The money habits you live by can make or break your finances. Financial personality Vincent Chan shares many of the good and bad money habits that people should know about, but his recent TikTok video exposes a key mistake that can cost you millions.
“Saving money is not going to make you rich,” Chan said.
At first glance, the assertion challenges conventional advice about saving money instead of spending it. Chan isn’t telling people to blow through their money, but saving alone isn’t enough for building long-term wealth. Chan brings out the calculations and explains what you should be doing with your money instead.
Don’t Miss:
-
Maximize saving for your retirement and cut down on taxes: Schedule your free call with a financial advisor to start your financial journey – no cost, no obligation.
-
Be part of the next med-tech breakthrough for only $350 — 500+ surgeries already done with nView’s AI system.
You Lose Money If You Don’t Invest It
Chan explained in the TikTok video that if you save $300 per month for 40 years, you end up with $156,000 in your savings account. That’s not bad, and your account can be higher if you put the cash in a high-yield savings account.
However, inflation will reduce your money’s purchasing power. A $156,000 balance won’t be worth as much in 40 years as it’s worth today. That’s why Chan suggests investing your extra money, and he makes a compelling case.
If you took the same $300 per month and invested it in assets that produced a 10% annualized return, you would end up with $1.8 million after 40 years. That’s a seismic difference. While you have to take more risks as an investor, the payoff is far more rewarding if you pick good assets. Luckily, investors can choose from several mutual funds and ETFs that make investing more accessible and simpler.
Trending: Invest where it hurts — and help millions heal: Invest in Cytonics and help disrupt a $390B Big Pharma stronghold.
Set Up A Six-Month Emergency Fund First
Although investing your money can help you achieve your financial goals far quicker than if you only stick the money in your savings account, you shouldn’t rush to make regular investments. If you invest every dollar you make, you will have to pull money from your brokerage account to cover emergency expenses.
Instead of contending with that scenario, Chan suggests setting up a six-month emergency fund before contributing to a portfolio. That way, you know that you can cover surprise expenses without resorting to selling stocks.
You can calculate how much you need by multiplying your monthly expenses by six. Consumers can reduce their monthly expenses and make long-term changes to their budget to reduce how much they need in their savings accounts before they can invest. Putting money into a high-yield savings account can also help it reach six months’ worth of expenses sooner.
See Also: Are you rich? Here’s what Americans think you need to be considered wealthy.
Start Investing Instead Of Saving
Once you can cover six months’ worth of expenses, you should prioritize investing over saving. That’s the approach Chan suggests in his video, and it gives your money the opportunity to multiply in the long run. The stock market has produced many millionaires and is a popular avenue for retirement.
Investing after establishing an emergency fund also builds momentum. You may feel inspired when your portfolio goes up and strive to invest a higher percentage of each paycheck into your brokerage account. While stocks aren’t the only asset available, this asset class is one of the most liquid and accessible options. Real estate is another valuable asset class, but most properties require a lot of capital just for the down payment.
Saving money is good because it means you keep your expenses at bay. Investing is the next step that can set you up for long-term wealth.
Read Next:
-
If You’re Age 35, 50, or 60: Here’s How Much You Should Have Saved Vs. Invested By Now
-
Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.
Image: Shutterstock
“ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
-
APPLE (AAPL): Free Stock Analysis Report
-
TESLA (TSLA): Free Stock Analysis Report
This article Vincent Chan Shares A Lesson That Can Cost You $1 Million If You Get It Wrong: ‘Saving Money Is Not Going To Make You Rich’ originally appeared on Benzinga.com
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
