The virtuous cycle in our personal finance

Conceptually, all of personal finance can be encapsulated in to three very simple concepts namely earnings, savings and investments. If these three elements work in harmony, they kick-start a virtuous cycle of never ending savings in our personal finances.


The virtuous cycle in our financial life can be initiated by generating savings from our earnings and investing them with great care over the long term. The earnings from the investments add to the savings which can then be reinvested to generate greater returns and thus starting a never ending virtuous cycle where returns from investments are re-invested which keep on building greater savings.

Creating a virtuous cycle in our personal finances

 One cant help but notice the smiley type of shape in the lower half of the chart. I guess, a virtuous cycle in our personal finances apart from the earnings should also generate lots of smileys.