Another Beginning of the Whiteaura

The Velocity of Money

The average people park their money in one place and forget about it. Their money will degrade over time. Inflation, will corrode the value.

Money in banks earns a pitiful interest. It is one of the safest thing to do if one does not know what to do with the cash they have. However, they must keep in mind that money in the bank, with the tiny interest, can never beat inflation, which is to say that the money will get lesser and lesser in value over time.

Some people park their money in investment tools. They chuck one lump sum of money and then forget about it. The old time saying of "invest in long term, diversify" may or may not be true. There's always a common saying that on average, the stock market goes up by 10% each year. I beg to differ. It all depends on when u get in and when u get out. If u chuck one lump sum of money into an investment tools and forget about it, it's the same as forgetting u ever had that money.

Money should have velocity. The faster it is, the lesser the risk. It should be dynamic and always on the move. The faster it moves, the more money it can generate, and the lesser the risk. How many people got caught in the stock market crash and lose their fortune? There's a lot. Because instead of moving their money out when the situation is bad, the money remains static in the losing stock and goes down with the whole market.

posted by Whiteaura II @ 12:37 AM