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For years I have asked people to answer this question in 5 seconds…..

Which one would you pick? 1 million pounds cash right now, or 1p today and doubled every day for 31 days?

Answer now - 1 million or 1 penny?

Just so you understand, without any doubt; on the first day I would give you 1 penny, the next day 2, the next 4, the next 8, and so on. On the eleventh day it would have accumulated to £10.24.

So, which would you take?

Answer now – 1 million or 1 penny?

When it comes to money, lots of people like to keep it, hoard it away for a rainy day, or just because they feel safe seeing their savings in a bank ready for them to live on when they don’t have a job or don’t want to work.

Now think about this; if, after working and saving for thirty years, you find out a thief has been stealing a bit of your savings every week you would be very angry, so why are you not angry about inflation doing the same thing every week?

Inflation is just robbing you so that your money deflates, leaving you unable to buy what you could have just a year ago. So I say that your money is being stolen. Most people don’t see it like that, and, if they do, they don’t understand just what it’s doing to their savings and the diminishing returns they can get on their money.

Another question for you, in 5 seconds please.

Who is the winner when it comes to money?

  • The person who saves their money in a bank?
  • The bank which lends that money to a customer?
  • The person who is the borrower of that money?

The answer, in the vast number of cases, is the person who borrows. You see, different times call for different strategies, but the person who puts their money into the bank, usually to protect it, loses out to inflation in two ways; £100k today in the bank, with inflation, say, at 10% next year, is worth £90k which, in 5 years’ time, will be worth under £62k.

Meanwhile, the person who borrowed their money has an investment worth just over £161k, which they can leverage against, say at 90%; that’s an extra £54k of investment that they can buy and reinvest, making a £215k investment that can buy passive income for them.

At the present time, the net passive income would be £12.5k, plus the appreciating asset would keep up with inflation, whereas the money in the bank would have an income of £500 and would be eroded by inflation.

So, Speculate to Accumulate

Money makes money, but only if it is invested with caution. Most people don’t give this a thought.

If you don’t believe me, ask any business person

– an extract from my book, page 185