A friend pose this interesting question to me over my concern with inflation eating into our hard earn money. To point out how serious the problem is, i have it structured below.
Let's think of a scenario. I have idle cash of $1M. Considering inflation of 3%, that's 30K loss annually. We know how rich we are is how much we save. Using this basis, if I save 30K annually from my monthly earning, i am just working my arse off just to level up my networth. The curse of being a millionaire ?
Let's go further. For those who are more financially awakened, potential returns may average 5% annually. $1M sitting idle is 50K loss. Has risk adversity reached a new height in stupidity ?
Not surprising for those Savvy Investor who hits 10% return. That's 100K average. If you have this money and they are not working because you are so busy with work, do yourself a favor, sit down and do some Maths. What the hell am I talking ? A Savvy Investor will not have this problem.
Now where am I ...
Cory
9th Sept 2015
My personal definition of cash rotting no matter how much, is leaving cash under your pillow or in one's biscuit tin.
ReplyDeleteUp to personal risk and reward preference, if you put cash into your own personal business, into stock market, in bank fixed deposit then you are making cash working hard, harder or hardest for you.
Even with cash under pillow, we are taking the risk of currency strength just that return inconstant currency is zero. Working "harder" maybe a new norm.
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