I realized something after watching this short video ...
... That if the LOCAL bank/credit union is full of saved money then the interest rates will go down and stay down [reaching an equalibrium after some
fluctuations early on when bank goes full and rates drop and the bank lends lots (to our kids etc. so they can get somewhere) thus emptying the banks
vaults to a certain extent (until repaid with % interest in the long run) which raises the interest rate which is a sign to start saving again as the
flywheel is losing momentum] , money will become cheap and the bank won't want anymore cheap money and will want people to INVEST in the local
economies stock market in Blue Chip (stock market) [wiki] stocks that return a yearly
At that point one directs the excess interest payments on ones local bank savings account [because the bank is full and we don''t want the interest
rate to fall too low ] into the stock market [generally speaking] and into regular dividend paying local blue chips stocks [specifically speaking].
Then one buys and long term holds enough local blue chip stocks that return enough yearly dividends to cover ones yearly usage of products and
services PLUS a small surplus that is invested in a non local bank and or stock market and is ones pension fund. This is choosen primarily for
security reasons known as "Don't keep all your (nest) eggs all in the same basket."
This sets up a finacial flywheel with a lot of momentum [ie the FLOW] because once the STOCKS [ie banks and stock markets] are FULL they start to
overflow into other STOCKS!
This IS the map of financial growth in my humble opinion (self taught mostly)!
1] Earn a profitable wage so can save some $$$ that accrue some low % compound interest rate in a local bank.
2] Fill up your savings account until the local bank starts to drop it's interest rates [ a watershed moment ] and then divert all further profits
from savings into a non local bank account [pension fund] and divert all wage profits into blue chip stocks until your financial flywheel is up to
speed with your lifestyle with some money momentum to spare.
3] Divert all excess yearly blue chip profits into non local blue chip stocks in non local stock markets.
4] When both non local bank and non local stock market financial flywheels are also up to speed for the lifestyle you wish to live in retirement, then
one can start playing with what ever excess one has left and can afford to take a bigger gamble on the stock market with non blue chip stocks and
become involved with bonds.
5] Buying long term low % interest rate bearing bonds allows the NATIONAL GOVERNMENT to purchase [on our behalf] nationally required infrastructure
such as roads and hospitals etc. When they pay off around the time of ones retirement this adds an extra boost and peace of mind to ones future
6] When the Nation is financially and economically safe and sound [ie the entire set of flywheels are working in conjunction with each other and the
flow of money is continuous and the flywheel has a high momentum due to having a high money mass with all the stocks being full] THEN one can start
thinking about investing overseas in other nations.
7] Finally when one runs out of all safe bets and all ones bases are covered locally nationally and globally [ie all ones stocks are full and
overflowing] then one can take even greater gambling risks such as day trading and futures etc.
We can trade metals [or similar] as Gold currency [or similar] or Cannon shot [or similar]. One is far more economic and takes less effort and is far
less bloody minded as fair trade in a a free market economy is the source of technological growth when one starts investing in R&D start up companies
in day trading and futures markets.
Personal Disclosure: Make Bank'$ [etc] your Friends ok!
edit on 1-2-2012 by OmegaLogos because: Edited to add blue chip stock market wiki link.
edit on 1-2-2012 by OmegaLogos
because: Edited to fix spelling.
edit on 1-2-2012 by OmegaLogos because: Edited to redact "either" for clarity.
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