Investment Journal

The basic guideline in investing is the country's inflation rate. All your savings for the long term, time deposits and other investments must produce rates that are higher than inflation. Your earnings rate should be 2 to 4 percent above inflation rate. So, if the inflation rate is 6%, your earnings rate should be 8 to 10%. Otherwise, you will lose a great deal of money especially if you invest for the long term. The longer the term, the higher the risk that at some point inflation will rise dramatically and reduce the value of your money. The money you save will not be enough to buy the same goods you are able to buy today. For example, you put 1,000,000 pesos in time deposit for one year and the bank's interest rate is 3% net per annum. If after one year inflation rate shoots up to 5%, your money will still lose 2% in value. Imagine how much you will lose if you will keep on doing this for 10 years.