Why People Who Save Relentlessly Keep Getting Poorer?
How much did that chicken-leg bento for lunch cost you today? If you said sixty or seventy dollars, your memory is still stuck in Taiwan ten years ago. Back then a proper meat-and-veggies meal cost that much; today any random bento shop charges at least NT120.
But has your salary doubled over those ten years?
For the vast majority of Taiwan’s salaried workers, paychecks have barely moved. Yet the purchasing power of the cash in your hands is being quietly eroded at 2% to 3% every single year. The one million dollars you saved a decade ago is probably worth less than half that in real terms today.
The root cause is the biggest loophole in the modern monetary system: ever since the U.S. dollar decoupled from the gold standard, governments around the world have been printing money. The more bills flood the system, the higher real-asset prices (stocks, real estate, gold) get bid up. Meanwhile, the cold digits sitting still in your bank account have become the heaviest invisible tax on savers.
Even more brutally, the bank’s own business model works by sucking in your deposits at a meager 1% interest, then lending that money out at 3% to 5% (or higher) to business owners and investors who need capital to expand. Every dollar you slave away to save is, in fact, the cheapest bottom-tier fuel in this financial game.
The rich take the money you deposited, buy assets, start companies, and hire you to work for them. Without realizing it, you become the free stepping stone for someone else’s class leap.
Inflation: That Invisible Giant Hand Quietly Pays Down the Rich Man’s Debt
Most ordinary people tense up the moment they hear the word “debt,” treating it like a ferocious beast. But look closely at the bosses of large publicly listed companies: how many of them carry tens of millions or even hundreds of millions in bank debt? Are they not terrified of defaulting?
The truth is they understand inflation’s destructive power better than anyone. Let’s run a quick thought experiment:
Suppose you take out a NT10 million principal. But does NT10 million buys today?
At a compounding 2% to 3% annual inflation rate, the real purchasing power of that NT$10 million three decades from now might collapse to just a few million in today’s terms. In other words, inflation has invisibly paid off most of your real debt for you.
This is the most subversive and perfectly legal wealth-transfer mechanism in finance: as long as the assets you invest in appreciate at a rate far exceeding the interest you pay, you have effectively borrowed the hand of inflation to wipe out your future debt.
Good Debt vs Bad Debt: The Debt the Poor Carry Is Eating Your Future
But not all debt works in your favor. Debt divides into good debt and bad debt, a core financial concept the wealthy class will never willingly share with you.
The poor and the middle class usually carry “bad debt,” the kind of toxic liability that keeps draining cash straight out of your pocket. For example:
- Brutally high credit card revolving interest (often 15% or above)
- Installment plans on designer handbags or imported cars that depreciate the moment you drive them off the lot
- Pure consumer loans that bring in zero additional cash flow
Money borrowed to feed short-term consumption cravings is the poison that keeps you poorer. As long as you carry any revolving balance above 10%, almost no legal, safe investment can reliably outperform that terrifying compounding cost.
The debt the rich take on, however, is almost always “good debt,” premium liabilities that pour money into your pocket on a continuous loop. For example: using a low-cost mortgage (around 2%) to buy a rental property that delivers a steady yield, with annual rental returns potentially hitting 4% to 5%. The spread in between is pure profit earned for you by the bank’s capital.
Even better, the one who makes your monthly mortgage payment is your tenant, faithfully wiring in rent on time. Two or three decades later, when the loan is fully paid off, you own a property almost entirely without using your own cash.
This is the legendary “financial leverage” strategy in finance: you don’t need to painfully save tens of millions to buy property. You can use the bank’s leverage to front-load that future wealth, today.
Tax Code Loopholes: The Rich Don’t Take a Salary, Yet Pay Less Tax
Beyond inflation and cash flow, the rich have one more critical reason to keep borrowing from banks: borrowed money, under the tax codes of most countries, is completely tax-free.
The salary you sweat to earn at your job is hit with income tax before it ever lands in your hands; the more you earn, the more they take. But if you use debt to generate cash flow, that money is accounted as a “liability” (because you owe it back in the future), and not counted as taxable income.
That is why many billionaire bosses of public companies simply don’t pay themselves a salary at all, drawing only a token NT$1 symbolic wage to completely sidestep punishing personal income tax.
