There is a saying that “Persuasion is more effective than force” and while most of us would tend to agree with it, the trouble is the thin line that separates persuasion and manipulation. (the same thin line that separates caring and controlling) and the thing with manipulation is that it is usually done among people with intimate relationships, the most common is between parents and their children, and it runs both ways. Below are some expressions which I consider to be manipulative. I’m sure you’ve heard these before, either being said to you or you telling others at some point in your life. this compilation is my opinion based on my experience, I’ve added some comments to make it amusing (at least) hopefully you’ll enjoy reading even if you don’t agree with it. (and if you do-next time somebody tells you…)
1.) I LOVE YOU
This one I’m sure we all agree, win hands down, as one of the most manipulative expression of all time, it has been used, misused and abused, for selfish interest.
2.) THIS IS FOR YOUR OWN GOOD
Another expression that has been abused, and is all so familiar among kids, and while I don’t question the intention, there are times when we are intelligent enough to asses the situation honestly, and objectively, is it really for your own good or more for the one saying it?
3.)IF YOU REALLY CARE ABOUT…..
Your career, your studies, your…. etc. and of course my favorite, “if you really love me, you would”… (fill in the blanks)
4.) CAN YOU DO ME A FAVOR?
* When someone buttonholes you with this approach, beware! The use of this sentence is unfair; it’s blackmailing. The speaker traps the listener, who has to listen to the request or be rude. And in giving consent to listen the listener is placed in a dilemma by the word favor. He has to grant something against his own best interest, or to appear in an uncharitable light. Watch out for him.
and don’t you find it equally manipulative if not annoying when said in the vernacular? “Hanggyo lang kini kung mosugot ka”.
5.) IT’S ONLY A SUGGESTION
The most common opening for unsolicited advise, but let’s face it, even when we say that, we don’t admit, that deep inside, we expect our advise to be taken at face value. Maybe we should follow it up with- “TAKE NOTE WHO IS MAKING THE SUGGESTION”.
6.) IF YOU WANT TO SUCCEED YOU HAVE TO SACRIFICE
No I’m not saying this isn’t true because I subscribe to this wisdom, but not when you’re invited to a free Orientation seminar for a direct selling company, or an association/organization, and suddenly the seminar takes longer than originally scheduled and you have to excuse yourself because of your other obligations, or they will schedule another meeting which just happens to be in conflict with your other commitments, when organizers will suddenly lay that expression on you…how convenient.
*Peoplewatching; research briefs on human behavior. Academic Publishing Corp.
Saturday, November 21, 2009
Wednesday, November 18, 2009
PINOY HALLOWEEN
It’s Friday morning October 30, and we’re buying candles and flowers in order to avoid the rush hour crowd on Saturday, in preparation of All Saints and All Souls day, like most Filipinos. I grew up in that tradition, in my younger days, it was to visit the grave of our departed grandparents, and now my late mom. The routine has always been, to go to the memorial park early in the evening, light up some candles, pray, eat our dinner there, do some bonding with old family friends and relatives, who are likewise in the cemetery for the same reasons, and go home by late nightfall, it wasn’t that crowded yet. But lately a lot of things have changed, and not just the crowd, we now go early in the morning, (more to find a good parking space) pitch our tent, (yup) eat lunch and dinner there, and stay late in the night, or like others, spend the night there. Some memorial parks actually go as far as put up a Halloween festival, with dance contests, talent shows, complete with food concessionaires, and even those selling masks, and a fireworks display, late in the evening, this is probably to entice more clients, to have their umm resting place there.
But wait, isn’t Halloween an American tradition? That maybe true, however, since it just happens to precede All Saints and All Souls day, a Filipino tradition, in which Filipinos honour and remember their dead, it’s not surprising that Filipinos have adopted it as well (among other things American). And with our penchant to make every non-working holiday a celebration, it’s not surprising we have adopted and celebrated someone else’s as well.
Come Nov. 01 (All Saints) and Nov. 02), Filipinos go to the cemetery to gather, and remember their dearly departed, it’s a family affair, and for once, it’s not just the sadness of losing and missing a loved one, but a celebration of seeing those who are still alive albeit already living in other places or some other country, who have come back to visit as well. And since Filipinos traditionally celebrate it at the cemetery, Halloween gets an authentic boost when we celebrate it there as well.
(above) It’s not summer camp. It's All Saints Day and they're preparing to spend the night here at the cemetery, just like most Filipinos on Nov. 01 and 02. It’s a family affair, so everyone is in for a treat.
