There were three siblings who inherited a sum of Php 300K from the sale of a small parcel of land, which their deceased parents left to them. They agreed to divide the money, and all take equal share then left.
The first one is Ping, the eldest of the three. Upon receiving the money, he imagined a lot of things he can buy and do with it. He immediately went to the nearest department store and buy all the things he wanted: new clothes, new shoes, new pants, new cellphone, new computer and splurge himself on that very day. The next day, he woke up with all the things he bought the previous day and found out that all the money he got was spent to the last penny.
The second child is Pong, quite a bit of a saver. He is afraid to take risk and always on the safe side. Since he don’t know what to do yet with the money, he immediately went to the bank the other day. He has a friend working in the bank and he approached him. To maximize the interest of the money, he wanted to avail the term deposit which will give his money the 5% interest rate. And so he deposited all his money in the bank.
The third child is Pang, a business minded person and quite a risk taker. From the start the he held the money on his palm, he already knew what he needed to do. He wanted to invest his money in mutual fund to maximize the profit and give him the best return. A friend of him was working in a nearby financial institution offering mutual funds so he approached him. However, his friend warned him of the possible risk. That if he have plans of taking the money in less than 5 years, he better deposit it in the bank as mutual fund may not be able to grow his money during that short years. Pang understand and know the risk and agreed on it.
Past forward, it’s been 30 years since the three siblings receive their Php 100K each from the sale of the small parcel of land they inherited from their parents.
Ping, as expected turned out to be the poorest among them. He spent all the money he got 30 years ago and now living in a day time job with a very small income. Sometimes not enough to support his family of three.
Pong, the second child and a saver decided to go to the bank and check his money. He finally have something in mind to buy and he needed the money for it. His friend is still working on that bank and he approached him. He told him he wanted to withdraw all his money and close the account. His friend then search their computer system and see how much his money is after 30 years of long term deposit in the bank. To his surpsise, he was informed by his friend that the Php 100K that he deposited 30 years ago was already Php 432K. However, there was a 20% tax on this kind of transaction. So from Php 432K, he now have Php 370K after 30 years. He is not rich, but have enough money for his expenses and able to support his family.
The third sibling who invested in mutual funds approached the fund manager and ask for the withdrawal of his money he deposited 30 years ago. During that time, the fund manager told him about the ups and downs of the market with some years even have negative growth. But overall, the fund manager told him that his money grow yearly with avaerage rate of 15%. Now, his total money is Php 6.6 million. Pang was so happy to know that he has millions of cash out of the Php 100K he initially invested 30 years ago.
Spender, Saver and Investor. Which one are you now? Are you saving wisely for the future or spending all that you have for today?
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