How Investment Can Help You Tackle Inflation

As i said from the last POST, the best way to tackling down the living cost is learn how to invest your money instead of spending more into the inflation market.

First of all you should know how inflation can turn people's money smaller and smaller.It's easy to explain how inflation will lower down the value of money. Example, now you may buy 5 apples by $ 2 .Due to the inflation ,the $ 2 you own after five years may only buy 3 apples, because the value of money was dropped.

How Inflation Lowering Your Money's Value

Someone used to said inflation was like an invisible hand, it will took our money away without any awareness. For example, if you saved $ 1 million in the bank and the inflation rate for this year2011 is 4% , (don't worry!) the money inside your account is still $ 1 million , no one will steal it, but the value of the money will dropped 4% after the year.

What i mean ''dropped' can be expressed by this example. On 2011, you may wanted buy a Condo'
 worth $ 1 million but you didn't ; however when you decided on 2012, you need to pay extra $ 40,0000 because of the price or building material rose up. It's all due to inflation.Furthermore the value of money
will also drop when the government keep printing more money out into market to support economy. Every time they have prints the money,the currency will gone of its true value causes the purchasing power going down.

Lets see Robert Kiyosaki explain how inflation will kill our savings

Learn Investment to Tackle Inflation

So, how investment worked to tackle inflation?
It's pretty simple the step, just hard to work it out for most people.
Since the value of the money will '' dropped'' directly proportional with the inflation rate, what we could do is to find something to ''covers'' this hole dig by inflation, and this is the most basic way to learn.

We could find any viable and potential products in investment market to cover the hole. It means if the inflation rate is 4 % for the year and you are able to find an investment which rate of return is 10%, you can now earn 6%  real money into your pocket instead of deducted 4% from value of money.

Cool ?! It's sounds easy from the theory, but comes difficult when come to practical. People may lazy to find these investment,and may feel uncomfortable to put their money in risk.

Hedge Against Inflation

Hedge Against Inflation - you can protect yourself from the inflation , while making a big money from it too!

Smart investor will choose to buy commodities against the inflation like Oil, Gold, Silver, Land etc.
Today, there are many experts investor strongly recommended that Silver is the No 1 investment today to against inflation. However the price of Silver was quite a high value in the market today, about $ 35 an ounce.
We should take action when the price comes down. Investor believe that value of Silver will rise higher one day.

The  reason  why those investor like Silver is because Silver are mostly used in industries commodities
such as cell phone,computer and many things. But they thought most people only focusing on Gold market which has making it more intensive than Silver.

Let's see how great investor explain which hedge is the best against inflation.

*So lets start it together today to Run out from the rat race and achieve our Financial Freedom!


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Run Out From The Rat Race - Learn Investment

What will  you do to face the inflation which goes up day by day?

I read a  news yesterday that a minister tells his country's  people ,the inflation for this year will maintain high and unavoidable.It will again burden the cost of living for everyone.

The only Best way he said to solves the problem is,

       ''Upgrading one's skills and increasing one's salary is the only way to tackle cost of living.''

Well, is that right he said?!

Today, the no 1 issue for everyone is cost of living, people wake up early before the sunrise and go home sunset for the working.

Training may not a sexy subject but upgrading one's skills will really improve their social competitiveness .Generally speaking this is quite suitable for most people today.

However, is this the best way to tackle our living cost?

Answer : I absolutely don't think so.

Why? Do you think the inflation will goes down or disappear after you getting a new stronger working skill?

How about the inflation maintained and the rate goes even higher after few year? Does it means by the moment you need to learn and upgrade more and more skills until like a ROBOT?

The picture below will tells what gonna happened at the end.

It means in order to tackle the living cost, we keep upgrading working skills for our competitiveness ,at the end we will like the man in the picture ''Running in the circle'' over and over, also known as ''rat race''

So we know that we don't want to be work unstoppable like hell in our life, we want more time for enjoyment with family,friends or even from travel .

The best for me is to learn and upgrading skills. Skills that you can't find from any working skills training ;skills that will tackling down your living cost while able to turning your life to become rich . 

