The benefits of investing
It maintains your buying power kahit may inflation
To best illustrate the value of investing, we have to talk about inflation.
Every year ay tumataas ang presyo ng goods and services dahil sa pagbabago ng ekonomiya. This increase in prices over a period of time is called inflation. Sa pagtaas ng inflation rate, nababawasan din ang value ng iyong pera.
Let’s say na ang price ng paborito mong burger in 2020 ay Php 100. Inflation rate rose to 4.2% in 2021, kaya ang price nito ay tumaas rin to Php 104.2.
Kung patuloy na tataas ang inflation rate by 4.2% taon-taon…
…by 2035 — which is 20 years from now — ang price ng burger mo ay Php 227.70 na. In short, halos half na lang ng burger ang mabibili ng Php 100 in 2035. Nakakalungkot, ‘di ba?
It’s best to have investments para masabayan ang pagtaas ng inflation rate (at pagmahal ng burger).
First, many investments earn higher interest than the 0.25-4% interest rate ng savings accounts. Compared to most savings accounts na fixed ang interest rate, the value of investments also change or increase.
It gets better if you’re an aggressive investor who earns dividends instead of interest. For example:
Nag-invest ka ng Php 10,000 sa stock market. Then, nag-save ka rin ng Php 10,000 in a savings account with 4% interest.
Ginalingan mo at nag-trade ka everyday sa stock market for 1 year. This resulted in your investment doubling to Php 20,000. Meanwhile, your savings increased to Php 10,400.
In this case, nalagpasan ng investment profits mo ang earnings ng iyong savings in the same amount of time.
Investments also earn compound interest
Second, investments take advantage of compound interest. It means na kumikita rin ng interest ang iyong investment earnings as time goes by. It’s a good way to prepare for long-term financial goals, such as retirement. So choose an investment an babagay sa iyong risk profile at goal timeline. Ito ay para mag-grow ang pera mo just in time to meet your investment goal.