Ang Pera Mo at Ang Halaga Nito


Ang Pera Mo at Ang Halaga Nito

Every Filipino’s Guide to Inflation

Walking towards our seminar venue at Max’s Restaurant, I saw an enlarged copy of their very first menu. Just look at the price of a whole fried chicken – FIVE pesos!

Max's Classic Menu (Inflation Example)

Do you remember your parents telling how cheap prices were during their time?
O, wag na tayo lumayo, kahit ako, I still remember a time when commuting cost less than 2 pesos, phone calls were 75 cents, wala pang coke in cans, arcade tokens were a buck each, and you can enjoy a movie for less than fifty pesos.

Eh magkano ba ang mga ‘to ngayon? A whole Max’s fried chicken is P389, a small bottle of soda is now P10, P8 is the minimum fare to ride a jeepney, and a regular 2D movie costs P200.

Bababa kaya ang mga presyo na ‘to o mas tataas pa? Nagbabago ang presyo ng mga ito dahil sa INFLATION.

You may have heard about inflation before or maybe you haven’t. I hope by the end of this blog, you’ll have a greater understanding of what it is and how it affects all of us.

What is Inflation?

Have you seen our monthly Facebook post about inflation? Dinaan mo lang ba, o nakialam ka?

In our seminars, regardless where I conduct it (even for economics students who should know the answer), when asked about the current Philippine inflation rate, I always get the same response: a blank stare. But when asked about the peso-dollar rate, almost everyone has a figure in mind.

Why is that? Our culture has taught us to keep track of the peso-dollar rate. While yes, the peso-dollar rate is important, it is not as important as inflation. But why does everyone seem to ignore it?

What if I tell you that inflation is silently eating the value of your savings, will you start paying attention?

Pero, ano nga ba ang inflation? Ito ang pagtaas sa pangkalahatang presyo ng mga basic goods at services. Hindi pa kasama dito ang iyong prepaid load at internet connection. Hehehe :)

At dahil sa pagtaas ng presyo ng pangunahing bilihin, ang bawat piso na hawak mo ay makakabili ng mas kaunting produkto o serbisyo.

Using our Max’s example, kung ang P400 mo ngayon ay makakabili ng 1 whole fried chicken, ilang chicken kaya ito sa dati nitong presyo na P5? That’s 80 pieces of whole fried chicken!

Now ask yourself, Kung pupunta ka sa Max’s ngayon at may dala kang P5, ano ang mabibili mo? Yan ang epekto ng inflation!

Another example, diba weekly nalang tumataas ang presyo ng gasolina?
Back in 1997 when I got my very first car, a second hand Daewoo Espero, a full tank only cost me P320. That was only P8/liter!

Today, if I live in the same house, and go to work in the same place, unless my salary increases, saan ko kukunin ang almost 80% na itinaas sa presyo ng gasolina?

Effects of Inflation

Kung nagbabago ang presyo ng bilihin, hindi ba dapat gumagalaw din ang pera natin to keep up?

Inflation tells us what our money SHOULD be making, because if our money doesn’t grow along with inflation, nababawasan ang value nito!

The “Good” Filipino Savers

We Filipinos are very good savers. Did you know that in Special Deposit Accounts (SDA) alone, there’s P1.7 trillion? I repeat, 1.7 TRILLION pesos according to the data from BSP as of June 2013. (That’s almost a hundred times more than the P10 billion pork barrel scam.)

Sa SDA palang yan ha, wala pa dyan ang regular savings, checking, time deposit, payroll, and other accounts. Ganyan kagaling sa savings ang Pilipino!

The Real Rate of Return

There’s nothing wrong in having a savings account. In fact it’s very useful to keep our money safe for immediate needs and emergencies. But keeping your money in a saving account long-term, ibang usapan na yan.

Like I mentioned earlier, inflation is silently eating the value of your savings. Take a look at this formula and computation:
(Note that this is a very rough formula, but it will work as a general rule of thumb.)

