As you can see (if you can't see - take a look around what blog you're on)... Saving and investing is simply sensible. Just as it is wise to brush your teeth every day - because it will cost more to repair, restore and place implants.
Save and invest. That's not unheard of advice, is it?
...But even though we hear this from SODRa consultants (as if it were clear that you can't expect a better pension), we still rarely save and invest.
Because it seems to us that:
- Investing is difficult;
- Investing requires substantial savings;
- We have nothing to save - we don't earn anyway;
- We can't manage our finances because of inflation;
- It's more important to live pleasantly in the moment.
But what if you can save and invest even if you earn the minimum?
What if you can do it even if you are underage? Or have a full-time job? If you don't have time? You have five kids and three jeeps? Do you like parties and...
Where do euros come from?
Imagine you open a muffin business. Mmm... Buns... You use around €0.15 worth of ingredients, equipment, labour and employees to bake one bun. Then you sell those buns for €0.14. Will there be a profit?
In this case, it can reduce labour costs, start living more simply, maybe find more efficient working methods or otherwise save.
...Or they can raise rates - start new businesses, learn in the name of sellingand maybe invest in something.
How will you increase your income/expenditure gap to keep more profit? Your choice. I don't know what your situation is to predict what would be best.
But the point is: this difference.
Povilas, American star, talks about it Mr. Money Mustache and a Lithuanian couple Baltic mustache. Lithuanian investors from Investology and Finansisto. I am speaking at this moment.
How to save?
If you already track your spending (via this app), you should see that low costs add up. If you smoke, chances are you're losing €300+ a year. That's already one week holiday in Turkey for two! And so on.
I'm not saying that smoking or spending money in any other way is bad. I myself pay €12 every month for a subscription to the video game World of Warcraft.
...Money is meant to be spent on things that make our lives easier and more enjoyable!
Just how wise is it today to spend money without thinking about your personal inflation rate and that in the future, this money can ensure you have a more comfortable old age or a more pleasant service in medical (even dental) institutions?
Here it is. Savings add up. And they make sense.
Join the €1 Challenge!
It is very simple:
- You take the euro.
- You put it in your saver.
- Repeat after 24 hours.
If you work for the Lithuanian minimum wage, you earn 19,6 euro each. And it's likely you'll earn more.
Is the euro a lot? No. But it's enough to accumulate €365 in just one year without even noticing it.
You can also raise your target. Let's say, throw in €2 every day. Or 5. Or 10. Or from 1 to 52 according to this graph, which you can print out now. Don't worry, I've prepared it so you can print it out and stick it on your wall or on your saver:
Yes, just click and print! That way you can track your progress!
(If you have different (bigger or smaller) goals, take advantage of this fantastic tool and you can generate whatever poster you want.)
With bigger goals, you're likely to accumulate more. I set myself a challenge in November 2017 to put in €1 + 1% more every day than yesterday.
Here's what my savings schedule looked like:
More detailed figures:Interactive timeline
And here's what the saver looked like when it was filled:
(This is part of the videos, the rest of which are in my @1procentas on instagram.)
In 181 days (half a year) I saved €505.58. What's most important? I did it by accident. I didn't even notice how it happened.
How to invest?
...Savings are then best invested to avoid being eaten up by currency depreciation.
My parents and grandparents, burnt by "Sekundės and other banks after independence, do not save money in institutions. They simply buy durable purchases - they put their money into renovating their house or yard, expanding their businesses.
...And that's not a bad way to invest!
That's all very well - the value of the money does not leave our family's property (the territory), these purchases do not wear out quickly (a new roof on a house is likely to last for at least 30 years), and in many cases the cost of the materials (the paving stones) and the workers (the pavers) will only increase in the future. And not just because of inflation, but also because imports are not increasing and potential workers are decreasing. The Ukrainians, however good their workers, will not be able to service the whole of Lithuania.
So you can invest the money you save in...
...What will last.
For example:
- Knowledge. My grandmother has been studying all her life, and studying all her life, and... Well, she's over 80, but she lives like a queen, and she can afford it. But you can disobey my grandmother - think with your own head.Chances are that if you learn better retention of information, speed reading, emotion management, self-confidence and discipline or whatever you want... It will be useful to you for many decades to come.
