The Wise Investor
1.4 Common mistakes
Kate had been thinking for some time about John's
words. Although he had not explained the details, it seemed
a little too good to be true. If things were as simple as they
sounded, she couldn't understand why everyone was not
successful in the way John described.
Kate's grandfather sat on the park bench, the cool wind
on his face and the warm sun on his skin, and waited for his
granddaughter to speak. If he was to teach her about money
and investment, she must believe that it was worthwhile, and
it would work for her. There would always be doubts, of
course, but she must believe deep down that it would work
in the end. If she didn't, then they would be wasting their
"John," she said at length, "if it's so simple. Why doesn't
everyone do it?"
"There are several common mistakes people make, Kate.
The first, and the most fatal of all, is that most people spend
everything that they earn. They may have some money put
aside for a rainy day, and they may save up for a new car or
boat, but overall they end up spending all money they earn.
To achieve financial success, you must save money and
invest it. Even if it is a small amount at first, you must
increase your wealth each year.
Each year, you must have a little more money and wealth
than the year before. If you save and invest wisely, you will
gain wealth and freedom. If you spend all the money that
you earn, however, then you will still be financially
dependent in fifty year's time. You will be dependent on
your salary from work, a government pension, or some other
income. Whatever the source, you will not have freedom,
security and independence."
Kate had to admit that she was one of these people
herself, and although she owned more possessions than she