Real Rate of return
real rate of return

Do you know what this means? Yung isang libo mo na tiniis mong hindi gastusin at nilagay ng isang taon sa bangko, kikita ng TATLONG PISO.

As you can see, with a national average of the Philippine inflation rate of 3% and the interest rate of a regular savings account of 0.375%, YOUR MONEY ACTUALLY LOST VALUE!

Lahat naman siguro tayo nag iipon because we want to get something better in the future. Pero kung ganito narin lang ang usapan, bakit hindi mo nalang gastusin ang pera mo ngayon?

Unless the goal of your savings is to buy something that depreciates in value (like a smartphone), don’t you think it’s unfair to spend your whole life saving money and when the time comes that you want to spend it, hindi mo na mabibili ang gusto mo?

Not knowing this, a lot of people compromise very important things like retirement.

The Consequences

No matter how much we take care of ourselves, by the time we reach the age of 50, there will be some changes in our body. I’m not trying to be negative here, but it is during this time when high cholesterol, diabetes, and other diseases begin to be felt.

Now, is health care cheap or expensive in the Philippines? It is expensive, right? How can we afford this if we do not have enough money? (Read more: Wealth is Health)

Beat Inflation!

Whether to invest or not, it’s still completely depends on you. But I hope by this time, I have taught you enough about inflation so that you won’t unknowingly wonder why some people remain to be where they are regardless of how hard they work.

Can I share you a little secret that successful businessmen have in common? Aside from hard work and perseverance, they NEVER ACCEPT ANYTHING BELOW INFLATION, and you shouldn’t too!

Filipinos like to complain about prices going up, but they often ignore the fact that their money has been sleeping all this time. The real issue here shouldn’t be whether inflation is rising or not, BUT whether is it rising at a quicker pace than your money does.

Armed with this knowledge, you can now ask the right questions to people selling you investment products. If its performance is below inflation, what’s the point of getting it?

Know your options and take a look at the different investments that can potentially beat inflation. (Watch our TV show here: The TV Show)

Be Updated About Inflation

The Philippine inflation rate is published in the business section of major broadsheets every first week of the month.

This data is gathered and released by the National Statistics Office where you can also get more information.

Lastly, we will be updating this page every time the inflation rate is released so feel free to bookmark our site.:)

The inflation rate for the month of November is 3.7%. Are you beating it?

MORE ON INFLATION:

During my seminars, I tell people that the Real Rate of Return formula just serves as a ballpark calculation. However, since not everyone who reads our posts has attended our seminars, here is the exact formula to calculate the Real Rate of Return:

((1+actual return) / (1+ inflation rate)) – 1

If you plug in the numbers, you will see that using the actual equation results in a slightly lower loss compared to simply subtracting it.

“Simple” version: .00375 (savings rate) – .05 (inflation rate) = -.04625

Formula: (1.00375 / 1.05) – 1 = -.04405

So regardless of which method you use, the fact still remains that if you want your money to seriously grow over time, you have to beat inflation.

Aya Laraya

public seminarofw


Comments

  1. Aileen Lay says

    Hi Aya im from Taiwan…and following all knowledgeable information
    about stock markets in ur program…Pesos and Sense”. if ever I want to learn online
    seminars….how much is it? and how many month did it takes?.. Is there also a ” futures trade”
    in our country?…waiting your reply….more power to your program and God Bless you<3

  2. says

    Hi, Aya! I’ve learned a lot from your Financial Literacy program PESOSandSENSE in YouTube! Inflation is really something that we all should be aware of, it will help us understand the real value of our money, and how we can beat it. Thanks for sharing this post! Keep up the good work! :)

  3. says

    Hi Sir Aya,

    Like na like ko po ang inyong article na ‘to. Madami po talaga sa ating mga Pilipino ang hindi nakaka-alam ng konsepto ng ‘inflation’ at kapag nalaman na nila kung ano ang silbi nito, magugulat sila sa mga nangyayari at magagalit na kadalasan ay sa ating gobyerno. Sa tingin ko lamang po, bukod sa pagpapa-alam sa publiko ng ganitong mga konsepto (sana mas tangkilikin po ng media na itampok ang epekto ng inflation sa mas hirap sa buhay na Pilipino).

