Future Value – How do you plan your investment?

Have you ever wondering all of the income that you put in the bank will be go waste? Worse, you keep all of your money in safety box at home! If you do one of these things, I totally recommend you to change your way immediately. Because may be, if you put the money or use it in another way, it be much more profitable. One of the thing you can do is make an investment out of it. But when should you invest?

You should invest your money as soon as possible when there is profitable chance.

Because if you prolong your chance to do investment, you might lose the chance to get more profit. Here some prove and example. Imagine you are still 40 years old and have 1 mio of money, there is a chance to do investment with 5% rate. But then you think that you want to do investment later at 45 years old with the same 1 mio. When you should do investment if you have the plan to stop the investment at your retirement age which is 50? at 40 or 45 y.o? Totally the 40 one. Here are the calculation:

• If you invest at 45 years old

• If you invest at 40 years old

Using future value formula, you may see if you invest at 40 years old it’s more profitable by Rp 352.413,1. It shows that if you invest in longer period of time, it will be much more profitable. It means you have to do investment as soon as possible when there is a chance. Another advantage from invest early is, if the inflation rate is below your investment rate, it means your buying power will increase by over period of time.

The next is, may be after you agree with this theory, you become attracted in investment and have a goal in mind. Then another question will arise, how much should I invest if I want to get 2 mio over 5 years and you have choose 5% rate investment? Don’t worry, we can also calculate it using present value formula.

If you want to know how much can you get from investment over a period of time, you may use future value formula to calculate. But if you want to know how much you should invest, you may user present value formula. Happy investment!

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Maharaniar

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