You’re missing the 0th step of Wealth Accumulation

I’m sure you’ve heard so many advices on how to become rich. No matter how the idea is structured, most of them say the same thing.

  1. Invest x% of your salary every month.
  2. Let it compound for a long span of time.
  3. Enjoy being a millionaire.

It all look very simple on paper, but when you’re 30 and still have $0 in savings, you start to wonder why you couldn’t do it.

You’ve read dozens of books on personal finances. You’ve cut down all of your spendings to the bare minimum. You’ve followed the advices to the letter but still you couldn’t do it.

Is there a secret ingredient that you might have missed?

As a matter of fact, there is.

The 0th step

I have also been in the same position as you are when I first started my job.

No matter how precisely the finances are planned, at the end of the month, you’re waiting for the next pay check. Months of hard earned savings are one car-breakdown away from being completely wiped. Your credit card bill grows every month without you even knowing. Believe me, I’ve been there.

It’s not because the financial advisers are wrong. The 3 steps I have mentioned earlier is absolutely correct and that is the surefire way for the riches. But there is a very important step 0 which most advisers miss or don’t emphasise much.

It is that — if you plan to invest x% of your salary, you need to strongly ensure that you can live off of the remaining. It’s not living as in “covering your monthly expenses”. You should be able to cover medical emergencies, vehicle repairs and any other expense (emergency or otherwise) using your remaining cash without even having to look at the investments ever.

If you are earning a decent salary, this might be very simple and obvious to you. But if your current salary is just enough to cover your expenses as is, this is not an easy ask.

If you set aside only your monthly expenses and invest everything else, you’ve essentially invested your emergency fund. You’re definitely going to need it back on a rainy day.

The issue is that now if you followed some sophisticated investment plan you’ve read from a top rated book and invest your emergency fund on, let’s say stock market, you’re going to have a very bad time. If you need the money back when the market is down, you’re going to make a huge loss. You’ve taken a step forward just to take two steps back.

So what’s the solution? how to take the 0th step to ensure your investments are not liquidated prematurely.


We’ll discuss a detailed financial plan on a different post with all of this included (so follow Little Grey Book to receive the notification). But right now, let’s focus on the matter at hand.

There are 2 solutions I can suggest if your current salary doesn’t allow you to invest. Note that the solution below assumes that you have taken all the necessary steps beforehand to minimise your expenses.

1. Invest in high liquid & steady growth products

So as we’ve learned, a part of your current investment comes from the money you should set aside for emergencies. That’s fine. Only thing is you should never invest that kind of money in high volatile products such as stocks or crypto currencies. You should explore those products only when you have a little more financial freedom and wiggle room.

Focus on high liquid and steady growth products which gives you the flexibility to exit anytime you need the money while enjoying the returns. And hopefully if you didn’t need the money, you can keep investing until you do. Few examples (sorted by liquidity) are,

  1. Savings Accounts
  2. Unit Trusts consisting 100% on one or few of the following,
  • Government Securities. Treasury Bills, Treasury Bonds and Repurchase Agreements
  • Bank Deposits
  • Corporate Debts
  • Commercial Papers
  • Asset Backed Securities
  1. Lower term Fixed deposits
  2. Treasury bills or lower term Treasury Notes

We won’t discuss or explore the risk and return of any of the above, as this blog is meant to provide some initiative for you to take a step in the right direction. Once done that, you will find more than enough resources online to know about each individual product above and anything else I have missed here as well.

2. Increase your earning potential

The above is a temporary patch to the problem. No matter how well you’ve invested your money, if you have to exit for some cough medicine, you won’t advance in your finances. To get to utilise the power of compounding as everyone suggests, you need to put serious money aside to be invested for long term.

Assuming you have reduced all of your expenses to the bare minimum, but still can’t set aside some amount for long term investment, there is only one solution to level the scale. You need to increase your income.

It’s easier said than done. I know. But that’s your only way out of the paycheque-to-paycheque death trap. Once you have enough income which exceeds your expenses, you can take your favourite investment book out and execute everything you learned.

Side hustles are a good addition to your income (assuming you will make sure that your job performance and your professional and personal growth are not affected by it). But, the major way I see you can increase your income is by gathering knowledge and capability in a high demand profession.

If you’re currently in a such profession, try to specialise as much as you can in areas that industry demands. Gather qualifications and capabilities and increase your value. Sooner or later, you’ll earn enough to match your value.

If you’re not in a high demand profession, either try to find a specialisation or a vertical that is in high demand, or leave your profession all together for a better one. There are many success stories I personally know, of people who moved to Software Engineering from various other practices, just because it’s paid more. Don’t be embraced to move to a different profession for the money. You’re essentially trying to get into a service that’s more valuable to the society. What’s wrong with that? That’s the foundation of capitalism.

Again, I’m not going to discuss this further than necessary. There are million and one ways to do it once you know what to do. You have to find a path that matches you in the general direction I’ve stated here.

It’s not easy to become rich. If it is, everyone would be able to do it. You need to lay down the correct plan and start working your butt off to build your future. I hope this blog post helped you to look at the plan in a different perspective if you were struggling a little. Take the 0th step and the next will be much easier.

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