Investing in a New Frame of Mind

Two things are meant by this:

First, when I use the word “invest” in this instance, we don’t mean just putting money into a savings account or the stock market. You should treat every decision you make in your life as an investment decision.

For example, when you’re deciding whether or not to go out to dinner tonight, whether or not to add the GPS satellite system to your new car order, whether or not to go on that clothes shopping spree, or something as simple as paying $20 each month for HBO:

Look at each decision as an investment. It’s fine to spend your money, but you’d be surprised how much you can accumulate if you start investing with a new frame of mind.

Another example, and most important, invest with a new frame of mind. Look at the money you invest with a new frame of mind. Instead of feeling like you’re putting away $100 this month when you could be buying a new DVD player, think of it this way:

That $100 you just invested will pay you dividends for the rest of your life.

That’s right, at a 10% return rate, you will receive $10 per year FOREVER from that investment. Moreover, if you leave the investment return in the same account, that $10 per year will grow each year. That means that if you invested $100 a month for 10 months, that your investment would return that same $100 every year.

Use this state of mind constantly and think of each investment you make. Instead of spending an extra $5,000 to upgrade your new car purchase to the sport package, you could invest that money and earn over $500 per year. In ten years when you sell your car, that $5,000 will be worth closer to $13,000 (with compounded interest at 10%) and you will be earning about $1,300 per year (or over $100 per month).

The next Free Finance Tip is about When to Start Investing. Or go to Free Finance Tips.

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