Time Value of Money

Before i start to share about what really financial planning is about, i would like to ask you all 1 simple scenario question.

What if i give you RM2400 as your pocket money for the year but i need you to choose 1 of the payment methods i offer below:

i. Receive the RM2400 right now.

ii. Receive the RM2400 after 12months from now.

Well, it seems like these 2 options are the same however what RM2400 can buy now and what RM2400 can buy after 1 year?

So what will you choose? Receive the money now or later?

Cant get the idea i am trying to say? Remember back when good old primary school days where 1 bowl of mee soup only cost around 50cents then gone up to secondary time, the same bowl of mee become RM1.50 and when working time now it is RM3.00

So you see now the money that you have present time is worth more than the same amount in the future. There is 2 things that you need to know about value of money: as long saving money can net you interest, any amount is worth more the sooner you receive it; Another thing is Compound interest- The Double-Edged Sword.

Taking the 1st question as example, if you choose to receive the money now and decided to put in a Fixed-Deposit of 12months which is 2.5%pa, your RM2400 will become RM2460 (2400 x 1.025). But then if you choose to receive the money a year later, your RM2400 only worth RM2341.46 (2400/1.025).

I will go more on the compound interest next time because i dont want to make my entry so long till can bore you all :) So basically save whatever we can now instead of i will start saving when my acc got a certain amount of money. 

Arigato and Sayonara, see ya next time ^^V

Welcome ^^V

Hi, welcome to the small financial world of mine. First of all i would like to thank you all for spending some time on reading the posts here. This is the 1st welcoming post and i promised more will come. 

I decided to start this due to my found interest in personal finance and i believe it is quite becoming a nessecity to all of us nowadays. So i am determined to share all my 2 cents on it.

Hopefully i wont get a tonne of flaming for my posts but i do hope you all would share your point of view by commenting on my posts as sharing is caring ya :) 

Well Personal finance touches on Insurance, Taxation, Estate Planning and Investment. As i am still on the crossroads of going to either CFA or CFP, so what i am share here is really merely based on my own studies as well working experience as PFE :)

Other than that, i  would like to share my thoughs of properties and cars esp compact cars. This is due to other than my GF, i have also grown a passion love for compact cars :) rs esp compact cars. This is due to other than my GF, i have also grown a passion love for compact cars :) 

Till then....