  4. Melvin says

    yung P1000.00 na dineposito mo sa bangko ay gagamitin ng bangko para i-invest sa stocks. kikita sila ng more than 10% tapos ikaw lugi pa. mag-aral mag-invest para yung ginagawa ng bangko sa pera mo, ikaw na mismo ang gumawa. may 10% ka pa, knock-out si inflation, panalo ka :)

  5. jhoanna says

    One of the best topic I read. An alarming inflation rate that will kill you money’s value in a long run. I hope this topic will open the mind of each and every filipino. Keep it up Mr. Aya. And thank you for the information….

  6. says

    gud day sir aya,isa po akong ordinaryong may bahay na naghahangad n makatulong s aking asawa n nagtatrabaho abroad.gusto ko po sana magnegosyo dahil kahit paano ay may naiipon po ako n 2k kada buwan.matagal ko n po napapanood s youtube ang pag-iinvest.kaso luck of knowledge po ako regarding po s pag-iinvest.sana po s pamamagitan ng pesos and sense ay matulungan nyo ako at maiguide ng tama.alam nmn po natin nahirap ang tumanda n walang naiipon at napaghahandaan. maraming salamat po at pagpalain po kyo ng poong may kapal.

    • says

      need asap advice sir aya, gusto k p n mag invest s tresury bonds/bills,
      ask po ng DO and DONTS! wala p ako any idea dun at s mga investment,
      ayaw ko p magsisi s huli, at pang paaral p ng mga bata ang goal
      namin bakit kami mag invest!

  7. says

    Hi sir Aya balak ko po mag invest sa mutual funds, studyante po me and waht pong maganda na maisusuggest niyo para sa akin?wala po me kakilalang broker kaya nag aask po me sainyo?ano po ang safe na company?kung san ko invest pera ko?pinapadalhan lang po me ng pera ng parents ko.Please po need ko po advise
    Godbless po

  8. Bet says

    Hi Sir Aya. Kailangan ko po sana ng advice nyo. Ano pong maipapayo nyo sa taong magstart pa lang sa investing. Halimbawa po wala pa pong savings, walang emergency fund, walang investment. Alin po ba ang dapat maunang bigyan ng atensyon, (1) ang mag-ipon para sa emergency fund o (2) pagsabayin ang pag-iipon para sa emergency fund & at the same time nagsisimula na din mag-invest katulad sa stock market o yung katulad ng real estate na makukuha sa mababang hulugan. Thank you po.

  9. ARTHURO DELEON LIWAG says

    OFW PO AKO KUMIKITA LANG PO NG 35 thou. Meron pong halos10 thou na save tama lang pu ba na isave nalang sa banko o pano po ?

  10. imeon says

    hi sir aya!
    i have built up my emergency fund already and will soon start investing. san ba magandang ilagay ang emergency fund? into regular savings or time deposit?

    • #makethebesthappen says

      good decision imeon. You may invest your built emergency fund on investments funds depending on your time horizon, goal and risk profile. :)

    • Kit says

      Hi imeon! In my opinion,yung emergency fund ay dapat accessible. kaya wag sana time deposit. Para in case of emergency ay madaling makuha.

    • FRANK says

      Emergency funds should not be invested , yan yong funds na dapat naka ready in case you have urgent needs ng fund. Dapat ang iinvest mo is the excess from emergency funds . Kapag innenvest mo ang emergency funds suppose sa stock at nagkataon na bear ang market mapipiliatn kang i seel yun shares at LOSS ! kasi wala kang choice need mo yun pera eh.

  11. Alizza says

    Inflation still not clear to me. How can we lower the inflation? And what are the factors contributing in increasing the inflation rate? Anyway, investing maybe better (not sure about to start investing) than having a bank savings account. Still investment is a bit risky and everyone must know how to do good in buying and selling their shares. Right??? Still, investment is a great idea for me.

