Sunday, December 7, 2008

emphasize on Automated Saving again

Some of you who has been reading my blog may have seen this picture below many times.

Basically this diagram is almost all about what I preach about in personal finance.

The first thing to do is not to buy insurance nor any investment plans.  The first thing to do is to transfer money from your income into a "Money earn Money" (MeM) acount.

It should have a few unique qualifying features:
1.  It always have a positive interest, no matter how low it gets.
2.  has limited convinience to withdraw money out from this MeM acount.

So it could even be just a normal saving account with low interest.

The 'flow' from Income to MeM should be Automated.  Once setup, you should forget about this MeM account too.  That way this MeM is really passive, definitely accumulating and safe from weak EQ withdrawal.