Tuesday, January 11, 2011

Why become an Investor?

I’ve been talking a lot about saving money and I noticed that readers might stop at that. So I decided to write about the great things about investing money.

Saving money is just the beginning while investing it is the process. The fruits of your money’s labor will be reap when you need it and only when you need it.

Reminders before investing:

Investing requires math.

Mind you, the mathematics involved in investing are very simple addition, subtraction, multiplication and division only. No need for advance mathematics. No need for calculus and trigonometry. MDAS will be fine.

Invest with a specific goal in mind.

Before investing be certain of the reason why you are going to invest. Will this be for the downpayment of your dream house? Will this be for the college education of your children? Will this be for a grand wedding you want to have? Any reason is valid as long as you have a particular reason.

We usually think of banks when it comes to saving money. Why? Because our parents taught us to do so. During the time of our parents banks give higher interest rates. Way higher than what they offer now. That’s why during their times banks are good investment facilities. But things change. Right now, banks themselves say that they are not investment facilities. So where will we put our money? Answer: Invest it!

If you put your 100,000php in a bank that gives 1% per annum how many years will it take to double? If you don’t have a calculator then do it in Excel. You’ll be amazed to find out that your money will become 200,000php after 72 years. Question: Will you still be alive after 72 years? I hope so. If you want your money to grow faster put it in an investment facility which earns higher than inflation rate. Averagely about 12% per annum. Now, using your calculator or your Excel find out how long will it take your 100,000php to become 200,000php. Amazingly, it would only take 6 years.

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