    Nice blogs, I am reading almost all of your blogs, Sir aYA.

    • Arianne says

      We can beat inflation if everybody in the world pays their debt to somebody which was originated many years ago. All countries has debt to somebody. We use debt to build businesses and to propel economy. When once debt isn’t paid off, that’s where the value of our money decreases. In the Philippines, peso is our currency. The rise and fall of our peso really depends on our economic decisions made by our government and businessmen. We should be better off right now when one of our President has made the agreement on the dollar exchange from 1 dollar to 2 peso i think to benefit from trading. And now it rises from ins and outs of poor decisions by everybody involved. Right now, we have OFW to exploit as a commodity which we are all proud of to bail us out by putting in dollars to our country. So, we are still safe. What you can do? Be a capitalist to be rich. Pool talents, investors, and build businesses. The tax of having a business is 3%. Regardless how much you profit from the business, we have laws protecting our employers that salary is basic. The difference between a Capitalist and Self Employed is that, a capitalist hire a manager to manage their business. The Self Employed don’t entrust his to anybody. I’m not against Mutual Funds, Stocks, Bonds. If you put your money on those, you are an investor that help SM, Ayala, etc, grow. The Capitalist don’t put their money on those. They build businesses and when they need more money, they venture their company to Stocks. Yes, you can own a portion of the shares, but it’s really them who make money. The fluctation of the stock price factored the movement of its business. If business going well, it rises. If it didnt, your money is flushed out. If you cant read technicalities, save yourself and dont trade. Don’t follow the brags of know how of how tos. As Warren Buffet quotes, invest in business you believe in. I hope i make myself clear.

  12. Emmanuel P. Gutierrez Jr. says

    Ano po ba yung sinasabi ni Robert Kiyosaki na”Hedge Funds” which will help daw to beat inflation? Meron ba nun dito? Should I invest my money on companies like Sun Life, PruLife UK, and Philam Life or just learn and do stocks? or both?

  13. says

    sir Aya matagal napo kita sinusubaybayan, ngayon po sir gumawa po ako ng blog ko..about financial freedom para makapagshare ng mga FRee info sa mga friends ko, magpapaalam po sana ako sayo kung pwd ko bang macopy yung mga content mo..pero lalagyan ko nmn ng link mo para ma redirect din sila sa site mo? ok po ba yun sir ?

    • Ryan says

      Thank you for discussing on how to fight inflation. Mag add lng po ako ng input. Every country has it’s own inflation rate. I am working here in thailand 5 years na. Ang pmasahe at pagkain ay halos ganun pa din. Mura dito ang pamasahe, income tax at bilihin compare stin. Sobrang baba ng rate ng inflation dito compare sa pinas. Take note, ang presyo ng gasolina dito ay parehas ng sa pinas. Inflation rate depends on the attitude of people. That is the biggest factor that affects inflation rate. The attitude of being GREED. Pag gustong yumaman ng doktor, magtataas sya ng presyo nya, susunod na ang abogado at iba pa. Tumaas lng ng konti ang gasolina, magtataas n din ang paninda kahit na konti lng ang epekto sa kanila ng pagtaas ng gasolina. Mataas ang inflation rate sa pilipinas kya dapat tyo magisip kung paano malalabanan to. Mutual fund and buying of stocks are some of the options. Mababawasan o bababa ang rate ng inflation stin kung mawawala ang attitude of being greed… Imposible po yan. Pkibasa din po ang book na ‘Rich dad poor dad’ by robert kiyosaki. Idownload nyo s google. I learned a lot from this book.

  14. says

    Hi there, just became aware of your blog through Google,
    and found that it’s really informative. I am gonna watch out for brussels.

    I will appreciate if you continue this in future.
    A lot of people will be benefited from your writing.
    Cheers!

  15. Jerry says

    So, is the 4.9% inflation rate for the month of August is the inflation rate from Aug 1 to Aug 31? Or is the 4.9% inflation rate the inflation rate from Aug 2013 to Aug 2014?

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