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Chicken or Egg? - by Auntyby Aunty
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Chicken or Egg?

Here’s a thought for you that can hopefully change your mindset about financial well being and action:

2013-03-31_18-09-30Imagine your savings, home equity, retirement funds as being eggs.  If you have your funds in stocks or mutual funds sitting in accounts, they are also eggs.  As a matter of fact, people actually call these their nest egg!  When you need to draw out from these eggs, you will have to crack them or take a bite (if they are hard boiled.)  You then end up with less egg in your nest of financial options.  This goes on until your nest egg is gone.

In money terms, you will be using up your funds each time you make a withdrawal unless your earnings or value increases by more than the amount withdrawn.  You might be able to survive if you have a huge amount of funds to last a good many years, or the amount you withdraw is piddly enough to never diminish the principal.

We have taken our egg (specifically our home equity) and bought a live chicken that lays eggs.  The eggs in our nest accumulate because the chicken keeps laying them eggs.  Now, when we need to draw out funds, we take it from the pile of eggs and leave the chicken alone.  We can even buy more chickens with our ever growing pile of eggs!

In money terms, we used our funds to buy an asset (investment property) that pays out cash flowing rents (eggs).  That cash flow pays our bills and will fund our retirement.  The asset (chicken) remains intact.

That is sweet chicken!

About The Author

Aunty is a new senior citizen and loving this phase of her life. Less responsibilities, less fear of being weird, able to do more of the things that I want to do! Older, yes, slower, yes, but life is even more wonderful in my golden years and I look forward to even goldener ones.

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