I am honored to have a great guest post by newcomer to the Personal Finance Blogging scene: Compounding Works. At Compounding Works, they believe the best investment is in learning, and by compounding it, we will achieve much better financial results.
Using the Pyramid of Wealth Building
The first step to building wealth is to… well, start saving. The savings ladder is a great guide to help you get started. Setting up a budget and save regularly is key to succeed in the long run.
Saving encourages good habits, and protects your future self from both unforeseeable events and planned expenses, such as a wedding, buying a house or retire early.
But just saving isn’t enough, though. If inflation, or the rate at which prices increase over time, continues to rise, your money will loose its value over time, unless you can make it grow faster than inflation rises.
This is where investment comes in. It doesn’t matter if you have $10, $1000, $10,000 or $1,000,000 saved away. If you don’t invest that cash wisely, it will shrink as time goes by and become less valuable.
So how can we invest our cash?