It's Not Wise to Save Anymore.. It's Time To Invest!
by Ramli Sarie
Understanding Currency Inflation
(YOU GOT TO READ THIS! ITS' IMPORTANT!)
I am just here to open your mind and to create an awareness that whatever you are saving now for the future use, let say for a long retirement holiday, children's educations fees or pilgrims, and let say you need $20,000 for a particular savings because that is the amount or price NOW and you began to put aside a certain amount of money every month into your bank account and makes it as your savings towards that goal. Assuming your saving plan takes you 10 years and sadly, after 10 years later, the amount of money needed for you to spend on the things you initially planned off was not enough simply because of price inflation! with the banks giving you only 5-10% annual interest, how much really your savings can be.
Another example is from the past experiences. We all have known that what we can used to get for 50 cents about 10-15 years ago isn't that price anymore now. Example are sweets and candies, do you really think that the price if the sweets and candies had risen up over the time that now it cost you almost double? People will say that it's because the rent for the store had rise up and the products and services follows as to sustain the business. Well, what cause all this to rise and increase over the years? Do the price of all these really increase? The answer is No! Your dollar or currency value is the one that keeps dropping until you need to spend more now than before for the same item. So, has your salary or salaries of jobs increases too? Maybe, but not as exponentially equal to rise of products in the market? The effect is the fact that THE POOR JUST GET POORER!
Can you imagine that the amount of money you have now or been saving inside the bank is going to almost half in terms of value in the next few decades? Your $20,00 could just be like $10,000 of today. Ofcourse you will see your balance at $20K but I'm referring to the value value of the money. So to avoid that LOST of Value to your Money, you must learn how to atleast preserve or grow it now.
Purchasing Power
Purchasing power represents the amount of goods and services you can buy with a currency. You should aim to preserve your purchasing power to ensure that the currency you are working hard to earn today is still valuable in the future when you want to spend it. The key to preserving your purchasing power is two-fold:
- You should hold currency that retains its value over long periods of time.
- You should hold currency that is appreciating relative to most, if not all other currencies in both the short and medium-term.
Historically, buying gold and silver has been an excellent way of preserving purchasing power over long periods of time. Today it takes almost the same amount of gold or silver to buy a barrel of crude oil as it did 50 years ago. This is in stark contrast to national currencies (also called fiat currencies), like the US dollar, the values of which strongly erode over time. Central banks and governments have set a long-term trend of currency debasement, and it is unlikely that this trend will be reversed anytime soon.
Gold and silver are the only globally recognized currencies that cannot be created out of thin air, which makes both of them great stores of value (preservers of purchasing power) in the long-term. Unlike fiat currencies that can easily be debased, gold and silver remain the ultimate forms of money.
How do gold and silver preserve and increase your purchasing power?
How do gold and silver preserve and increase your purchasing power?
If you had invested $10,000 on 1 January 2000 in 3-Month US Treasury bills your purchasing power would have decreased slightly by 1 January 2013. If you had invested the same $10,000 in gold, your purchasing power would have quadrupled, and the return for silver is close to gold. See the chart below.
The US dollar and 8 other major currencies versus gold
The US dollar and 8 other major currencies versus silver
The silver price also gained in 2012 against all major currencies. Silver’s results are presented in the following table.
Silver has generated average annual rates of appreciation in all nine currencies that are higher than gold. So silver also fits well within a long-term accumulation plan, but only if you are prepared to accept the volatility that comes with it.
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