Do
you really know the difference?
Spending
vs Investing
Do you really know the difference
between spending and investing? An expense is gone forever while an investment
is expected to bring a return. Do you know the different types of spending and
investing? Learn and profit from knowing and taking action.
1.
First Party Spending. When we spend our money to buy something for us. This
is when we are the most concerned about value, the cost and the quality of what
you buy.
2.
Second Party Spending. When we spend our money to buy something for someone
else. Here we are not as concerned about value because we are most concerned about
the cost of what we buy.
3.
Third Party Spending. This is where we are spending someone else’s money to
buy something for someone else’s. All types of government spending by
definition are third party spending. The money is spent with the least concern
about value. No wonder governments spend so much and get so little for what
they buy.
4.
Fourth Party Spending. This is where we spend someone else’s money to buy
things for ourselves. This is the easiest form of spending. Student loans, car
loans, mortgage loans, credit cards, etc. This is where we mortgage our future
for something we want today. The government and banks promote this kind of spending
because they know we are not as diligent as we ought to be when spending
someone else’s money.
5.
First Party Investing. When you invest your money in something for you.
Investing in yourself is the best type of investing because it will bring you
the best return. Invest heavily to improve your financial, personal, and
professional life. Invest in great books, audios, and association (seminars,
conventions, etc.). Apply what you learn. Knowing and not doing is not knowing.
6.
Second Party Investing. When we invest our money in someone else. Companies invest
in training and development of their key employees because they expect a return
on their investment. Investment in people brings the second best form of
return.
7.
Third Party Investing. When we invest someone else’s money for someone else’s
benefit. Investment companies through their investment brokers fit this type of
investing. Be sure to ask your investment advisor if he or she has invested at
least the same amount of money as you are about to invest in the same type of
investment. This is the third best form of investment. Be completely out of
debt (including your mortgage) before investing in stocks, bonds, CDs, mutual
funds, etc.
8.
Fourth Party Investing. When we invest someone else’s money for ourselves.
This is where many people get in trouble financially because of greed. We
borrow money (margin) to invest is something to get rich quick. We get that hot
tip and borrow money to invest. Stay away for this type of investing unless you
want to go broke quickly in a grand scale.
Thank
you for reading and reflecting on today’s nuggets. Share them with others.
Be blessed and be a
blessing to others
Carlos Fontana
Author of the book Priceless, Co-author of the
book Follow to Lead
"The future
belongs to those who can see and pursue opportunities before they are
obvious."
"Those that take
swift action will always leave those that don't breathing the dust."
I would love to do a
podcast or a blog interview and share my Nuggets with your audience!
