Wednesday, January 20, 2021

Where does Money come from?!

Photo by Erik Mclean on Unsplash

Dear readers,

Thank you for coming here!


I read about an interesting research on “Where does Money come from?” the other day. 

It was done in 2019 so it is a bit outdated, but I believe things should not have changed much over the last two years.

Therefore, I would like to share it with you in this quick read.


Where does Money come from?

In 2018, 

  • 73% of the income of Chinese residents came from work — “People-generating money”
  • 27% came from investments — “Money-generating money”
  • In US, even for the richest families, about half of the income came from work

I think it tells us two things to get money.

1.Focus on improving our work efficiency and output

It is clear that work generates most of the income for the mass population.

And that is just the average.

That means, for some people, work can even generate more than 100% of their wealth. That is what happened to me when I first started investing, with negative returns.

Therefore, to accumulate wealth, the best way for most is to focus on improving our work efficiency and output and use that to trade for wealth.

This is especially true when we do not have big enough capital.

2.Start investing as early as possible and make it a continuous journey

On the other hand, 27% is significant. 

Therefore, we should definitely not ignore it. No matter we like it or not, investing is going to be a “must” for us. 

I did not start investing until past my 30. If possible, you should start as early as possible. 

The earlier you start, the less costly your mistakes will be and the more time you will have to make compounding work to your favor.

And it should be a continuous journey. And I mean two things.

  1. You should spend time on it continuously to learn and practice. Spend time on money related staff at least every week.
  2. You should keep exploring new things, not limiting yourself due to laziness. I limited myself into “DCA into ETFs” without knowing there are so many other ways to invest.

This does not contradict with the first point. Time will be available if you really think it is important.

I did not spend extra time on work before I started investing. I spent it on gaming, movies and etc.

Besides, focusing on just one thing, as many tell us, sounds so boring.

I think we can manage to do two things well! 

Happy work and Happy investing and Happy getting rich!


Till next time!

No comments:

Post a Comment