Walter Yitzchak Reissman: Don’t Save! Invest to Grow Your Money

Walter Reissman states that we are a society of spenders. For example, 54% of Americans have credit card debt that they carry over from month to month, with an average interest rate of 16%. 50% of Americans have had credit card debt for more than a year.

Amidst the spending, we are told to save. However, Walter Reissman says that this is not sound advice.. Just like the 16% interest rate on credit cards greatly increases the amount of debt we owe, inflation depletes our savings.

The Savings Problem

It’s the advice you received from your parents, or perhaps your grandparents when you got your first checkbook. Save. However, Walter Reissman finds that people rely on savings when they really need to invest.

The money that they are saving won’t be worth nearly as much as it is today in 20 to 30 years. The $20,000 they put aside for a future wedding is only going to cover half the cost years down the road.

The Effect of Inflation

An item that costs $100 today will cost approximately $134 in 10 years. In 15 years, the cost will go up 50%, to $155, according to Walter Reissman. This means, in 15 years, the money you saved will only buy a fraction of what it would today.

Let’s say you need $60,000 to cover one year’s worth of expenses. In 20 years, this $60,000 would be worth $33,000 in today’s money. To have the purchasing power equivalent to $60,000 today in 20 years, you will need $108,000!

Investing vs. Savings

When you invest, you can expect at least a 6% return on the investment over time. If you invest $2,000, 20 years later you will have $6,000 at an interest rate of 6%.

This is enough to cover the rising costs associated with inflation, and still increase your savings. If you invest the $60,000 we discussed earlier, you will have $192,000 in 20 years.

Planning for the Inevitable

Part of saving for retirement or other major life events is understanding how much money you will need. If your expenses are $3,000 a month now, you can realistically expect them to be $6,000 a month 20 years from now.

Walter Reissman says people often make the mistake of creating savings goals based on their current financial needs, instead of the financial needs they will have in the future. If math isn’t your strong suit, you may easily become overwhelmed trying to sort out how much your expenses will be in 20-30 years’ time.

In addition to accounting for inflation, you’ll need enough money to keep you afloat year after year. A financial coach can help you plan for the future successfully.

The Importance of a Financial Coach

If there is one message Walter Yitzchak Reissman wants to emphasize, it is that today’s people need financial coaches. Getting into a big hole isn’t the product of one problem. Instead, it is the product of many bad decisions, and it takes just a small amount to go over the top.

A financial coach, such as Walter Yitzchak Reissman, will work alongside the clients through every step of their financial lives and importantly prevent bad decisions.