Okay, you know how to save! You have limited the number of shoes and bags you buy. You even appreciate non-branded values. It’s all a matter of taste, anyway!
Your next question is how to invest what you save. To choose among your options, you need to understand that the value of money changes over time. What used to cost One Peso many years ago may cost Two Pesos today. This increase in cost is called “inflation.” Inflation is a universal phenomenon that happens in all countries and economies. We need to understand why our savings should earn at a rate higher than inflation. If you leave your money in a deposit where the interest is lower than inflation, your money is losing value every year. For example, if inflation is 6% every year and your money is earning only 1-5% per annum in your savings or time deposit, the value of your money is going down by 1-5% (6% minus the rate that you earn from your deposit) every year. In this case, the amount that you have saved will buy less and less over the years. Therefore, when you invest your money, you must remember that you must earn more than the inflation rate.
So now you want to know where you can invest your savings to earn more than inflation. There are many options nowadays. We will be talking about those options after we have covered the basics.
FRANCISCO J. COLAYCO is an entrepreneur, a venture developer and financial advisor. He has over 40 years of experience that covers service contracting in the Middle East, manufacturing, trading construction, shipbuilding, management consulting, banking and financial services. He is the Chairman of the Colayco Foundation for Education (CFE) and the author of bestsellers: Wealth Within Your Reach (2004 National Book Award for Business and Economics), Making Your Money Work (Nominated in 2005, National Book Awards Business and Economics), Pera Palaguin Workbook and Money for Kids. The books are available at National Bookstore, most other bookstores or directly from CFE. He joins our website blog to share with ordinary income earners, Overseas Filipino Workers (OFW) and students the simple principles to "Save what you earn and grow what you save." CFE conducts talks, seminars, and workshops. “Managing Personal Finances For The Future” a seminar-workshop developed in partnership with the Ateneo Graduate School of Business, Center for Continuing Education. June 21, 2008, Saturday, 9:00 am to 6:00 pm. For registration and inquiries, please call Marleth Calanog at 830-2050. CFE is also the producer of the PISObilities DVD series, available at your favorite audio-video shops in May 2008. Learn more about the advocacy at www.colaycofoundation.com, email info@colaycofoundation.com, via SMS +63917-8537333 or through (632)637-3741.
Piggy bank photo by Penny Matthews.
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