Wednesday, November 3, 2010

time is an investor's best friend

Most people think that you have to be rich to be an investor. Nothing could be further from the truth. The secret ingredient for turning small amounts of money into considerable wealth is TIME. I would like to share a portion of a fund's prospectus that shows how big a difference starting early can make in one's journey to wealth:

Jack and Jill start working at age 25. Jill immediately starts investing $20 per week into an investment account that earns 7% per annum. Jack wants to enjoy himself a bit first and waits until he is 40 before investing $40 a week into the same fund. They both stop contributing when they retire at age 65. Despite putting in more than what Jill did, Jack actually has less money than Jill. Their end balance is as follows:
Jill: $213,903 (total contribution: $41,600)
Jack: $135,621 (total contribution: $52,000)
And they say math is not interesting. Jill has $78,282 more than Jack even if she invested less than him. The difference is that she started early and time was on her side, allowing compound interest to grow her money more. So the lesson is, start now and start small and let time be on your side.

Tuesday, November 2, 2010

finding extra money

Yippee! Its November and that means next month will be my annual holiday leave. Where else but my home country, the Philippines. Christmas is just different when you're home. I've been setting aside money to splurge for next month, not to mention the pasalubong and Christmas gifts for family and friends. Now this got me thinking on how to find extra money, at least to cover for my plane fare. I was thinking of bringing some stuff which is expensive back there like Billabong board shorts and sell them for a profit. Did this before so I know it works. But I want to try something new like bringing items back from the Philippines and sell them here in Australia. I have yet to research on items which sell here and those which could pass Customs. Mind you, Australia is very strict with quarantine and the entry of plant or animal products in their ports. Then the answer just dropped on my lap when a female co-worker asked me if I can bring jewelry on my return. She even wanted to give me the money now but told her to give it when I'm about to fly. This trading business is exciting and I hope it will result to a substantial profit. But even if it doesn't, the experience will leave very valuable lessons.