Aren’t day supposed to come out only at night?
The, (L-R) aswang, white lady, and kapre, creatures of Philippine folklore that have made our Halloween distinctively pinoy, no witches and broomsticks here.
Creatures whose world has turned upside-down.
not only can they get to come out at daytime, they get own the damn road as well
When you hold a Halloween dance contest on All Saints day-at the cemetery, you can be sure, the spirit of Michael Jackson lives on.
It’s a non-working holiday, and in the middle of the semestral break, come Nov.01 and 02, everyone’s’ dying to go to the cemetery
Lest we forget... it’s a time to remember our loved ones, who have gone ahead of us.
Bwa ha ha ha ha
But wait, isn’t Halloween an American tradition? That maybe true, however, since it just happens to precede All Saints and All Souls day, a Filipino tradition, in which Filipinos honour and remember their dead, it’s not surprising that Filipinos have adopted it as well (among other things American). And with our penchant to make every non-working holiday a celebration, it’s not surprising we have adopted and celebrated someone else’s as well.
Come Nov. 01 (All Saints) and Nov. 02), Filipinos go to the cemetery to gather, and remember their dearly departed, it’s a family affair, and for once, it’s not just the sadness of losing and missing a loved one, but a celebration of seeing those who are still alive albeit already living in other places or some other country, who have come back to visit as well. And since Filipinos traditionally celebrate it at the cemetery, Halloween gets an authentic boost when we celebrate it there as well.
(above) It’s not summer camp. It's All Saints Day and they're preparing to spend the night here at the cemetery, just like most Filipinos on Nov. 01 and 02. It’s a family affair, so everyone is in for a treat.
Aren’t day supposed to come out only at night?
The, (L-R) aswang, white lady, and kapre, creatures of Philippine folklore that have made our Halloween distinctively pinoy, no witches and broomsticks here.
Creatures whose world has turned upside-down.
not only can they get to come out at daytime, they get own the damn road as well
When you hold a Halloween dance contest on All Saints day-at the cemetery, you can be sure, the spirit of Michael Jackson lives on.
It’s a non-working holiday, and in the middle of the semestral break, come Nov.01 and 02, everyone’s’ dying to go to the cemetery
Lest we forget... it’s a time to remember our loved ones, who have gone ahead of us.
Bwa ha ha ha ha
Saturday, October 31, 2009
THE PARADOX OF WISDOM
1.) IT IS SAID: First impression is lasting
BUT: Do not judge a book by its cover.
2.) IT IS SAID: The squeaky wheel gets oiled.
BUT: The nail that sticks out gets hammered.
3.) WE ALWAYS SAY: I will cross my bridge when I get there.
BUT ITS BETTER TO: Dig your well before you’re thirsty
4. IT IS SAID: Only fools go where Angels fear to tread.
BUT: The biggest risk of all, is to take none at all.
5.) IT IS SAID: Fortune favours the strong
HOWEVER: And the meek shall inherit the earth.
6.) IT IS SAID: Absence makes the heart grow fonder.
BUT: Out of sight, out of mind.
7.)IT IS SAID: He who hesitates is lost
BUT REMEMBER: Look before you leap.
8.) IT IS SAID: Two heads are better than one.
BUT: Too many cooks will spoil the broth.
9.) IT IS SAID: An ounce of prevention is better than a pound of cure.
BUT: No Pain-No Gain
10.) THEY SAY: The Pen is mightier than the sword
BUT : Action speaks louder than words
PS: Look who’s talking?
THOSE WHO SPEAK
“Those who speak now know nothing;
Those who know are silent.”
This word, as I am told,
Were spoken by Lao-tzu
If we are to believe that Lao-tzu
Was himself one knew,
How come that he wrote a book of five thousand
words?
BUT: Do not judge a book by its cover.
2.) IT IS SAID: The squeaky wheel gets oiled.
BUT: The nail that sticks out gets hammered.
3.) WE ALWAYS SAY: I will cross my bridge when I get there.
BUT ITS BETTER TO: Dig your well before you’re thirsty
4. IT IS SAID: Only fools go where Angels fear to tread.
BUT: The biggest risk of all, is to take none at all.
5.) IT IS SAID: Fortune favours the strong
HOWEVER: And the meek shall inherit the earth.
6.) IT IS SAID: Absence makes the heart grow fonder.
BUT: Out of sight, out of mind.
