4.1 - Investments, Interest Rates, and Rental Concerns of Filopino Entrepreneurs

Investment

- Asset or commodity obtained with the intention of producing sales or appreciation

Appreciation

- increase over time in the valuation of an object

Exchange Rate

- value of a currency for the purpose of conversion to another

Stay ahead of inflation

- investments help you stay ahead of inflation by potentially increasing the value of your assets faster than the rate at which the cost of goods and services rises, thereby preserving or even increasing your purchasing power

Inflation

- general rise in prices every year and the decrease in the money’s buying power

Investment as a form of retirement

- Any new way of making money encourages an increase in net worth

- You will be more prepared for any emergency and retirement with investing

Money Making

- Investing for the long term provides more option for your income to grow- your earnings compound with time

- Your money works hard to save you from having to work

Meet other financial goals

- Getting other methods of earning allows you to accumulate cash easier

Interest Rate

- Amount a lender charges for the utilization of assets expressed as a percentage of the principal

- Usually noted on an annual bases referred to as the annual percentage rate

Nominal Interest

- ‘Fixed interest rate’

- Does not take the increase of commodity into the computation; used mostly by commercial banks for loans

Effective Interest Rate

- Interest rate received or charged on an investment, loan, or other financial transaction owing to the compounding result for a defined period of time

Floating Rate

- Also called ‘dynamic rate’

- Interest rate based on a bench mark (Consumer Price Index or CPI) such as the ForEx or the PSE