Let’s start by going about 10 years back…Think just how much something like a loaf of bread or can of coke cost down the street at your local 711. How much was a pack of smokes or six pack of beer? How much cash did you need to fill your gas tank, pay your electric or phone bill? And even what it cost to buy things like your car or even your house. The price of everything has gone up and so has their stocks. Imagine what things will cost in 20 or 30 years.
Maybe ten years ago you decided to start a savings account and every month put in a hundred bucks, totaling today at 12 000 dollars plus a few hundred in interest. Could that 12000 bucks you saved up over the last ten years hold the kind of buying power it did when you started? Of course not, the price of everything from gas to food has gone up.
Now on the other hand there are certain market prices that have gone down. For example the price of computers, televisions and electronics that use to go for thousands now can be picked up for a few hundred bucks. I just picked up a 52 inch flat screen TV for just under 1000 bucks, a TV that use to cost thousands a few years ago.
The main point I am trying to get across is basically, if your leaving your money in a savings account you’re actually losing money. The fact of the matter is to save money for the future; you’re going to have to get at less enough interest to cover the costs of inflation, which is rare with the weak and pathetic interest rates today.
So the next big question would be “If I am losing money in my savings where do I put my money?”
Currently in April of 2012 interest rates are sitting at an all-time record low. At these current rates, there is no way your savings are going to have a chance at keeping up with the rate of inflation. You are actually losing money in the long run!
To have a decent chance for financial freedom in the days to come you’re going to need to put your savings into something that will yield a return and increase in value over the years, instead of dwindling.
So your first step should be to learn the very basics of the stock market and how it works.