In a training camp, trainees are told to carry either one, a sand bag(5kg) and a rocky bag(7kg), along the whole training route.
'You'll have to climb up the hill, swim through the river, and walk pass the swampy ground. The whole journey would be around 5 miles,' instructor told the trainees.
By knowing the distance of the journey, most trainees choose the 5 kg sand bag, instead of heavier 7 kg rocky bag.
At the finishing line, those who chosen the rocky bag succeeded, the rest failed. After swim through the river, the 5 kg sand bag become 10 kg, but the rocky bag remain 7 kg.
.....
wiwt says, the story tells, everyone have to go through life, either to suffer early or double later.
Most people didn't sacrifice enjoyment in life in their early age, by start saving and invest, that's why the have to suffer in the elderly life.
Showing posts with label financial. Show all posts
Showing posts with label financial. Show all posts
Saturday, November 10, 2007
Tuesday, November 6, 2007
Earn, Spend, Save vs Earn, Save, Spend
In most cases, people are uses to the following formula: (Formula I)
(Earnings) - (Spendings) = [(Savings) + (Investments)]
In wiwts' point of view, the following formula would be better: (Formula II)
(Earnings) - [(Savings) + (Investments)] = (Spendings)
Isn't it?
Earnings can be any source of income: salary, interest, dividend, rental collection, etc.
Savings indicated an amount of money that put aside without touching it.
Investments can be like anything ranging from Mutual Fund, Equity, Derivative, Real Estate, etc.
Spendings means an amount of money to be turn into materials, that cannot generate any source of income.
From wiwt's observation, most of the people are facing financial problems, where "too many things to buy but little cash in hand". The main reason is , they tend to follow the 1st formula, instead of the 2nd.
The ideal calculation for Formula II
(Age 21-30)
Savings should be 15% of Earnings
Investments should be 25% of Earnings
(Age 31-40)
Savings should be 20% of Earnings
Investments should be 20% of Earnings
(Age 41-50)
Savings should be 30% of Earnings
Investments should be 10% of Earnings
(Age 51-60)
Savings should be 35% of Earnings
Investments should be 5% of Earnings
In order to achieve Formula II, a person should be debt free. For a person in debt, he/she should reduce 5% from each Savings and Investments and put 10% for DEBT.
(Earnings) - (Spendings) = [(Savings) + (Investments)]
In wiwts' point of view, the following formula would be better: (Formula II)
(Earnings) - [(Savings) + (Investments)] = (Spendings)
Isn't it?
Earnings can be any source of income: salary, interest, dividend, rental collection, etc.
Savings indicated an amount of money that put aside without touching it.
Investments can be like anything ranging from Mutual Fund, Equity, Derivative, Real Estate, etc.
Spendings means an amount of money to be turn into materials, that cannot generate any source of income.
From wiwt's observation, most of the people are facing financial problems, where "too many things to buy but little cash in hand". The main reason is , they tend to follow the 1st formula, instead of the 2nd.
The ideal calculation for Formula II
(Age 21-30)
Savings should be 15% of Earnings
Investments should be 25% of Earnings
(Age 31-40)
Savings should be 20% of Earnings
Investments should be 20% of Earnings
(Age 41-50)
Savings should be 30% of Earnings
Investments should be 10% of Earnings
(Age 51-60)
Savings should be 35% of Earnings
Investments should be 5% of Earnings
In order to achieve Formula II, a person should be debt free. For a person in debt, he/she should reduce 5% from each Savings and Investments and put 10% for DEBT.
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