Putting money to work

We are talking about compounding over here. As mentioned before, using Rule of 72, that is, taking 72 divided by the percent-return, that is the number of years needed to double your money. It also means that you have to put all the new money to work immediately once you receive it.

This is how it goes:

To double your money in 2 years, you need 41.42% per year.
To double your money in 5 years, you need 14.87%
To double your money in 10 years, you need 7.18%

Now, prepare for the eye opener...

To double your money based on 10% monthly compounding, it will take 8 months!!

Question is, do we have an instrument that pays interest (ie. returns) monthly? How safe are investments like this?

I wonder why...

I have two 14" CRT televisions at home, one is a very old Thomson and the other is a recently bought Akira. No matter how I tune it, the picture quality for my Akira cannot be compared to the half-decade old Thomson.. Why is that so? Aren't they both TVs?

Inflation adjusted, I guess the Thomson cost twice as much as the Akira.. That will probably explain why...

In the midst of asking my friends to buy insurance, they start to forget that I ask because I care for them...

Choices

Sometimes I have people coming to me and ask me why I don't join companies which can offer insurance policies from many insurers, which brings me to the question of why people would want to go there? And why are there still companies out there with only one offering? Shouldn't such companies be driven out of the system?

Long ago, the 3 top insurers in Singapore, namely AIA, Great Eastern and Prudential, do not distribute their products to Independent Financial Advisors (IFA), for a very simple reason which I have mentioned. They are the best around, so why would you pass a good product to strangers to sell, knowing there is a possibility that they might mis-sell it? (see recent article on Finexis great work with AXA, here and here).

I usually tell my price-sensitive clients that things are expensive for a reason, especially in a competitive market like this. Why is Magnolia milk priced higher than HL milk since both are milk? The difference lies in the quality, which means the process of producing that milk you drink is of a higher cost. Similarly, some insurance policies have returns, which are superior to their competitor, and of course not forgetting quality customer service and claims process.

Would you buy a policy which takes 3 weeks to process a claim, when you need the money most?