How the Poor, the Middle Class, and the Rich Think about Investment

How the Poor, the Middle Class, and the Rich Think about Investment


The poor don’t invest because they don’t have money to invest. They spend all their money and forget about investments. The funny thing is though, although they have no money to invest, they have money to gamble. They have money to buy lottery, they have money to buy 4D and 3D, go to Genting and gamble a few thousand Ringgit, travel with Star Cruise, drink alcohol and smoke.

For all these money-burning activities, the poor have money. When it comes to investing, they have no money.

Now, the middle class is actually where most people you see or meet are. The middle class say, “Investing is Risky.” Every time people say investing is risky, they actually mean that speculating or gambling is risky. Most people cannot differentiate between speculating and investing.

Understanding about the difference between investing and speculating is very important. If you still cannot differentiate, then just follow this simple definition. -anything that can make money and can lose money is gambling or speculating.

Investing, if you do it the right way, you cannot lose money. This doesn’t mean that you never lose money, but as a whole you cannot lose money. Just like in a casino. If you are a casino owner, you may lose at individual rounds, but as a whole if you combine all the tables and bets, you cannot lose.

As for the rich, instead of saying, “Investing is risky,” the rich will say, “Not investing is risky.” Why do you think the rich would say so?

Inflation eats our money away. If you don’t invest, your money will be eaten by inflation.
So, why is not investing risky? Because if you don’t invest, your money will be in your savings account, or FD, or EPF where you look for all the guaranteed things and so forth, plus all your money will be eaten by inflation.

Secondly, you face another risk which is “you don’t have enough money” risk – the risk of having not enough money. You don’t have enough money for your kids’ education, not enough for your retirement, maybe not enough for your parents’ hospital bills in the future and maybe your own hospital bills in the future as well.

If you talk about insurance, the insurance might be so costly that you could barely afford to pay for it unless you plan to work for life. Even if you plan to work for life, you still face another risk: Whether people will still hire you when you’re old, and whether you can still work or not when you’re old. In that sense, even if you don’t invest you are facing many risks, which is why, to the rich, not investing is also a risk.

Another risk of not investing is that your money will grow too slowly. What if got you into an illness and cannot work anymore? When you cannot work anymore, all your financial goals are not met, and you have financial liabilities.

So, investing actually expedites financial security if you do it the right way. Not speculating or gambling – but Investing.



courtesy KCL