Your Personal Financial Solutions

Why do you NEED to invest? Do take note that the question is not, “Why do you WANT to invest?” What’s the difference here?


Here’s my answer to both questions above…

The reason I WANT to invest is to gain a strong, positive cash flow that is capable of providing me financial freedom in whatever market conditions.
The reason I NEED to invest is to cope with personal, family, Malaysia and world inflation rate.


Why is this so?

Malaysia’s inflation rate
I am living in Malaysia. Obviously, I need to ensure that my investments cater for my country’s inflation rate. Malaysia’s inflation rate is normally at about 2% to 4%.
Example: How much shall a cup of coffee cost in 20 years to come (future), now (present) and 20 years ago (past)?

World inflation rate
Because of globalization, the world is becoming a ‘small’ place. To a certain extent, we do need to consider this too. This would be more evident for constant vacationers.
Example: How much increase in a cup of coffee would be when you visited country X 20 years to come, now and 20 years to ago?

Personal inflation rate
The personal inflation rate can easily range from 6% to 20% or even more. This is the most worrying one as once you have maintained a certain standard of lifestyle, it is difficult to reduce the standard. Huge amount of ROI need to be obtained to ensure similar lifestyle in the future.
Example: 20 years ago, drinking a cup of coffee in a ‘kopitiam’. Now, drinking gourmet coffee in Starbucks or Coffee Bean. How about in the future?

Family inflation rate
Once you started a family, inflation rate would slowly rise. Inflation rate varies depending on your family lifestyle and goals.
Example: 40 years ago, a certificate/diploma is sufficient. Now, a degree is only sufficient. PhD is only sufficient in 40 years to come?

Please take note that different people have different reasons... The above are based on my point of view...