7.)IT IS SAID: He who hesitates is lost
BUT REMEMBER: Look before you leap.
8.) IT IS SAID: Two heads are better than one.
BUT: Too many cooks will spoil the broth.
9.) IT IS SAID: An ounce of prevention is better than a pound of cure.
BUT: No Pain-No Gain
10.) THEY SAY: The Pen is mightier than the sword
BUT : Action speaks louder than words
PS: Look who’s talking?
THOSE WHO SPEAK
“Those who speak now know nothing;
Those who know are silent.”
This word, as I am told,
Were spoken by Lao-tzu
If we are to believe that Lao-tzu
Was himself one knew,
How come that he wrote a book of five thousand
words?
Friday, October 16, 2009
THE 10 SIGNS OF AGING FOR MEN
1.) You are now starting to wear reading glasses
2.) When it comes to music, sports, gimmicks, and even fashion, you think the
70’s and the 80’s rule.
3.) Your favourite music collection is mostly made up of vinyls (and in
fairness, it was been proven that vinyl has superior sound quality than CD’s)
4.) You no longer like wearing printed t-shirts (you prefer plain colored ones)
5.) Sticking racing stickers on your car or motorbike is in bad taste.
6.) You now frown when young women wear sexy clothes inside the church.
7.) Your average annual beer consumption is declining.
8.) Forget new age, your idea of a chill out music is still Pink Floyd’s “Dark
Side of the Moon” album.
9.) Your parents, teachers and especially the principal were right all along-
freedom goes hand in hand with responsibilities.
10.) You just come to realise, that despite its flaws, the system actually
works, and more than that-you are now part of it!
2.) When it comes to music, sports, gimmicks, and even fashion, you think the
70’s and the 80’s rule.
3.) Your favourite music collection is mostly made up of vinyls (and in
fairness, it was been proven that vinyl has superior sound quality than CD’s)
4.) You no longer like wearing printed t-shirts (you prefer plain colored ones)
5.) Sticking racing stickers on your car or motorbike is in bad taste.
6.) You now frown when young women wear sexy clothes inside the church.
7.) Your average annual beer consumption is declining.
8.) Forget new age, your idea of a chill out music is still Pink Floyd’s “Dark
Side of the Moon” album.
9.) Your parents, teachers and especially the principal were right all along-
freedom goes hand in hand with responsibilities.
10.) You just come to realise, that despite its flaws, the system actually
works, and more than that-you are now part of it!
Saturday, August 29, 2009
INVESTMENT PROPSAL: What should I do to marry a rich guy?
A young and pretty lady posted this on a popular forum:
I'm going to be honest of what I'm going to say here. I'm 25 this year. I'm very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above. You might say that I'm greedy, but an annual salary of $1M is considered only as middle class in New York . My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married? I wanted to ask: what should I do to marry rich persons like you? Among those I've dated, the richest is $250k annual income, and it seems that this is my upper limit. If someone is going to move into high cost residential area on the west of New York City Garden ( ? ) , $250k annual income is not enough.
I'm here humbly to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, gym)
2) Which age group should I target?
3) Why most wives of the rich men is only average-looking? I've met a few girls who don’t have looks and are not interesting, but they are able to marry rich guys
4) How do you decide who can be your wife, and who can only be your girlfriend? (my target now is to get married)
Ms. Pretty
Awesome reply:
Dear Ms.. Pretty,
I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyse your situation as a professional investor. My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I'm not wasting time here. From the standpoint of a business person, it is a bad decision to marry you.. The answer is very simple, so let me explain.
Put the details aside, what you're trying to do is an exchange of 'beauty' and 'money': Person A provides beauty, and Person B pays for it, fair and square. However, there's a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can't be prettier year after year.. Hence from the viewpoint of economics, I am an appreciation asset, and you are a depreciation asset. It's not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worried 10 years later.
By the terms we use in Wall Street, every trading has a position, dating with you is also a 'trading position'. If the trade value dropped we will sell it and it is not a good idea to keep it for long term - same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or 'leased'. Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. And by the way, you could make yourself to become a rich person with $500k annual income. This has better chance than finding a rich fool.
Hope this reply helps. If you are interested in 'leasing' services, do contact me...
signed,
CEO J.P.. Morgan
DEFINITION OF FINANCIAL TERMS (POST SUB-PRIME)
BULL MARKET – A random market movement causing
an investor to mistake himself for a financial genius
BEAR MARKET – a 6 to 18 month period when the
kids get no allowance, the wife gets no jewellery, and the husband gets no
sex.