That is, INVESTMENT.

I strongly believe the only way to run out from the rat race is to learn investment.

So NOW you can think about how investment can makes you afford your cost of living ; how will it turning people to better life without struggling the money.

I will talk about how investment will increase our competitiveness to inflation on my next POST.

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Learn From the Book - Richdad Poor Dad

Many people know their dreams, and most people dreamed  to be rich.However there's only 20% of people in this world owned the 80% of assets from the world, and these 20% of people become the richest man in the world because they have the rich knowledge and put the ultimate efforts towards their dream.

I remember during the year of 2007, I met the incredible power of Robert Kiyosaki in a bookstore.

The first book i read from Richdad series was Richdad Poor Dad. (Chinese translated version).

I believe this is the best financial- knowledge book ever to builds up all the newbie's basis towards their financial ability.I found that other than learning to be financially freedom, i also learnt  the power of money and how to differentiate between Asset and Liabilities.

The reason why i picked up the book is because I have an ambition to become a businessman since i was studied my secondary.

This is making me a different boy from many friends who already planned to study into college and get a degree therefore work in the big company.

Finally i found that I couldn't get the knowledge needed neither from school nor my friends. I thought I need a book that could leads me to my dream and makes big money in real life.                                                

Idea of The Book

I had have read the book twice so far and i found every time i read, I got some inspiration and awareness of somethings.One of the beauty of the book is we're not necessary to have some accountancy knowledge, but Robert had tought  how you need to  look at your cashflow by financial statement.He gave us a brand new concept between Asset and Liabilities.

The most simple way to defines Asset and Liabilities is ,Asset is something  that can put money into your pocket while Liabilities is something that take out the money from your pocket.

For example, buying a house should considered as Liabilities and not an Asset, it's because if we by the house by mortgage, and only if one day we're not able afford the loan, it will be confiscated by the bank.

While only the cashflow from monthly rental could only considered as your Asset.

The Power of Investment

After the book , I had also read Richdad Guide to Investing, i found that other than making business and

financial planning, investment is also of of the important step to get financially freedom and rich. You should know the multiple return that you can own via investment. This so-called ''multiple return'' power also known
as ''Compound Interest'' has already been created by the greatest scientist Mr.Albert Einstein.

From the book ''Richdad Guide to Investing'', I learnt that there are actually 4 kinds of working territory exist in our society. Robert has divided these difference into 4 quadrant, where 20% of the richest people in this world    are belongs quadrant of ''Investor''.

Most of the people from ''EMPLOYEE'' are not rich because they have a job, and they work hard for their money. However, "INVESTOR'' knows that they will only get rich by let the ''Money Works For Them''.They knows that the only way to run out from the ''rat race'' (financial freedom) is to stop working for money.

Last but not least, I think the idea of the book may indirectly proportional to those who thought that: :

-  I should work hard for my company.
-  My paid is high, no necessary to take risk for investment.
-  Government & Company will caring my retirement pension.

-  Owning business is not easy.
- There is a risk for Investment.
-  Money in the bank is more safer than money in Stocks or Real Estate.
-  I don't want to learn Investment, taking too much time etc

Reasonably say it might be right for certain people, but the truth is, if you don't learn to manage your money from now on, your money will ''gone'' in one day. Today, money in the bank is not the best choice ever, the low interest given will not able to block  ocean of  ''economy crisis'' too. Moreover, the higher inflation rate which boost up almost yearly will also makes our money deteriorated.

Other the other hand, investing doesn't risk at all, it will only be ''risky'' when we try to ''invest ''blindly'', where this is the most common error by so-called  ''investor'' today.People who investing blindly means they invest an activities without the knowledge,they buy the stock only by the information by friends,broker, and never do any investigation or studied  the financial statement of that company.

People are doing so because they wanted earn fast money from investment. They did know the rules of buying low and selling high in stock market,but  they will insist to buy high and sell low in the stock market when they heard of any  uncertainty or news. Some people even put most of their property into the activities of speculation.


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