May 25, 2014

Cory Diary : No Earning Money is Losing Money

Continued from my earlier Damn to Saver article, with the continued QE though tapered and expectation of long term low interest rates, high inflation will continue to stay with us one way or the other. Nevermind about the statistics from any governments.


Compounded 2.5% inflation across 5 years,
Years Principal Inflation Rate Purchasing Power Principal Reduction
5 $10,000 -2.50% $8,811 -11.89%

Compounded 4% inflation across 5 years,
Years Principal Inflation Rate Purchasing Power Principal Reduction
5 $10,000 -4.00% $8,154 -18.46%

what this means are you need to deduct probably 20% profits you made from the past 5 years just to break even after fixed interest returns are taken into consideration. So don't start patting yourself on the back yet till you are earning way above it.

For those who has Stayed on the sideline Mainly, good luck to you !

Cory
25th May 2014

6 comments:

  1. Totally agreed with you and I am one of those staying in the side line for too long previously ;-)

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  2. There's a camp for warchest. I say do everything you stomach can stand.

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  3. Well said! Am learning to invest at the half century plus mark .... hopefully it is not too late..!

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  4. Well the goal is Awareness. Don't trade an arm or leg on it's conclusion though ! We have to do our own investment decision and be accountable for them. The Market is not low hanging fruits, neither do staying out is.

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  5. I keep some warchest money in case market crash (which happens perhaps every 5 years?) and can pick up bargains.
    Then anything above the warchest amount I invest in case market still going up but I use trading platforms that allow me to put stop loss (which when stocks make good profit, I set the stop loss higher so as to cash the profit automatically if market go down).
    Also, choose value dividend stocks to collect money in the mean time.

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  6. Putting Stop Loss in our context is interesting while the price slide. Another way is to do staggered selling of targeted prices to lock-in while climbing. Looks like you have a plan.

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