Whenever they need cash to fund a lavish lifestyle or make their next investment, they pledge their company’s stock to the bank as collateral and borrow against it. They can spend freely, owe a single cent in tax, and in many jurisdictions the interest paid to the bank is itself tax-deductible, further slashing the tax bill on their other assets.
This is the highest form of legally dodging taxes inside the capital game, courtesy of the wealthy class gaming the rules at the foundation level.
What School Never Taught You: Why Do Our Elders Always Tell Us to Save?
At this point you might be stunned: if borrowing to invest carries this many hidden advantages, why do the elders around us and our school teachers never teach us about leverage and debt?
The reason is brutal: the education system we grew up in was built during the Industrial Revolution, designed to mass-produce obedient bottom-tier labor for large factories. Those workers are trained to behave, follow instructions, and dutifully sock away the money they earn. That way society runs smoothly, and factory owners and banks enjoy an endless supply of cheap capital.
If everyone were raised to understand financial leverage, to know how to use other people’s money to make money for themselves, who would still show up at a factory every day to tighten screws, or sit in an office grinding through overtime?
The belief that “saving is safe” is, at its core, a collective hypnosis the system deliberately cultivates to keep the bottom labor structure intact.
The Average Salary Worker’s 4-Step Leverage Playbook
Of course, the double-edged sword of borrowing to invest is absolutely loaded with risk, demanding both sharp financial IQ and rigorous risk control. Blindly following the crowd into leveraged bets on volatile stocks can easily leave you chasing tops and panic-selling bottoms, wiping out your capital and leaving you shackled to lifelong debt.
For an ordinary salary worker in Taiwan looking to safely take that first step while keeping risk under control, here are four moves to begin with:
Step One: Annihilate all bad debt immediately. Clear out credit card revolving balances and high-interest consumer loans in one decisive strike. This is the highest-returning “investment” you can make.
Step Two: Build a flawless personal credit score inside the banking system. Many people think never owning a credit card and going cash-only makes them the most creditworthy, but in the eyes of the Joint Credit Information Center, that profile is the “riskiest demographic,” because there is simply no repayment history to judge. The smart play is to responsibly apply for 1 to 2 credit cards, pay the full balance every month, never trigger revolving interest, and let time compound your score. That is what unlocks the lowest loan rates in the future.
Step Three: Treasure the stable job you have right now. Until you build a passive income large enough to cover your living expenses, your salary is your best weapon. The customers banks love lending to are salaried employees, civil servants, and teachers, anyone with a fixed monthly paycheck and a clear repayment source. Doing your current job well and growing your active income is the rock-solid foundation for expanding your financial leverage.
Step Four: Start learning and investing in quality assets with inflation-resistant potential. Whether it’s a well-located older apartment with strong rental yield, or broad-market index funds delivering stable long-term annualized returns (such as Taiwan’s 0050 or U.S. S&P 500 index funds). As long as the long-term compound annual growth rate of that asset reliably beats your borrowing cost, you are flawlessly executing the rich man’s borrowing mindset.
Closing: Stop Letting Your Money Sleep at the Bank
The bounty of any era always goes to the small minority who can see through the true nature of money and the underlying rules of the financial game. Personal finance is never just dry, boring number crunching; it is a deep branch of wealth psychology, a battle against your own fear and greed.
To truly leap across class lines and escape the daily grind of worrying about money usually only takes one decisive shift in your foundational wealth mindset.
Take a deep breath, calm down, and audit your real financial situation right now: is the debt on your back a terrible kind of bad debt ruthlessly siphoning cash out of your pocket, or is it premium good debt working for you day and night, pouring money back in?
If you are drowning in bad debt, draft a strict repayment plan today to wipe it out. If you carry no debt at all, congratulations, you are holding a clean, infinitely possible personal financial canvas. From today, learn to put your idle capital to work as your most loyal, fearless soldier, marching onto the capital battlefield to expand your territory.
If this hard-hitting breakdown of borrowing and inflation has helped reshape how you think about personal finance, please drop a comment telling me: which type of loan do you most want to prioritize paying off right now? Let’s break the vicious cycle of being busy-broke together.
This article involves financial and investment advice. Please evaluate your own situation and consult a professional financial advisor before acting.
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