VALUE INVESTING – The art of buying low and selling lower..
P/E RATIO – The percentage of investors wetting
their pants as the market keeps crashing.
BROKER - What my financial planner has made me.
STANDARD & POOR – Your life in a nutshell.
STOCK ANALYST – Idiot who just downgraded your stock.
STOCK SPLIT – When your ex-wife and her lawyer
split your assets equally between themselves.
MARKET CORRECTION – The Day after you buy stocks..
CASH FLOW – The movement our money makes as it disappears down the
toilet.
WINDOWS – What you jump out of when you're the
sucker who invested in PIP, Franc Swiss, and Legacy Plans on the same year
INSTITUTIONAL INVESTOR – Past year investor
who's now locked up in a nuthouse.
PROFIT – an archaic word no longer in use.
SOURCE: Forwarded email
I'm going to be honest of what I'm going to say here. I'm 25 this year. I'm very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above. You might say that I'm greedy, but an annual salary of $1M is considered only as middle class in New York . My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married? I wanted to ask: what should I do to marry rich persons like you? Among those I've dated, the richest is $250k annual income, and it seems that this is my upper limit. If someone is going to move into high cost residential area on the west of New York City Garden ( ? ) , $250k annual income is not enough.
I'm here humbly to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, gym)
2) Which age group should I target?
3) Why most wives of the rich men is only average-looking? I've met a few girls who don’t have looks and are not interesting, but they are able to marry rich guys
4) How do you decide who can be your wife, and who can only be your girlfriend? (my target now is to get married)
Ms. Pretty
Awesome reply:
Dear Ms.. Pretty,
I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyse your situation as a professional investor. My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I'm not wasting time here. From the standpoint of a business person, it is a bad decision to marry you.. The answer is very simple, so let me explain.
Put the details aside, what you're trying to do is an exchange of 'beauty' and 'money': Person A provides beauty, and Person B pays for it, fair and square. However, there's a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can't be prettier year after year.. Hence from the viewpoint of economics, I am an appreciation asset, and you are a depreciation asset. It's not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worried 10 years later.
By the terms we use in Wall Street, every trading has a position, dating with you is also a 'trading position'. If the trade value dropped we will sell it and it is not a good idea to keep it for long term - same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or 'leased'. Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. And by the way, you could make yourself to become a rich person with $500k annual income. This has better chance than finding a rich fool.
Hope this reply helps. If you are interested in 'leasing' services, do contact me...
signed,
CEO J.P.. Morgan
DEFINITION OF FINANCIAL TERMS (POST SUB-PRIME)
BULL MARKET – A random market movement causing
an investor to mistake himself for a financial genius
BEAR MARKET – a 6 to 18 month period when the
kids get no allowance, the wife gets no jewellery, and the husband gets no
sex.
VALUE INVESTING – The art of buying low and selling lower..
P/E RATIO – The percentage of investors wetting
their pants as the market keeps crashing.
BROKER - What my financial planner has made me.
STANDARD & POOR – Your life in a nutshell.
STOCK ANALYST – Idiot who just downgraded your stock.
STOCK SPLIT – When your ex-wife and her lawyer
split your assets equally between themselves.
MARKET CORRECTION – The Day after you buy stocks..
CASH FLOW – The movement our money makes as it disappears down the
toilet.
WINDOWS – What you jump out of when you're the
sucker who invested in PIP, Franc Swiss, and Legacy Plans on the same year
INSTITUTIONAL INVESTOR – Past year investor
who's now locked up in a nuthouse.
PROFIT – an archaic word no longer in use.
SOURCE: Forwarded email
Friday, August 21, 2009
Some common Investment Terms simplified
Asset allocation refers to the method of deciding how much money to invest
And in which investment vehicle (i.e. stocks, bonds, mutual funds etc.)
