They say, it's not how much you earn but how much you keep. This applies to individuals, companies, and even countries.
What does that mean exactly? Let me explain.
It is said that there are USD 38 trillion being exchanged in transactions at any given point in time. There will always be money being exchanged between parties. Businessmen with all their creativity, device systems so that they can capture some of this money floating around. They do this in such a way that the net exchange will be favorable to them. These systems are called businesses.
As a consumer, you pay like P65 for a P35 burger to let's say Mcjollibug. The net exchange is that Mcjollibug earns P30 from the consumer. As you can see businesses are like money magnets attracting money from consumers!
In all this, there will be winner and a loser. One who earns from the net exchange of money and one who loses. Looking at the bigger picture, and when you really look at it, it is the consumer (who doesn't keep/save/invest) any money that loses. The income he gets from his employers, just passes through him and into the hands of another business.
Then let's look at investors. Businesses need to expand. For what reason? More money of course. They need to expand, gain market share, etc.. and to do that you need some money money to spend for their operations. If a business doesn't have money, it will look for investors willing to earn from the business expansion. So in this exchange, the investors earn from the earnings of this business. Want an example? Let's look at stocks. When you buy shares of stocks of a company, you become like an owner of that company. If the company earns, the price shares also increase. When you sell the shares, you as the the investor then earns. Hope that's clear.
Good businessmen, like most of our Taipans try to keep as much money as possible. If they have an airline, the food gets served by one of his food and restaurant companies. The bookings are done by his travel agencies. Most of his businesses are insured by his own insurance company. His expansions are funded by his banks. His condos tie up miles to his airline. His malls sell his own products. His banks and franchises rents in his malls. This goes on... But you do get the picture right?
As you can see, the good businessman knows how to keep his money. In the case above, it just revolves around his group of companies. This almost never goes out. But when it does, it becomes a small percentage of what he actually earns from his businesses. See the difference in the attitude of the common Pinoy consumer and the rich businessman? I'm not really surprised why the rich get richer and the poor gets poorer.
Now what am I saying? If you want to become wealthy or something close to it, adapt this mindset. Learn to save and invest. What's that I hear? You can't afford to save? But I say, during these times everyone cannot afford not to save. More so now since the percentage of middle class is disappearing into the poverty line.
Furthermore, when a person gets old and unproductive (like most of us mortals) what next? He could only rely on what he kept. If there are none, through the money of other people (relatives, children). If you love these people, act now. Save soon and save smart. Invest soon and invest wisely.
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