- Houses, flats, land and repairs. Cars and computers (even cryptocurrency mining machines) wear out and change quickly. But land, houses and apartments are likely to last a long time. Even if we assume that we can get land from the sea and apartments from above, these assets are solid.It is probably often best to start with repairs. Whatever rooftop solar panelswhich are likely to pay for themselves within 10 years. Or tidy up your yard to make it safer for your children and your neighbours' children to play. Or at least install LED light bulbs at home, which are more expensive but last a hundred times longer.Then there is investment in land and other real estate. If you don't know anything about it, you can learn about it from these books and for this course - I recommend both of them because I know these teachers.
- Health. But it needs to be taken care of all the time, not just once a year... God, well. Don't spare those few euros for healthier products. And also...There are ergonomic desks that you or your employees might work at. There are shoes to fit your feet so you don't hurt your feet. There are reading machines that don't emit light and don't hurt your eyes if you read a lot. There are headphones that are high quality and non-intrusive but soundproof. There are glasses that protect from the sun and don't obscure the view... Believe me, I could put a link on each of these examples, but there are so many convenience wonders these days that you probably wouldn't have enough money for all of them! Or at least I wouldn't have enough for myself.If knowledge and where you live are enough to keep you calm, then health is enough. And there are almost no limits to wise investment.
The most important rule here is to make sure that it pays off and is not just another advertising scam. How to choose between the two probably has its own set of principles.
You can also invest the money you save in...
...Loans to others.
In reality, all active investment is lending. It's to a bank, to a company on the stock market, to the state through bonds, to an ordinary Lithuanian or foreign citizen.
There are many choices, so I'd rather share reliable places where you can learn more about investing in English:
- Investology;
- Financier;
- Investor group(s) on Facebook;
- If you're a complete beginner, then Žilvinas Butkevičius courses.
Or, finally, just watch what Paul does or Baltic Mustache couple. If you know anyone else who invests in Lithuania and shows their money statistics publicly, please let me know in the comments and I'd love to add them to this list.
True, it is important! I don't recommend learning from books.
Information in books becomes outdated too quickly. Books on investing are important to read, but that's more important afterwards. Look for core principles, repetitive systems... For specific advice on where to put that first €365 (or €36.5, or €3650...), your best bet is online.
And just try.
This is extremely important. Herein lies the the biggest mistake you can make. Like making pancakes, investing is something you learn only by investing. Well... that is... you learn to make pancakes by making pancakes, of course. That's what I meant. In a word, I feel that you understand what I am saying.
...How do I currently invest my money?
I invest in p2p loans.
In my opinion, this is the easiest way to invest - you don't need to be self-employed or anything, you can invest (and earn!) as little as €5, and earnings up to the €500 limit are tax-free. In other words, the state will not take 15% of your €500 profit. That half a thousand a year is entirely yours.
...And more. Investing through peer-to-peer lending is very passive. I am a terrible sloth, so I like it. Once you choose your settings, you can actually go and count crows for the rest of the year. It only takes a few hours a year.
If you want to try p2p lending in Lithuania, for Lithuanian residents, you can do so via:
- Loan Club (after registration via this link you get €10 for free)
- Self (after registration via this link you get €10 for free)
- Finbee
And then there is Lithuania Rontgenwho specialise in real estate loans, which I haven't tried myself, but p2p investor group on Facebook I've heard good feedback.
By the way, if you're wondering why these p2p intermediaries are giving you those euros, it pays them to have you invest with them. They take a small percentage for themselves for brokering.
Realistically, you can expect an annual return on your p2p investment of around 8-12%.
Finally...
It's not what you can do, but what you will do.
"Young age is an investor's biggest advantage" - Romanas, investor from Vilnius
So, how about you?
Are you in a saving phase? Or maybe investing? How are you saving, investing? And is there anything else you would recommend to a beginner saver/investor?
Share your opinion in the comments below!
P.S. Click and get 3 FREE podcasts (audio interviews): "3 exceptional Lithuanian teachers share their secrets". For investors and those interested in self-development.