• Dylan Cottrill

A penny saved is still just a penny

I’ve paraphrased the famous quote from the businessman, Dan Lok, but his views on the original quote (a penny saved is a penny earned) are interesting. When you boil it down, Dan believes that you simply cannot be rich if you are cheap. Which is a rather bold statement, considering there are several extremely wealthy people who have accumulated unfathomable amounts of money and are notoriously frugal with their wealth. However, there is something to what Dan says.

Money is seen as a valuable entity by most, I mean, that is the purpose of money is it not? To serve as a form of value that everyone would understand and value the same based on appearance in order to facilitate trading. Then, through the complexity and ingenuity of human development, we learned how to leverage our money and increase its value. So, what exactly is leveraging your money? The Cambridge dictionary defines leverage as, “Using (something) to maximum advantage.” This basically means using your money to its maximum potential. Now, when you look at what most people do with their money, you’ll see that, in countries with well-established education systems, only approximately half of adults invest their money. That investment includes; stocks, bonds, ETF & mutual funds, cryptocurrency, real estate and even regular savings accounts (deposit accounts). That means that an outrageous number of people just aren’t taking advantage of their money’s potential – not even the minimum potential you get from a savings account. Money is so much more than a trading entity, and if you use leverage correctly you can maximise the potential of your money in a way that ‘saving’ it just can’t.

Time is money!

Although, some may say that savings are a preferred choice simply due to the lessened risk, and while it is true that a savings account is safer than the stock market, for instance, you should still pursue opportunities to grow your wealth. The reason people seem to lack vision in terms of their money’s potential is born out of fear, a fear of spending money. Now, this doesn’t mean that investing and spending are the same, but instead they are perceived this way by the general public. This, I believe, is due to an absence of understanding of the world of finances, stocks, yields and returns. Without understanding, there is an incredible leap in perceived risk on the part of the potential investor. Perceived risk and calculated risk are two very different things, perceived risk refers to the risk a person thinks exists but is founded on assumption. Calculated risk is when you analyse the risk at hand through statistics and risk assessment models giving an accurate representation of the true risk involved in an opportunity. This allows you to evaluate the worth of said risk.

Is this risk worth the possible reward?

In reality, well my reality at least – you need to spend money in order to make money. This has always just made the most sense to me. The process of using my money to build enterprises that will provide a sustainable living for myself and others is what inspires and motivates me. That’s because I understand the true potential of money, if it’s used in the correct way of course. Once you learn how to evaluate the risk of these decisions you can easily use that skill to literally create your own wealth – and this way it becomes sustainable, providing growing benefit year on year.

All this being said, the risk involved in investment is not for everyone. It takes time to understand the risk of certain industries and I am by no means an expert. However, anyone can learn about risk and how to interpret it so why not try? We live in an amazing era of technology where you can sit at home and still be able to access that potential for your money to grow through online trading platforms and investment management systems available through a simple Google search. A penny is just a penny, and a dollar is just a dollar – at the end of the day, it's up to you to make it more than that.

Dylan Cottrill | LinkedIn

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