How many times have you heard that phrase before?
It’s a harsh reality we must face on a day to day basis. Most of us wake up on that Monday morning knowing that another work week has just begun. We spend such a large part of our lives working to make money because money is what makes the world go round.
Growing up in a hardworking household, my parents didn’t hold back to tell me that if I want money, I had to work hard for it. A simple concept — in that if you provide value to the world, you will get rewarded with money in return.
With this in mind, I had learnt to treat my lunch money as a precious resource. For every gold coin, I ensured that it was handed over securely for any canteen goodie purchase I made. Money is a resource that is needed to enjoy almost all of life’s pleasures. You work to earn money to spend it. It’s so basic that even a capuchin monkey can understand the sequence.
8-year old me:
hard work = value creation = money
earn money → spend money*
(as an 8-year old, majority of my expenses included vegemite toasties, meat pies, zooper doopers, slushees, all of which were among an assortment of Aussie canteen items)
Although rudimentary, this money mindset stayed with me until I played the ASX stock market game and learnt that money was more complex than earn and spend. This game threw me into the deep end and taught me about the world of stocks; an item that if bought, either can make money or lose money. Imagine a teenager stumbling upon a revelation like this — make easy money through stocks instead of hard work. Blown away, I gave up my preconceived notions about money and thought it best to dump all my eggs into this basket. But despite what I thought I knew, it was not too long before my dreams came crashing down, as my game portfolio plummeted at an equal velocity. I was silly to believe that investing was that easy. Surely there is some way you can invest in such a way that can consistently generate positive returns. But how?
Over the next few years, I would research about the stock market and investing strategies. It turned out, investing is hard for 99% of the world with 95% of finance professionals unable to beat the market. Stock picking is inherently risky unless you diversify. Since most aspiring investors don’t know how to build a stable return portfolio or have enough capital to invest, it becomes tricky for them to start their investing career. It's still difficult to understand what the best way for a beginner investor to build an effective portfolio. That was until I began working on pearler and it’s investing principle:
Invest in low fee index funds to match the returns of the market
Using this passive investing strategy, you won’t need to watch the market or understand portfolio mechanics and yet, you will receive an average 7% return in the long term. If you can’t beat the market 99% of the time, the second best option is to match market returns. I know that money doesn’t grow on trees but now with index investing growing rapidly, it’s become clear that money can still safely and passively grow elsewhere. It took me over a decade to understand how to grow money and no it does not grow on trees:
“Money grows with passive investing.”
Disclaimer: At pearler, we pride ourselves on the quality of the financial advice we give, however, this advice has not been tailored for you. You may have unique financial goals, circumstances or needs which make this advice inappropriate, and it is important that you know whether you do. If you’re unsure we urge you to speak to someone you trust who is competent with money and understands your individual needs, whether they be a trusted friend or professional.
