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RE: Is Your Money Dying? The Secret Loss of Savings
I wouldn't be me if I didn't add a little extra on this :)
Just for fun, remember the rule of 72. What is the rule of 72? Well, take whatever interest rate you are getting (lets say 7.2%) divide that number into 72 and the result is how long it will take your money to double. 72/7.2% --> 10. In ten years your money will double. Those rupee going 10X higher since 2000 means 9.2% interest rate. A little higher than I would expect from an average return but still possible.
You are correct that money stashed is effectively dead and WILL lose money over time.
However, your elder "ChaCha Deeno" is not entirely wrong in stashing money but there is a better way to do it. Many old school people distrust banks and governments intensely. Putting money into investments they don't understand (which can also go down) is something they can't do with funds that are so important for a future obligation. Yes, GIC and BONDS can be very useful if they are insured but I do not know if the government there offers protection from bank failure.
In the Philippines for example PDIC insures money but only to a maximum of 500,000 Peso, in Canada CDIC to a maximum of $120,000 CAD, if the money is more than that and the bank runs into issues.... You lose.
A possible alternative for those old school people with little to no investment knowledge? Silver or Gold coins. I personally hold both at home, albeit very little gold, because things happen. Silver and Gold have been currencies for thousands of years. Holding them is something physical and something that can be kept safely hidden. No bank. No investments that are hard to understand. Still looks and feels like money....but it isn't based on any country putting a number on a coin, its based by the value in the coin itself.
Just a thought and thanks for writing :)
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It’s been a while since you last commented. It’s nice to see you in my comment section once again!
Thanks for sharing the Rule of 72; I actually learned something new today.
Just a quick clarification: 'Chacha Deeno' isn't actually my uncle. He is the uncle of my friend, Ahmed Gulzar. Regardless, the rest of the story still makes sense no matter who he is. I mentioned this in the story, so perhaps it got lost in translation.
Like you mentioned, I also get frightened when I hear about bank fraud. When the banking collapse happened in Afghanistan a few years ago, I began questioning the stability of the US Dollar and other global currencies. In the end, we always find our way back to decentralized currency because one war can wipe out fiat value. I know it’s much harder for that to happen to the US Dollar, but it’s never impossible. Or perhaps the world will simply shift to a new standard like the Euro.
As for silver and gold, you can’t go wrong with them. They are easy to understand and have real-world utility. Now we can even buy digital gold, like PAXG, or digital silver with as little as $1.
It's good to be back. For the past 4 months I've been just trying to keep my sanity looking after two homestay students. It has been very rough and a lot of things I've wanted to do got put on hold.
The homestay students are back in Korea now (horray!) and I finally have time to work on the Good Little Dragons stuff I've been wanting to do.....although it is really really slow :(
And yes, reading articles and leaving comments is also on my to do list :)
.... especially when its about money :)