August 2017 – WELCOME TO CAPITAL OFFICE AUTOMATION

August 2017

Do we really need to be wealthy?

When I shared about what should we do to increase our net worth, there will be people that strongly dislike my idea. It makes me realize that there are still a group of people believe rich people are bad people and having a lot of money is actually a sin.

Personally, I don’t feel there is anything wrong with wealth accumulation. Being wealthy allow us to enjoy the life we want, do the things we like to do. Having money is not a sin, but using money to do bad things will be a sin.

Technically, we don’t need the money but we need what money can offer us. Money is power, it helps you to be able to do more, see more, learn more, own more and give money than if you don’t have the money. More money simply provides more choices.

Some people say it is our right to increase our wealth. If you do not pursue the right, you are remaining in the poverty. Having some money is simply not enough, it merely enables you to continue to live. To live the fullest, you need to have more money.

I’m more inclined to agree that acquiring wealth is our obligation rather than right. The fact remains that it is not possible to live a really complete or successful life without money. When you have money, you automatically have the choice to contribute and give back to the society. How would you be able to do it when you don’t even have enough for you own and your family? Hence, for all reasons, for our family, society, etc., we always need to make sure we do our best to be wealthy to reduce social problems and to help the society to become a better one.

How Long to Double Your Money?

This is an important question to be answered when we are doing our financial plan.

The duration required to double the money depends on the interest rate. The rule of 72 provides the answer to this.

The rule of 72 says that to find the number of years required to double your money at a given interest rate, you just divide 72 by the interest rate used. For example, if you want to know how long it will take to double your money at nine percent interest, divide 9 into 72 and get 8 years.

If an investor choose a very safe vehicle, i.e. Fixed Deposit, he will require more years to double his money and vice versa.

Considering that stock investments have returned roughly 10% over the last 100 years and investment grade bonds have returned roughly 6%, a portfolio that is divided evenly between the two should return about 8%. Dividing that expected return (8%) into 72 gives a portfolio that should double every nine years.

Due to the risks, one would not want to expose himself to the same investment vehicle. Hence, an effective plan for choosing the right vehicles and diversify your assets across a variety of investment classes to help protect against market ups and downs.

Start setting money aside for the future-one that will allow you to maintain your current lifestyle and is also consistent with your investment goals, risk tolerance and the amount of time you have to save.

Happy saving, happy investing!

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