5th April 2009 (long term vs short term)

I a "random thinking" kind of guy. I would all the sudden think of a question and go find out about it.

During my ITE days when i was idling around with my buddies at the shopping mall, i suddenly raise a question to my friend "How did the bank get the money to start up?"

"Aiyah, they just tell people to deposit money into their bank for interest rate and safely. With those money the client deposit, they use it to start out. It a game of gamble. If it didn't work out well the bank will just close down." he replied

I loved the ITE days, it's a time when my mind was filled with expectation. I don't know about youngster now, but people at my time was filled with expectation for the coming future.

In my quest to know more about financial stuff (before some financial "guru" deceived me of my hard earn money) I learned of things deeper than that.

There are two kind of investment, one is called "long term" another is called "short term".

For long term investment, you will heard something similar to this

"If you put money in your bank , you only get 0.02 interest rate per annual. However, if you put money in the plan that i going to introduce to you. it will get you a return of 4 to 5 per cent of interest rate per annual. In ten years you will get more return than what your bank will offer."

let's start from long term investment. it not actually "long term". It is long term for the client but short term for the company selling the product. let's be logic, a bank or any financial company need loan to start up. They need to made profit. They need to know how to get money fast, and the only way is through short term investment. The so called safe investment actually move with the market.

However, long term investment is needed. It is a back up source. A monthly input of money into a financial plan is a smart move. For my opinion, once the ten to five years is over ,the money should be put to short term investment instead of continue the plan.

What is short term investment? It is what you called "risky investment"

These are the list of short term investment

Stocks,for ex,future, options, real estate. (there are more) i like to called them financial tools.

The return is not monthly or yearly. it is daily.

There are investor called "big boys" known as those rice guys or bankers, and there are investor called the "small boys also known as retail investor or leverage investor.