17. Swabeng Dilemma: The Power of Your Money (An Introduction to Inflation)

Have you noticed that when you were young, the cost of a certain product or service would only be this amount only to find out years later, the price will increase through the years?


I remember a couple of years back (circa mid-90's), a Burger McDo Meal back then costs only 39 pesos (which includes regular fries and drinks). Fast forward to today, now it costs double at 79 pesos (with the same inclusions).

Within the span of almost two decades, the price of the Burger McDo Meal has doubled given that the product is still the same.


Also, what I remember was when we use to do grocery a couple of years back (circa mid-90's again), You would be able to buy a cart full of groceries for around 2000 pesos. Fast Forward to today again, the same 2000 pesos won't even fill half of the cart (unless your willing to spend more than 2000 pesos).

Given the same span of years, the value of money decreased overtime and you'd notice by then prices of good increase on a time-basis (annually).


I would also remember whenever my Dad takes me to school before he goes to work, Prices of fuel (particularly Diesel) costs around 7.xx pesos per liter. His budget of 500 pesos for diesel would give him around 71.5 Liters that usually lasts a couple of days (given his route would be home-school-work-home).


However, how far can today's 500 pesos worth of diesel can take you? How long it could last given the same route my dad takes? Definitely a few days less that what it can cover a couple years back.


And even way back, I remember my parents telling me that they only receive this amount of money as allowance. Lets say a couple of cents back during their time. They would told me that a bottle of softdrink costs between 5 to 10 centavos and a whole fried chicken at Max's back costs 5 pesos (compared to 449 pesos today).

Imagine the increase from 5 pesos to 449 pesos would be a staggering 8880%. Yes that's 8880% and I kid you not.


Anyway, why costs of goods back then costs much lower than it is today.

16. Swabeng Dilemma: Beyond your Savings Accounts

Let's say that you were able to pay your debts, completed your emergency fund and learned some basics on Savings Accounts. What's next for you?


Would you just spend the incoming money thinking that your already settled and financially secured for the years to come?


Or would you thirst for more and try to learn as much financial knowledge as possible?


I'm sure you have did your part more than I do as of this time and I know somehow your Financial IQ has increased from zero to something that you could pass on to future generations.

As for me, I'm still thinking what to write next. Care to comment so you could give me an idea on what to share?

10A. Swabeng Thoughts: Message from COL Financial

I'd probably break (just once in a while) this habit of posting once every 5 days as I just receive a message from COL Founder and Chairman Mr Edward Lee today. 

It was a very insightful letter as he reminds us the value of not just investing in the Stock Market, but also investing in yourself to be Financially Educated. 

Here is the letter that he sent me (and probably thousands of COL Financial Clients). I hope you'd be able to learn from his letter.

Dear COL Financial Client,

One of our biggest concerns at COL Financial is that many people start investing or trading in the stock market, even though they don't understand how to do it. Worse, some people even invest in speculative issues with no understanding of fundamentals, turning investing into gambling as they get excited at the prospect of making a high return.

This is the reason why people lose money in the stock market, and it's also the reason why people lose faith in the stock market.

People enjoy the rush of earning money from something they don't understand how to do, not knowing that the boring, slowly-but-surely way of investing is what works out in the long term.

It's why we are always encouraging everyone, not just COL Clients, to attend and learn from our investing seminars. We want you to understand the rules of investing and trading, so you don't end up wasting your hard-earned money.

Aside from arming yourself with investing knowledge, I also encourage you to manage your risk.

Start by deciding how much money you are comfortable placing in the stock market. Then, rebalance your portfolio regularly, at least twice or thrice a year, so that the amount of money you have in the stock market is always an amount you're comfortable with.

Finally, I would like to remind you that what matters is how long you're in the market----- not timing the market. While we're not certain what will exactly happen in the stock market this 2017, know that the long-term growth story of our country is strong and intact.

Thus, regularly investing in the Philippine stock market will bring good returns in the long term. It may not be as exciting as following a hot stock tip, but as George Soros says, good investing is boring.

Sincerely,

Edward K. Lee
Founder & Chairman of COL Financial


Please note that I'll be sharing some of my knowledge about the Stock Market in the coming months as I just need to follow my outline in posting.