What’s Your Investing Rate and Why Should You Increase It?
We’ve said it before and we’ll say it again...you can’t save your way to real wealth.
Think about it this way.
Saving = keeping your money.
Investing = putting your money to work for you.
Why are we talking about this today? Because we figured it’s time to explain one of the most important factors to your wealth-building success: your investing rate
Your Investing Rate (IR) is simply the amount of money you invest per month divided by your average monthly income, multiplied by 100.
So if your total income is $6,000 per month and you invest $600 of that, your Investing Rate is 10%.
The higher it is, the closer you are to Financial Freedom (AKA lifestyle freedom, because work becomes optional, not a necessity!).
In the example below, you can see how increasing your Investing Rate—without changing your salary—can make a multi-million dollar difference over the course of a lifetime.
When you go to work for money (read: active income), the amount of money you can make is directly limited by time. You only have so many hours in the day, therefore, you can only make so much income (read: salary band).
When you start investing, you can put your money to work making money for you (read: passive income). Investing your money is so important because the amount of money you can make is no longer bound by the amount of working hours you have in a day (read: unlimited return potential).
If your investing rate is 10%, you could be stuck working for another 50 years. If your Investing Rate is 100%, you could literally “retire” tomorrow. See how increasing your IR decreases your time left in the workforce:
**Excerpted from Session 5 of the Wealth Circle
So. How can YOU increase your Investing Rate?
Invest more of your income. Plain and simple. Need ideas on how to have more money for investments?
Spend less
Earn more
Invest the difference
Join the Wealth Circle
What’s your current Investing Rate?
If you need help figuring out how and what to invest in...then the Wealth Circle is right for you! We open enrollment twice a year, in February and August.