Author Topic: Inflation & need for investment  (Read 4787 times)

Offline julez.lim

  • Companion of Honour
  • ***
  • Posts: 809
  • Where sharing is learning
Inflation & need for investment
« on: March 11, 2006, 11:46:32 AM »
Why do you NEED to invest? Do take note that the question is not, “Why do you WANT to invest?” What’s the difference here?
Here’s my answer to both questions above…
The reason I WANT to invest is to gain a strong, positive cash flow that is capable of providing me financial freedom in whatever market conditions.
The reason I NEED to invest is to cope with personal, family, Malaysia and world inflation rate.
Why is this so?

Malaysia’s inflation rate
I am living in Malaysia. Obviously, I need to ensure that my investments cater for my country’s inflation rate. Malaysia’s inflation rate is normally at about 2% to 4%.
Example: How much shall a cup of coffee cost in 20 years to come (future), now (present) and 20 years ago (past)?

World inflation rate
Because of globalization, the world is becoming a ‘small’ place. To a certain extent, we do need to consider this too. This would be more evident for constant vacationers.
Example: How much increase in a cup of coffee would be when you visited country X 20 years to come, now and 20 years to ago?

Personal inflation rate
The personal inflation rate can easily range from 6% to 20% or even more. This is the most worrying one as once you have maintained a certain standard of lifestyle, it is difficult to reduce the standard. Huge amount of ROI need to be obtained to ensure similar lifestyle in the future.
Example: 20 years ago, drinking a cup of coffee in a ‘kopitiam’. Now, drinking gourmet coffee in Starbucks or Coffee Bean. How about in the future?

Family inflation rate
Once you started a family, inflation rate would slowly rise. Inflation rate varies depending on your family lifestyle and goals.
Example: 40 years ago, a certificate/diploma is sufficient. Now, a degree is only sufficient. PhD is only sufficient in 40 years to come?

Please take note that different people have different reasons... The above are based on my point of view...

Offline julez.lim

  • Companion of Honour
  • ***
  • Posts: 809
  • Where sharing is learning
Re: Inflation & need for investment
« Reply #1 on: July 25, 2006, 05:52:19 PM »
"Malaysia’s accelerating inflation may not prompt the central bank to raise interest rates because higher prices have been caused by rising costs, not increased demand" -biz.thestar.com.my

This is definitely good news for ppl who have loans...

Offline Maxforce

  • Baronet
  • ****
  • Posts: 1,082
    • Fusion Trader
Re: Inflation & need for investment
« Reply #2 on: July 29, 2006, 10:01:30 AM »
Having a fulltime job with yearly increment of slightly more than inflation rate, I supposed that means I need NOT invest ar?
Hmm, interesting way of looking at it!?
Five points a day, keeps you out of harm's way.

Offline julez.lim

  • Companion of Honour
  • ***
  • Posts: 809
  • Where sharing is learning
Re: Inflation & need for investment
« Reply #3 on: August 07, 2006, 12:20:46 PM »
True. But that is based on the CPI form of inflation. But not ur personal inflation rate. Right?

Offline Maxforce

  • Baronet
  • ****
  • Posts: 1,082
    • Fusion Trader
Re: Inflation & need for investment
« Reply #4 on: August 07, 2006, 08:24:37 PM »
HUh? What do you mean personal inflation rate?
Five points a day, keeps you out of harm's way.

Offline DenLee

  • Baronet
  • ****
  • Posts: 1,323
  • Sharing and seeking financial wisdom
Re: Inflation & need for investment
« Reply #5 on: August 07, 2006, 08:36:09 PM »
Having a fulltime job with yearly increment of slightly more than inflation rate, I supposed that means I need NOT invest ar?
Hmm, interesting way of looking at it!?
The fulltime job does not guarantee security although it could win the inflation rate yearly.  So, the investment part is still relevant.
Regards,
Denlee

Offline Maxforce

  • Baronet
  • ****
  • Posts: 1,082
    • Fusion Trader
Re: Inflation & need for investment
« Reply #6 on: August 07, 2006, 09:05:10 PM »
security? nahlah...
if we all want security, we wont be investing right?
cos investing comes with none other than risk.
Five points a day, keeps you out of harm's way.

