How Much Annual Interest Rate is a Good Investment?

By Sean Si

How Much Annual Interest Rate is a Good Investment?This depends largely on your goal. If you’re only on the lookout for extra cash flow, then anything that’s fixed, guaranteed, and that beats the bond rate of the government or inflation, then that’s already good enough.If you’re after growth, then it’s a totally different story. The benchmark for growth when it comes to investments is the PSCI. Last year, Pag-Ibig MP2 beat PSCI as it wasn’t an attractive investment option. The PSCI is the benchmark because in most cases when you beat the PSCI, you also beat most of the mutual funds out there.Many people have the misconception that when they get a good rate of return for this year, they’ll also get a good, or even better one next year. But there will be times when this will not happen.No investor, even the good ones, have a compounded growth rate of 100% because there will be years that will be bad. This is why Marvin Germo always says that you should not solely focus on growing your money. When you already made money out of it, you should transfer it to something that will give you cash flow so that you will have some stocks at hand that will help out when the market doesn’t do so good. You can put it on another asset class, invest in another market, or use it for stocks again as well.Some of Marvin Germo’s stocks in America have done very well this past year. The US stock market has been reaching an all-time high, and because Marvin had his own US stocks, he was affected by it a lot! McDonald's did really well last year despite the recent drive for healthier food. According to Marvin, McDonald's has been pivoting into different things such as their McCafe. The same is happening to National Bookstore. The last time Marvin went into one, he found that only a fifth of the store was filled with books, the rest was full of office and school supplies. Authors who rely on National Bookstore for exposure might be affected, but those who publish their books on their own won’t be. The people who publish their own books have Lazada and Shoppee to use.In essence, it’s the people who create the most value and know how to pivot their situation into a favorable will always win.You mentioned a while ago that regarding the growth percentage, as long as you beat inflation, you’re good. How much was the inflation rate last year?There was a time when the inflation rate was below 1%. For the entire year, however, it wouldn’t have surpassed 5%. All the things that made inflation scary during 2018 were almost nonexistent during 2019. In fact, the only thing that hindered the market was the trade war between the U.S. and China and the news of our President threatening to close down Manila Waters and Maynilad. These things affect investors, foreign investors in particular because these pieces of news can dictate whether other investors will put their money in the Philippines or another country. Bear in mind that the PSCI is made up of mostly the money invested by foreign investors. *Do you think that the contracts of these Water companies (Manila Waters, Maynilad) will be renewed?Marvin honestly doesn't know because their situation no longer depends on how the company performs. It’s an outlier right now. It could go several ways. The first circumstance is that a new President will win in 2022 and things will go back to normal. In this case, you should invest right now. Second, you could wait until things clear up before you put your money back. Lastly, you might think that things won’t get better for them, so you should pull out your money and invest them elsewhere.It’s difficult for Marvin to see what will happen at this point. However, when you look at their earnings last year, MPI has beSupport the show (

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