Successful? Why, yes I am.

Saturday, August 04, 2007

Value of dollar?

I read an excellent blog post at Binary Dollar and it was about the 'cross over point'. That is when your investments earn enough money that they surpass your expenses. You could classify this by saying your financially free.

One thing of interest I found (in the comments actually) people generally speaking probably do not take into account inflation when investing for the future and what dollar value their assets will be worth after the term of investment.

Analogy: Take car ownership. When calculating weekly costs of a car ownership, you put in such things as fuel, insurance, wear & tear/servicing etc. BUT people do not include depreciation.
Apparently in Australia now half the cost of owning a vehicle is now gone in depreciation. Reason for this is simply because so many new vehicles are being sold, the demand for used ones falls rapidly. The average value of a brand-new car is almost 50% after three years of ownership!
If you think about it, same thing needs to be applied to housing/property.

Anyhoo, getting back on topic of dollar and its purchasing power, whole point to investing is obviously to grow your money/assets but also to beat inflation. That is, your purchasing power should never diminish! Im going to have to work out some new graphs and put them up here for comparisons sake.

Keep in touch for follow up post on this topic



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