Monday, February 04, 2008

Save in a period of inflation

A young person made this argument, "What is the point of saving when prices will increase next year. It is better to spend now."

Here are my views:

1. Do not spend on unnecessary and expensive things.
2. If more people curtail their spending, prices will come down
3. You can invest your savings in equities and properties, to earn a return that beats inflation
4. Invest in a low-cost fund to achieve diversification. It also allow you invest in small amounts.

Inflation is caused by too many people spending too much in the fear of increasing prices in the future.

Read this FAQ:
http://www.tankinlian.com/faq/savings.html
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5 comments:

Anonymous said...

Inflation happens when too much money chasing too few goods. The other way is too little money chasing too many goods. You get disinflation and if nothing is done it will lead to deflation. Basically it is about supply and demand of money
The central bank will intervene from time to time, eg like Fed FOMC on their monthly meeting to review the economic situation in various areas to do some balancing act.The job of the central bank is to take out or put in the money.
As for the man in the street these are few things you can do.
#. Cut back your spending and revise your lifestyle.
#2. source for alternatives
#3. earn more money
#4. invest in instruments that can
overcome inflation to give real
return.
#5. Don't jump from the pan into the fire by investing in endowment, single or regular.(from bank to revosave or Growth Policy)
#6.Consult an honest and competent adviser and not an insurance salesman.

February 04, 2008 10:23 AM
Priyadi said...

another view: bought item depreciates much faster than inflation.

February 04, 2008 3:01 PM
Anonymous said...

PM was quoted as saying the inflation could be higher than 5% this year.
The coming Budget could expect something for the poor and elderly and money distribution should not be seen as a solution.
So how? It is time that you review your insurance products you bought or products that some agents are promoting to you.
Let me share my view.
Avoid endowment, whole life and those guaranteed return structured products and those products that you don't understand.
Invest in equities, unit trust, ILPs to hedge against inflation.

February 04, 2008 9:19 PM
hongjun said...

But I am quite certain whatever goes up are not likely to come down. I don't remember seeing prices of hawker food e.g. Chicken rice, noodles, etc. going down after going up.

Correct me if I am wrong.

February 04, 2008 10:33 PM
Anonymous said...

Yes , you are right , what goes up doesn't come down unless it is at verge of bankruptcy

February 05, 2008 10:11 AM

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