The Connection Between Frugal Living and Investing in Stocks

The Other Side of Investing

I see so-called successful traders showing off some $100K car, maybe a yacht, and definitely flaunting the successes of their trading formulas. But, I wonder if the money is made from people signing onto their classes and sure-fire schemes of making money fast.

Truth be told, people like Warren Buffett and Carl Icahn are the ones who could tell you how to make money in the stock market.

Warren Buffett is the epitome of extreme frugal living, as he doesn’t appear to flaunt his wealth nor does he show off by owning yachts and a gazillion sports cars. He’s done the same thing everyday for decades, driving in his old station wagon to work, dropping by McDonald’s for a sausage McMuffin or some other breakfast sandwich. He likes the simpler things in life like Cherry Coke and a soft serve Ice Cream from Dairy Queen (which he owns).

The bottom line is always to not spend more money than you earn, period. And put away at least 10-15% of that away in investments.

It’s a challenge, but the concept is to keep monthly cost-of-living expenses down, so that you can build a portfolio of investments that generate returns.

In other words, let your money work for you to make more money. And let that money compound with either interest or dividends from stocks.

The more I think about it, the more I realize that we individuals are like a business in which we have assets, and we have expenses and income. There is a cash flow that flows through our lives, and we either generate a negative cash flow or a positive one.

Saving our income will surely build our assets, and we can invest capital into things like mutual funds and dividend stocks to generate more income. This is essential because the money you’ve invested is actually making money for you, compared to actually working to earn that money physically.

So, any chance to let your money work for you is ideal, whether it be small or large. That is the goal to attaining some sense of financial freedom.

Of course, in those retirement years we might rely on a pension and social security to help pay the bills and get us by… by that time, if we have invested wisely, then we have dividend income to help supplement our monthly expenses and more money to travel and enjoy life.

If we could get to a point where we are able to save 40% or more income to further let our money work for us, the better off we will be.

More on this later…

Disclaimer: The content provided here is for information and entertainment purposes only. It’s not intended as an offer or solicitation to purchase any investment. And this material should not be taken as investment advice. Investing in equities is subject to extreme volatility.
Trade at your own risk.

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Carlos Rull

Carlos Rull is a musician living in the San Diego area. His interests include Yoga, Eastern Philosophy, Zen Buddhism, and Gardening. He plays drums, piano, and composes New Age & Ambient music, and his albums are available on iTunes and

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