Wednesday, January 28, 2009

A Letter Makes a Difference

What's the difference between investment and divestment? No, I'm not joking and this is not a trick question. A lot of people out there don't seem to know the difference and it's causing havoc in personal finances.

When you think of investment you need to think of income that comes in and stays in. investment is about money to be used in the future. Invested funds should be considered inviolable, not something you dip in to on a regular basis. Once you put money in to savings you should consider it invisible until way further down the road. And investments also bring in interest, another in that makes a difference in how we live.

Now what about divestment? Taking out money to meet regular expenses that has been put into savings towards a different specific goal or purpose is just plain dumb. That D is related to debt and deficit and delinquency and dearth. It's also related to unbridled desires. People who find themselves regularly dipping into savings have been deficient in planning a workable budget.

Who knew? The difference between financial health and financial disaster can be as simple as knowing the difference between an "i" and a "d."


Anonymous said...

That D is related to debt and deficit and delinquency and dirth.

Ummm, I hate to do this to an English teacher, but don't you mean "dearth" rather than "dirth"?


ProfK said...

Thanks for catching that--the perils of getting a posting up and leaving town without editing.