Diversification Based on the wisdom of “not putting all your eggs in 1 basket” it is a strategy where an investor puts money in several kinds of businesses or tools to protect his investments in case the market suffers a downturn. This could be a mix of shares in the stock market, mutual fund, or government securities like bonds and treasury bills. To illustrate a point, going back to basics (of investment) If your risk profile is conservative, supposedly so should your investments be, but because the lesser the risk-the lesser returns, you could also be losing out on potential income offered by higher instruments. The solution: Diversify-use 2 or more tools to achieve a common goal, say child’s future education, you start out with safer (but lower income) savings like a typical educational plan, then as your income increases, you compliment it with a higher return (but riskier) type of instrument, like Mutual Funds, to compliment the (the low income)educational plan, or if you’re the aggressive type, you start with the Mutual Funds, then back it up with an educational plan, as a back up support. (this is just an example to illustrate a point)
Portfolio A person’s investment in several instruments like stocks, equities, mutual funds, bonds, treasury notes, etc. consists of his portfolio – a term which refers to the investment collectively.
Fund manager A person who advises or helps manage an investor’s portfolio. Some financial institutions provide professional fund managers to clients as part of their investment package.
Liquidity refers to how fast investments or other assets can be converted to cash. Investments in the stock market and mutual funds are normally considered liquid because they can be easily sold to the stockbroker or issuer, while real state investments and jewelries take a while to dispose of .
Principal is the amount an investor originally uses invest, the premium he paid, or to buy securities or stock shares. It can also mean the amount a borrower applies for a loan, It also refers to the value where simple interest rates are computed, and so is the amount paid for the issuer of treasury notes and bills (usually the government) upon maturity.
Return on Investment refers to how long it takes to recover the amount of money an investor has put into a business or other money-making vehicles – higher returns at lesser time is ideal.
Term refers to the length of time your money has to be tied up to a deposit account or investment vehicle, which could either be for short, medium or long term. Terms could indicate the investment’s yield(interest or earnings – e.g., for bonds longer terms may offer higher interest rates) while pre termination (the withdrawal ,closing, and redemption of the investment before the agreed specified term, time deposits, and mutual funds for example ) may require you to pay a certain amount as fee or penalty.
Inflation refers to the increase in the prices of commodities in relation to the capacity of people to purchase such goods, to illustrate, say, if we had a 10% annual inflation, that means, that the same basket of assorted groceries that you bought for P100 last year will now cost you P110 – it is said that money may no longer be able to buy in the future what it can afford today. A Higher inflation rate diminishes the ability of the investment to yield higher returns. if the inflation rate is at 6-7% and your investment is earning you less than that, you’re basically losing money.
The Power of Compounding
One of the things you need to know about building wealth is the power of making regular periodic investments and reinvesting rather than spending the profits.
The results you will with this discipline are surprising. Let’s say you start with nothing, and decide putting P5000 of your income into an investment account every month, and you commit not to touch your money in investment. That means you can’t take withdraw any funds until you’ve reached your long-term goal. Based on an 11.8%, interest on average, annually over the past 10 years. If you achieve that same return, you’d have P1,140,000 after 10 years. But it gets better. You’ll have P4,860,000 if you stick with the plan for 20 years and a cool P17 million in 30 years.
The process described here is a combination of two powerful investing strategies: compounding and peso-cost averaging.
Compounding is simply reinvesting rather than spending your profits. By doing that; you capture the future returns on your reinvested profits as well as on your original investments.
Cost averaging was actually adopted from gambling, (in Las Vegas) it goes like this-If you had a $1000 to gamble in a casino, you should only bet $1 dollar per deal, that way you increase your odds a thousand times, but you should never gamble more than a dollar even if you keep winning, and stop when you’ve already bet a thousand times, (the original capital you brought in-it also involves self discipline) that way, if you win, you’ll end up with more than $1000 but if you loose, you won’t loose more than a thousand. Taken in the financial context of investing it means that you buy stocks at the same amount at regular intervals, fixed monthly investment buys more shares of a mutual fund or stock when prices are low, and fewer shares when prices are high. For instance, if you were investing P5000, you’d get 500 shares if a stock were trading at P10, but roughly 555 shares if it dropped to P9. Done regularly on the long run, it drives the average cost down, so you make more money.
Discipline Required. The hardest part of implementing these strategies is making the regular monthly investments. It’s easy to procrastinate adding to your account if the market is down or if you could use the cash for something else.
The best way to make sure that the regular investments happen is to automatically deduct a fixed amount from your monthly salary and directly invest it in a mutual fund account every month.
SOURCE:Inquirer.net, "Take Charge of your Money".
And in which investment vehicle (i.e. stocks, bonds, mutual funds etc.)
