Tuesday, August 5, 2014

What We Need to Ask Ourselves when Assessing our Cashflow Considering the Increase in Price of Goods in Philippines

Cumulative Inflation Rate In Philippines From DEC 2006



From this illustration, at least 5 question we have to ask ourselves when assessing our cash flow.
  • If our cash inflow is based alone on salary and in reference to the day we start working, did our salary increases more than the rate of which the price of goods also increases? 
  • From the day we decide to put our money in the bank, did it grow sufficient enough to compensate the cumulative increase also in price of basic goods? 
  • In reference to the day we start investing, is it already earning more than the cumulative increase in price of goods from the day we start investing? 
  • Did the net income of our other source of income such as business increases more than at least the rate of increase in price of basic goods? 
  • What are the available investment vehicle today that can possibly outweigh inflation and compensate all other investment fees? 
Perhaps, by asking these questions when assessing our cash flow planning, we can project somehow the needed earning or cash inflow in order to compensate one of the unavoidable economic factor "The Inflation". Of course, it's not enough to just realized this fact, I guess the hardest part when we realize something is actually whether we act upon that realization. Otherwise, it is as good as just a stored knowledge.

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