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June 13, 2014

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I totally agree that consistent saving is just a good way to build wealth. Even me, I prefer to save every month rather than proceed into investment.

Gosh, to listen to the news media, I though wealthy people stole all their money from the poor working man. Of course wealthy people never work, do they?

Of course, consistent saving is the bulwark of providing for a happy and enjoyable retirement.

However if you have the time and the necessary skills that are required to learn how to use complicated analytical methods don't discount "savvy investing".

Having done both successfully there are things to know about "savvy investing".

Even if you are a smart engineering or computer professional you would likely not have the time to learn everything that is required and to also spend the time it takes every market day to do what is required. It wasn't util after I retired that I started down that path, and when I did I spent many long hours studying books and manuals as I tried to absorb and become familiar with the information and the techniques. After I became a subscriber to the charting & analysis service that I have mentioned before I found that attending their seminars and getting to know other more experienced subscribers was an essential step in the process. There's no substitute for "collective wisdom and knowledge" and I benefited greatly from others that had been using the techniques for a long time.

Eventually, after getting to know the management of the company whose data and software I was using I started writing some of my own software to fill in gaps in the system and made them available to other subscribers. After a couple of years I marketed a comprehensive set of analytical tools which proved to be very popular.

This phase of my life also coincided with the start of the Internet Bubble, followed by its meteoric rise, and its eventual collapse. Who knows if something like it will ever be repeated, I certainly don't know.

Savvy investing however can consume all your time and eventually after getting out at the top of the bubble I went down an easier to live with path which was trading junk bond funds. These are far less volatile than stocks, much easier to live with, and are easily timed with moving average techniques. I stayed with these for a few years before finally deciding to move into the slow lane and own individual municipal & corporate bonds and some CDs that were yielding 5% at that time.

Consistent saving is boring. Bragging to relatives or at parties about how you are now saving 20% versus 15% of your income will get you a lot of sad looks. The attitude is typically, "anyone can do that, tell me something I don't know", even if few actually do it.

On the other hand, the guy who just tripled his money on a hot stock will have a crowd around him as he brags away. Everyone seems to want the easy win, to find "the secret" that will help them if only they discover it. No one wants to know if this was a fluke, or if the guy did some real research, or how the rest of his portfolio was doing overall. All they want to know is how they can get in on the deal. This is the reason con men find it so easy to find marks.

There are stories of "poor working men" that leave 7 figures to their heirs or to a worthy cause. Usually it's reported they lived a simple life.

Most people who remain poor enabled the rich (or the companies they buy stock in) to keep them that way. High monthly fees for "must have" services and interest will eat up potential savings. For the most part the wealthy haven't stolen or cheated anyone, the working poor gladly handed over their money.

Every dollar you get can be used to either but stuff or to buy freedom. There is no "always correct" use for any of those dollars. Spend on the stuff that truly is important to you, not to impress those around you. Invest to purchase your freedom, but not at the expense of what is truly important to you today. It is always an individual decision and one which should be addressed on an ongoing basis.

I'm glad that I never thought of retirement as my time of freedom or that my time of working was undesirable. Probably if my work had been boring, repetitive, and not challenging I might have felt that way. However as a young man I worked and studied hard and ended up with an MS degree in engineering and found my work challenging, enjoyable and satisfying and looked forward to going in every day and interacting with my co-workers, as well as making some progress on whatever project I was working on.

There are a multitude of well paying jobs that would be very unedesirable for me. In fact, any job that didn't give me an opportunity to be creative and to be part of a team producing a necessary and vital product would be boring. For example, I am glad that there are plenty of people willing to do jobs that are essential but that would drive me up the wall if I had to do them - the first one that comes to mind is delivering mail, another would be working in retail and having to keep smiling at customers.

Investment can be risky if the person doesn't know what he is doing. We all need to learn about investment however saving is a basic and important thing that everyone need to do.

Limey, you miss the point entirely. Until you had the ability to support your lifestyle with your assets you had to work. At the point you had sufficient assets to support your lifestyle for the first time you could choose to work, or not to work. This does not mean you retire, it simply means you (and probably the people you work for) know the job is a choice, not a necessity. This makes the job all the more enjoyable. I worked after I had bought my freedom, but it was much more enjoyable than before.

I would agree

For me, savings is the most difficult task for me, because my expense list is more than I earn each month. I opine to go for recurring savings, i.e. small but steady saving every month. Thats the only way for me :)

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