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Time Value of Money: How to Determine the Value of Money with Respect to Time

Money received today is more valuable than the same amount of money a year from now. It is essential to understand the relation between mone...

Napoleon Hill - Think and Grow Rich

Sharing this timeless book from Napoleon Hill. An excellent read for those who want to learn the Secret to Success. A guide on how to become successful and attain wealth. Napoleon Hills THIRTEEN PROVEN STEPS TO RICHES. Organized through 25 years of research, in collaboration with more than 500 distinguished men of great wealth, who proved by their own achievements that this philosophy is practical.

Savings Versus Investing

Which is riskier, placing your money in a piggy bank or investing it in the stock market? Whenever I talk to my friends about investing in the stock market most of them will tell me that they don't want to risk their money in an investment where in they might lose their money. After the continuous decline of the Philippine Stock market since its all time high last May of 2013 has made a lot of investors scared in investing on the stock market.

If you ask most Filipinos on how they could accumulate wealth, most of them will answering, placing their savings in a bank. The usually will tell you that placing your money in the bank is the safest way to achieving wealth since their savings are covered by the PDIC up to Php500,000. What most of them fail to realize is that their actually losing money by placing it in the bank. Although they are not losing physical money, they are losing the value of their money through the effects of inflation.

So is investing in the volatile stock market riskier than a bank savings account. To understand this more clearly we will explore the different ways of accumulating a million pesos by using different methods in achieving our goal. If a person with a salary of Php10,000 sets aside twenty percent of his income or Php 2,000 for investment how long will it take him to reach Php 1,000,000. We will also take into consideration the effect of inflation on the accumulated wealth once the goal of Php 1,000,000 is reached. The average inflation rate in the Philippines for the past 20 years is 6% per year.


MODE OF INVESTMENTINTEREST RATEDURATIONTOTAL INVESTMENTPURCHASING POWERPRICE INCREASE DUE TO INFLATION
PIGGY BANK0%41 YRS & 8 MO.PhP 1,000,000PhP 87,796.311039%
SAVINGS ACCOUNT0.03%39 YRS & 7 MO.PhP 950,000PhP 99,601.59904%
TIME DEPOSIT1%35 YRS.PhP 840,000PhP 130,039.01869%
LONG TERM TIME DEPOSIT5%23 YEARSPhP 552,000PhP 261,780.1282%
STOCK MARKET AVERAGE10%17 YEARSPhP 408,000PhP 371,747.21169%
STOCK MARKET 1986 - 201315.64%13 YEARSPhP 312,000PhP 469,483.57113%