Few years back, I was told that “You are losing money if you are not using it”! How coul it be?
This puzzle me and get me think hard. Are you able to comprehend this statement?
In the early days, I was thought that in order to be RICH, we need to save money. That means what we earn every month, we need to put aside and put into the bank to earn interest. In my parent time, there is no bank and only can put it under the pillow. Not able to earn any interest at all.
What it really mean is if we do not use the money wisely and just keep it under the pillow or bank, the money will devalued. Do you believed it? Ok, let’s examined below scenarios:
Scenario #1: Save the money and put under the pillow
Bank Interest = 0% per year since put under the pillow
Inflation rate = 7% per year
Duration = 10 years later
The value of RM10,000 is only worth = RM5,083 after 10 years later
Scenario #2: Save the money and put in the Bank
Bank Interest = 4% per year since put under the pillow
Inflation rate = 7% per year
Net rate = -3% since Inflation is greated than the Bank interest rate
Duration = 10 years later
The value of RM10,000 is only worth = RM7,440 after 10 years later.
Even you are saving money in the bank and do nothing, the value of the money still reducing thanks to the inflation rate.
So do you get it now, in today scenarios, it is no longer 1 + 1 (Saving Mode) but it is able how to multiply your money by investing into property. Something that is real and can increased in value due to inflation. Act wisely now.
