The key to achieving wealth is financial knowledge!
Financial literacy is essential to everyone. It is a skill that can benefit you for a lifetime. It enables us to make sound and knowledgeable decisions regarding matter on finance. Without sufficient financial knowledge, you may make wrong choices for your investments, insurance and other stuffs like investment linked product (ILP). The other day, my friend was just telling me of this lady who bought an ILP for herself. The sad thing is her average return per annum is only 1%, how pathetic! (I am not going to reveal what ILP she bought and which insurance company)
But if you are someone with financial knowledge, you are able to compare between different ILP and even explore the idea of buying term insurance and invest the rest yourselves. As a result of having financial knowledge, you are not limited to a few choices. Instead, you are able to weigh the pros and cons of the different choices to make the right judgement.
The problem with the society
The society we lived in right now (especially Asian countries) place little importance on financial knowledge. You don’t get to learn them in school and your parents seldom talk to you about money. Most of the things I‘ve learned from the education system is to prepare me for my future career and profession. And whenever I ask my parents about their salary, net worth and investments, they usually don’t reveal much. The only thing they will say is “Money not enough lah...”
To many people (mainly the older generation), their mindset is to have a good education, find a good paying job and work your way to retirement. I am not saying that is wrong, but it is definitely not enough for you to live a desired lifestyle and you barely will have enough to retire.
Let’s assume your salary is $2500 per month and you save $500 out of it every month.
After a year, you get $500 x 12 = $6000.
You intend to retire in 35 years, your total saving will be $6000 x 35 = $210 000.
If we factor in the bank interest rate of 0.125% p.a, by the end of 35 years, your total savings will only amount to around $264 579.
After a year, you get $500 x 12 = $6000.
You intend to retire in 35 years, your total saving will be $6000 x 35 = $210 000.
If we factor in the bank interest rate of 0.125% p.a, by the end of 35 years, your total savings will only amount to around $264 579.
Honestly, ask yourselves these questions. Is $264 579 enough for retirement? Can you live the desired lifestyle you always wanted? For me, the answer is NO. That is why I am constantly seeking to enlarge my financial knowledge.
For a person with financial knowledge, he or she can choose the right investments to invest the money and let it grow and compound.
Taking the calculations above, total savings after 35 years = $210 000.
Let’s assume you get a return of 8% p.a on your investments, by the end of 35 years, that amount of money will become a whopping sum of $1,110 042!
Look at the huge differences!
Let’s assume you get a return of 8% p.a on your investments, by the end of 35 years, that amount of money will become a whopping sum of $1,110 042!
Look at the huge differences!
I hope you are convinced that financial knowledge is important. We should never feel that we learned enough, but we should never stop learning. I hope that this blog can help you increase your financial knowledge. But remember, you cannot rely on others to help you achieve financial freedom. The only person that can help is YOU. Stop procrastinating, start now! Time is of the essence.
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