Diversification Based on the wisdom of “not putting all your eggs in 1 basket” it is a strategy where an investor puts money in several kinds of businesses or tools to protect his investments in case the market suffers a downturn. This could be a mix of shares in the stock market, mutual fund, or government securities like bonds and treasury bills. To illustrate a point, going back to basics (of investment) If your risk profile is conservative, supposedly so should your investments be, but because the lesser the risk-the lesser returns, you could also be losing out on potential income offered by higher instruments. The solution: Diversify-use 2 or more tools to achieve a common goal, say child’s future education, you start out with safer (but lower income) savings like a typical educational plan, then as your income increases, you compliment it with a higher return (but riskier) type of instrument, like Mutual Funds, to compliment the (the low income)educational plan, or if you’re the aggressive type, you start with the Mutual Funds, then back it up with an educational plan, as a back up support. (this is just an example to illustrate a point)
Portfolio A person’s investment in several instruments like stocks, equities, mutual funds, bonds, treasury notes, etc. consists of his portfolio – a term which refers to the investment collectively.
Fund manager A person who advises or helps manage an investor’s portfolio. Some financial institutions provide professional fund managers to clients as part of their investment package.
Liquidity refers to how fast investments or other assets can be converted to cash. Investments in the stock market and mutual funds are normally considered liquid because they can be easily sold to the stockbroker or issuer, while real state investments and jewelries take a while to dispose of .
Principal is the amount an investor originally uses invest, the premium he paid, or to buy securities or stock shares. It can also mean the amount a borrower applies for a loan, It also refers to the value where simple interest rates are computed, and so is the amount paid for the issuer of treasury notes and bills (usually the government) upon maturity.
Return on Investment refers to how long it takes to recover the amount of money an investor has put into a business or other money-making vehicles – higher returns at lesser time is ideal.
Term refers to the length of time your money has to be tied up to a deposit account or investment vehicle, which could either be for short, medium or long term. Terms could indicate the investment’s yield(interest or earnings – e.g., for bonds longer terms may offer higher interest rates) while pre termination (the withdrawal ,closing, and redemption of the investment before the agreed specified term, time deposits, and mutual funds for example ) may require you to pay a certain amount as fee or penalty.
Inflation refers to the increase in the prices of commodities in relation to the capacity of people to purchase such goods, to illustrate, say, if we had a 10% annual inflation, that means, that the same basket of assorted groceries that you bought for P100 last year will now cost you P110 – it is said that money may no longer be able to buy in the future what it can afford today. A Higher inflation rate diminishes the ability of the investment to yield higher returns. if the inflation rate is at 6-7% and your investment is earning you less than that, you’re basically losing money.
The Power of Compounding
One of the things you need to know about building wealth is the power of making regular periodic investments and reinvesting rather than spending the profits.
The results you will with this discipline are surprising. Let’s say you start with nothing, and decide putting P5000 of your income into an investment account every month, and you commit not to touch your money in investment. That means you can’t take withdraw any funds until you’ve reached your long-term goal. Based on an 11.8%, interest on average, annually over the past 10 years. If you achieve that same return, you’d have P1,140,000 after 10 years. But it gets better. You’ll have P4,860,000 if you stick with the plan for 20 years and a cool P17 million in 30 years.
The process described here is a combination of two powerful investing strategies: compounding and peso-cost averaging.
Compounding is simply reinvesting rather than spending your profits. By doing that; you capture the future returns on your reinvested profits as well as on your original investments.
Cost averaging was actually adopted from gambling, (in Las Vegas) it goes like this-If you had a $1000 to gamble in a casino, you should only bet $1 dollar per deal, that way you increase your odds a thousand times, but you should never gamble more than a dollar even if you keep winning, and stop when you’ve already bet a thousand times, (the original capital you brought in-it also involves self discipline) that way, if you win, you’ll end up with more than $1000 but if you loose, you won’t loose more than a thousand. Taken in the financial context of investing it means that you buy stocks at the same amount at regular intervals, fixed monthly investment buys more shares of a mutual fund or stock when prices are low, and fewer shares when prices are high. For instance, if you were investing P5000, you’d get 500 shares if a stock were trading at P10, but roughly 555 shares if it dropped to P9. Done regularly on the long run, it drives the average cost down, so you make more money.
Discipline Required. The hardest part of implementing these strategies is making the regular monthly investments. It’s easy to procrastinate adding to your account if the market is down or if you could use the cash for something else.
The best way to make sure that the regular investments happen is to automatically deduct a fixed amount from your monthly salary and directly invest it in a mutual fund account every month.
SOURCE:Inquirer.net, "Take Charge of your Money".
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