Level 2 – Savers
Today we will look at Level 2 Investors from The Cashflow Quadrant™ by Robert Kiyosaki.
Savers usually put a small amount aside regularly. Often they save to consume rather than to invest (saving for a trip or car). The money is put into low risk, low return savings vehicles.
These people are very security oriented and do not want to educate themselves about money. They like the security of money in the bank.
Even when shown that in today’s economic environment cash investments give a negative return after tax and inflation they are still unwilling to change.
These people often spend time trying to save pennies. They will go to grocery stores where there are cents off various items. Sometimes they will travel across town to save a few cents.
Saving money was a good idea in the first half of the last century when inflation was very low and the temptation to consume minimal. It is good to have some savings, maybe enough to pay for six months living expenses, but over and beyond that money should be invested.
People are living longer than previous generations and a lifetime of saving with negative returns will not give anyone a retirement nest egg.
I believe that there is security in knowledge and that these savers with their heads in the sand are in fact creating a very unsecure future for themselves. There is security in being educated about money and it reduces the fear surrounding it – which is often fear of an unknown.
I suspect that since the GFC many people who lost money in the stock related investments will gravitate to “secure savings accounts”. They will not be rewarded in the end.
Please leave me your feedback.