Today, I would like to talk to you about Inflation.
In economics, inflation is a change in some important measure of money which says either real or apparent value is falling. The three most obvious versions of this, each held by some economists to be "real" inflation, are for prices to rise compared to the currency in question, the overall value of that money to fall (perhaps compared to other currency), or for more of that money to be added to the economy.
More specific examples:
- If the cost of goods and services are getting higher.
- If the money is worth less, compared to foreign money.
- If the government increases the money supply, other than just to replace old money it destroys.
I did some calculations online and here's what I get:
Something that cost RM1000 in 1996 will cost RM1213.82 today. Also, if you were to buy exactly the same products in 2006 and 1996, they would cost you $1000 and $823.84 respectively. Imagine that, we have to pay for the same thing 20% more within a span of 10 years. A Honda City worth RM86K today will cost RM 100K++. Believe me, this situation will aggravate in the coming 10 years time, coupled with the fact that there is a consistent petrol hike every year.
Inflation, which hit a six-year high in May 2005, could edge higher before tapering off later this year, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz was reported as saying to The Sun. What is the rate now? 3.1% ~ 3.2%? That figure is just an average throughout Malaysia, in Penang or Kuala Lumpur or Johor Bahru, the inflation rate is easily 4 ~ 5 %!
So how do we hedge inflation?
Easy, put your money in "something" that would generate return which is higher than the inflation rate. Invest! Most of the unit trust funds offered by Public Mutual gained more than 8% in return per year. There are also some excellent funds which fetch more than 50% of return in a span of 3 years. Which means, you can double your money within 1.44 years!
Don't procrastinate anymore, path your future now!
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