Posts Tagged ‘reserve’

Trying to look a part is perhaps the single easiest way to never become the part.  This is especially true when it comes to money.  It takes a lot of money to keep up appearances.  This money spent on consumption items will be money not used to create real wealth.  If you really want to be rich, create a private reserve first, then let the money your money makes do the purchasing.  Spending first will leave you with empty pockets.

A proper private reserve provides you with quick access to your money.  Another term is “liquid”.  This is why I call it a pool of money.  You can go to the pool and take water out with a bucket.  In the same way, this private reserve allows you access to money when you need it.

A resource you have built and control is worth more than a resource someone else maintains and loans to you.  This seems obvious and logical.  But, it is much easier to simply rely on someone else who has already built it than to grow it yourself.  Consider long term costs when considering how you develop your money reserve.

One key feature of the private reserve strategy is that one builds a pool of funds from which to finance many purchases in life.  The benefit is the interest paid returns to one’s own pool instead an alternate finance company.

Saving… is deferred consumption.” -Gregory Bresiger

“Saving, ultimately, is consumption.  By setting aside some resources for meeting financial consumption needs, we invest them.” –Detlev S. Schlichter

The private reserve strategy initially provides a build up in savings, but it also produces a higher ability to consume.  By delaying consumption, one not only builds a base of capital for purchases, but saves interest payments to an outside source.  This savings is additional capital to use for various purposes.

Quantitative easing = creating money out of thin air.  Fractional reserve banking = creating money out of thin air.  Both cause inflation.  Private reserve banking = using money which already exists.  Establishing your own private bank not only prevents inflation, but keeps potential wealth in your own pocket.

“We operate from a level of liquidity that no one else does.  We don’t want to operate on bank lines.” –Warren Buffett

It is amazing how the greatest investor alive understands the necessity of keeping money in a liquid (easily accessible/available) position, knowing there will come hard times; yet most people strap themselves to the bank with high levels of debt.  It is imperative to build a private reserve from which cash can be obtained in hard times.

There are several definitions of money changer; one of which is a bank.  They basically exchange forms of currency.  Associated with this transaction is a fee; of which can be a premium charge.  Think of it like this, money changes, or moves, from one to another.  Becoming dependent on such money changers consistently moves your money into their hands.  Stay away from the money changers by developing a reserve of your own in order to retain those fees for yourself.