Rob Dix, an investment fund adviser and author, discusses the real price of money. Topics include the fascination with money, the rigged financial system, responsible debt, gold and silver investments, and investing boringly for broad exposure and earning more money.
Despite people spending their entire lives trying to earn more money, very few understand how it works and the best way to use it.
Money itself is a fiction, created and agreed upon by society, and traditional savings should be forgotten in favor of exploring investment opportunities to grow wealth.
Managing debt within the current financial system is challenging, and governments continually borrowing money to service existing debts can potentially lead to a debt spiral that impacts tax revenues.
Deep dives
The Importance of Understanding How Money Works
The podcast episode discusses the lack of understanding around money and how it works, despite people spending their entire lives trying to earn more money. The speaker emphasizes the need for individuals to educate themselves about money and the best ways to use it. They also highlight the fact that money itself is a fiction, created and agreed upon by society. The episode delves into the importance of forgetting about traditional savings and exploring investment opportunities to grow wealth.
The Impact of Central Banks and Inflation on the Financial System
The episode discusses the role of central banks in creating money out of thin air, which can lead to inflation. The speaker explains that excessive money creation can result in inflation, causing money to lose value. The conversation explores how inflation affects individuals by reducing the purchasing power of their savings. Additionally, the episode highlights that governments often prioritize inflation over deflation, aiming to maintain a steady inflation rate of around 2-3%. The discussion emphasizes the challenge of managing debt as inflation erodes its value over time.
Challenges of Government Debt and Financial Systems
The podcast explores the escalating levels of government debt and how it affects financial systems. The episode discusses the need for governments to continually borrow money to service existing debts and maintain manageable debt loads. It highlights the potential risk of debt spiraling out of control and impacting tax revenues. The speaker points out the challenges of managing debt within political cycles and the difficulty of finding a solution to steadily reduce it. While the future remains uncertain, the speaker suggests focusing on personal financial strategies to navigate the current system.
Practical Strategies for Financial Success
The podcast offers practical strategies for individuals to prosper within the financial system. It emphasizes the importance of being intentional and conscious about spending, conducting regular spending audits, and weighing the value of purchases. The episode also advocates for taking on debt responsibly, considering investments that generate returns, and understanding the risks involved. The speaker encourages listeners to educate themselves about personal finance and make informed decisions to achieve financial goals.
Investing in Property: An Effective Tool for Wealth Accumulation
Investing in property can be a powerful tool for building wealth. When you borrow a fixed amount to purchase a property, and the property value increases with inflation, you benefit from the asset appreciation while the debt remains fixed. This strategy allows you to store your wealth over time and provides a reliable income stream through rental payments. While interest rates and debt costs may fluctuate, investing in property can offer stability and steady returns in the long run.
The Importance of Diversification and Long-Term Investing
Investing in a diversified portfolio is crucial for long-term financial success. By avoiding the temptation to pick individual stocks and instead focusing on broad exposure, investors can reduce the risk associated with individual stock performance. Investing boringly in stocks also involves favoring sectors and companies that may be considered 'boring' but offer stability and reliable returns over time. Rather than trying to time the market or chase flashy investments, a long-term, consistent investment approach is more likely to yield positive results.
Rob Dix is an investment fund adviser, co-presenter of one of the UK’s most popular business podcasts (The Property Podcast), and the author of four best-selling books about property investment. Rob’s most recent book The Price Of Money: How to Prosper in a Financial World That’s Rigged Against You, is the book Rob wished he had on the topic of money when growing up.
Expect to learn why despite the fact humans spend their entire lives trying to earn more money very few of us understand how it works and the best way to use it, why money is a fiction, why you need to forget savings, how to take on debt responsibly, what assets are real, and the value of investing boringly.
Today’s podcast is sponsored and supported not by one of my usual sponsors but my Podcast Masterclass.
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