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Are You a True "Investor" or Just a Simple "Saver"?

As people apply a systematic, principled-approach to their finances, such as the one I teach my clients in the Money Mastery program, their thinking begins to change, fundamentally. They no longer feel out of control financially and begin to see each financial decision as it relates to a spending plan, savings plan, debt elimination plan, and tax reduction plan. Because they have an overall Master Plan with a big picture view of how each area of their finances must work together, they are personally and intimately connected to the details that make following those plans possible. They can avoid costly financial mistakes and begin to see highly lucrative opportunities for wealth expansion in the future. With time, they move from being simply a “saver” — someone who gives his or her money over to others to handle in hopes of making more — and instead begins to manipulate and handle that money personally as a dynamic investor.
What’s the difference between a “saver” and an “investor?” A saver lets someone else handle their money, thus eliminating opportunities to learn for themselves what will and will not make them more money. Examples of these types of savers are 401(k) participants, individuals invested in mutual funds and thus forced to use managers who control what happens to their money, and so forth. Often these types of people are referred to as “investors” because they are turning a portion of their money over to be “invested” in mutual funds and stock equities in hopes of gaining a nice return. But even though they may be referred to as “investors” that doesn’t make them such.
Unfortunately this group of people cannot be considered true investors because they are not personally controlling what happens to their money, nor learning how to put that money in motion to generate even more money. The whole idea behind using an integrated system of principles to manager your money, such as the Money Mastery system, is to learn to think like an investor. Doing so helps prevent you from getting into a “herd” mentality. Savers have their heads down, following the person in front of them, hoping for the best. If the rest of the herd is on a good path, then all is well. But unfortunately, as we have seen time and again with the stock market, what goes up must also come down. If the herd is following someone who is headed over the cliff, everyone else is going over with them.
I use this chart on the left to help people understand how little control the average “investor” has over their money when they turn it over to other people to manage in the market.
By contrast, a true investor has his head up, seeking to take action, observing his surroundings, expanding his perceptions, and making a plan by which he will put his money in motion to create more. Investing goes far beyond simply dumping money into a particular investment vehicle, such as a 401(k), or participating in a certain type of investment procedure. Remember, investing should be seen as a plan, not a product or procedure.

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