Offline DenLee

  • Baronet
  • ****
  • Posts: 1,323
  • Sharing and seeking financial wisdom
Re: Inflation & need for investment
« Reply #7 on: August 07, 2006, 09:22:03 PM »
What I meant is that there isn't job security as we all know, unless you own the business yourself.  That's why the investment part is still important.  Got it?
Regards,
Denlee

Offline booffett

  • Knight
  • **
  • Posts: 392
Re: Inflation & need for investment
« Reply #8 on: August 07, 2006, 10:02:12 PM »
Why do you NEED to invest? Do take note that the question is not, “Why do you WANT to invest?” What’s the difference here?
Here’s my answer to both questions above…
The reason I WANT to invest is to gain a strong, positive cash flow that is capable of providing me financial freedom in whatever market conditions.
The reason I NEED to invest is to cope with personal, family, Malaysia and world inflation rate.
Why is this so?

Malaysia’s inflation rate
I am living in Malaysia. Obviously, I need to ensure that my investments cater for my country’s inflation rate. Malaysia’s inflation rate is normally at about 2% to 4%.
Example: How much shall a cup of coffee cost in 20 years to come (future), now (present) and 20 years ago (past)?

World inflation rate
Because of globalization, the world is becoming a ‘small’ place. To a certain extent, we do need to consider this too. This would be more evident for constant vacationers.
Example: How much increase in a cup of coffee would be when you visited country X 20 years to come, now and 20 years to ago?

Personal inflation rate
The personal inflation rate can easily range from 6% to 20% or even more. This is the most worrying one as once you have maintained a certain standard of lifestyle, it is difficult to reduce the standard. Huge amount of ROI need to be obtained to ensure similar lifestyle in the future.
Example: 20 years ago, drinking a cup of coffee in a ‘kopitiam’. Now, drinking gourmet coffee in Starbucks or Coffee Bean. How about in the future?

Family inflation rate
Once you started a family, inflation rate would slowly rise. Inflation rate varies depending on your family lifestyle and goals.
Example: 40 years ago, a certificate/diploma is sufficient. Now, a degree is only sufficient. PhD is only sufficient in 40 years to come?

Please take note that different people have different reasons... The above are based on my point of view...

malaysia and world inflation managed by investment

personal and family inflation managed by EQ
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Maxforce

  • Baronet
  • ****
  • Posts: 1,082
    • Fusion Trader
Re: Inflation & need for investment
« Reply #9 on: August 07, 2006, 10:14:16 PM »
Still a job actually is safer than owning a business and investments.
But thats just technicality.
I invest to be rich. Not need to invest.
Five points a day, keeps you out of harm's way.

Offline julez.lim

  • Companion of Honour
  • ***
  • Posts: 809
  • Where sharing is learning
Re: Inflation & need for investment
« Reply #10 on: August 08, 2006, 05:43:13 PM »
Personal inflation is last time you drink kopi-o from mamak stall... Now u drink kopi-o from Starbucks...
And also your journey of single to couple to married to family and so on....

Offline Maxforce

  • Baronet
  • ****
  • Posts: 1,082
    • Fusion Trader
Re: Inflation & need for investment
« Reply #11 on: August 08, 2006, 07:16:31 PM »
which is controllable and should be covered by natural career progression.
Five points a day, keeps you out of harm's way.

Offline happyevan

  • Civilian
  • *
  • Posts: 10
Re: Inflation & need for investment
« Reply #12 on: November 24, 2006, 03:39:34 AM »
Choosing a business which needs low start up cost is also a good way to get financial freedom, additionally, the business income is also tax detuctible.

Building a business for passive income (http://www.profitwithabusiness.com/richdad.qi/)

Offline julez.lim

  • Companion of Honour
  • ***
  • Posts: 809
  • Where sharing is learning
Re: Inflation & need for investment
« Reply #13 on: November 24, 2006, 04:11:20 PM »
Business income tax deductible???
Could you please explain further? tiz is interesting...