Recent headlines are mainly focused on the potential bailout plan in the Republic of Cyprus, a member state of the European Union. Over 7o% of its 1.1million population is ethnic Greek, maybe that is the reason so often mistaken to be part of another country in financial crisis, Greece.
“The entwinement of Cyprus and Russia, the world’s ninth-biggest economy, makes things complicated. Russia’s banks and companies have $31 billion parked in Cypriot banks, according to estimates by Moody’s Investor Services” – Bloombarg Businessweek
In this article, I am going to illustrate to you how compounding interest works and how is it stealing your money at an exponentiation rate without you even knowing it.
What is Compounding Interest
Compounding interest means repeating the process of generating income on interest earn over a period of time.
For instance: RM100k principal cash into fix deposit for 20 years with an annual interest of 3%.
For the first year, your fix deposit will generating 3%. This will get you RM3,000 interest from your RM100,000 principle you initially put down. Upon maturity, renew contract again for another year but this time, instead of just RM100,000 – lay down RM103,000 (RM100,000 + interest generated from previous year) as principle.
By year two, you will have RM3,090 interest (RM103,000.00 X 3% = RM3,090). We have generated a noticeable amount of RM90 more in interest earned comparing to your first year. You now have RM106,090 (RM103,000 + RM3,090). Repeat the process of renewing your FD for the next 18 years.
So, how much will you be getting back? Give it a random estimate. Answer will be coming right up next! [Read more →]
Investment thru schemes have always been a top discussion topic. This is especially true for Gold investment schemes. Of late, we see many of such schemes surfaced in our local scene. Our Bank Negara Malaysia addresses this issue in their publication, Ringgit.
Among the scheme, one company with Syariah compliance offers 2% “Hibbah” on a monthly basis. With few simple strokes on an abacus, 2% a month brings an annualized return of 24%.
If you are buying gold for investment, gold shop is among the places you may go to purchase your investment. In Malaysia, our gold prices are standardized nationwide as most of our gold shop retailers are member of Federation of Goldsmith and Jewellers Association of Malaysia.
Federation of Goldsmith and Jewellers Association of Malaysia
FGJAM in short, set and publish standardized price for gold on a weekly basis. This creates a uniform gold price and healthy competition among gold retailers.
Price tag for a piece of gold in retail store is calculated by adding “Retail Gold Price” and “Workmanship”. Gold shop profits from margin over gold price as well as workmanship. Thus, for every gold ring, necklace or bracelet you buy from them, they will quote you two prices, the retail price of gold and workmanship.
Retail Gold Price
“Retail Gold Price” in summary is market price of gold – a price which includes overheads.
Salesmen need commissions, landlords want rents, security guards require bullets, lights run on electricity and a long list of other expenses. All these are compiled by FGJAM, which then published as “Retail Gold Price” on a weekly basis.
Workmanship
It is the price you pay for the time, effort and skill spent on creating a piece of jewelry. It varies from one jewelry to another jewelry. The more complex a jewelry is, the more expensive the “Workmanship” is.
In general, you can bargain on the “Workmanship” price but not the “Retail Gold Price”. FGJAM prohibits discounting on “Retail Gold Price” – a rule which is agreed by all its members. [Read more →]
Launched by the Prime Minister of Malaysia, YAB Dato’ Sri Mohd Najib Tun Haji Abdul Razak, the new currency series comprises newly designed banknotes and coins. The banknotes issued are in the denominations of RM1, RM5, RM10, RM20 and RM100 and will be available for circulation in the second half of 2012.
^ Distinctively Malaysia: The New Series of Malaysian Banknotes
For this new series, polymer substrate is used to make the RM1 and RM5 banknotes. RM20 is now back in circulation.
Compounding interest means repeating the process of generating income on interest earn over a period of time.
“Retail Gold Price” in summary is market price of gold – a price which includes overheads. 
