It depends how one calculates.

It also can be pointed up,
In USD term.
1970's
USD500 cometh 2011 USD1800 = 260%

35 years for 260% return, is not something very proud of, and definitely is not decent, nor even can catch up the inflation, nor beating FD rate by miles.

Yes, it is decent from 2003 to 2011. There is no doubt.
But next 3 to 5 years down the road, nobody knows.
It can even more magnificent, it can be pathetic as well.
Gold price during late 1979 to early 1980's was USD200-700.
Gold investor during that period suffer at least 20-25 years without any return, while at the same time, FD give you more than 200% return during this period, stock can register you at least 1000%, properties 1000% etc.

I don't mean to say gold is good or bad, what I want to highlight, a thing can be looked from different angle and can show you good/bad result from the different angle.

People can say stock is worth to invest, as stock has gain more than 100% from 2009 to 2011.
But another one can say, stock is not worth to invest, because from 2007 to 2011, stock still making a loss.
So a slight different angle or selective period of comparison, the outcome result is totally different.

While, whether it is decent for last 3 years, 5 years or 10 years, it doesn't give us a clue or any good indicator whether it is good or not to invest in it.

Locally, FD rate in the old day (1980's time) was around 7-9%.

US Fed fund rate during early 1980's was double digit aka >10%.

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Added on September 16, 2011, 6:30 pmIf from 1970's $35 to now $1800, is a 10.16% pa. return rate.
Then from 1980 $200/300 to now, is what rate then?

This post has been edited by cherroy: Sep 16 2011, 06:31 PM

I am not saying FD beat gold, as FD is always the worst return rate one.
Just selective period of using, then outcome result can be totally different.

I can use gold over the last 30 years return from early 1980's to now, can be as low as 5-6% pa. compounded.
Which mean comparable to FD rate only.
So for a person invest in gold and FD at the same time during early 1980's, the result can be the same.

Why take 1970 then?
Why not take 1950, or 1930?

4.44%, I can assure FD beat it.

Don't get me wrong, I am not disagreeing on the statement posted, Both, or every data we posted is a correct, just how it is looked upon.

FD rate was above 6-7% for quite a long time since 1980's, FD rate only plummeting after 1998 financial crisis.
FD is a compounded investment, your interest can be compounded one. So if 10 years time the FD rate is 6%, it is giving out 6% compounded rate for the last 10 years.

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Added on September 16, 2011, 6:43 pmI don't have data, if my memory serve me well, I put FD at rate around 6-7%, since late 1970's to early 1990's.

Then it is reasonable for me to use 1980's gold price as base, as I was starting investing during that time.
So no fair?

This post has been edited by cherroy: Sep 16 2011, 06:50 PM

There was 10%-11% FD for 60 months during 1998, this I can be certain of.

In the old day, normally lending rate is 200-300 basic point above deposit rate.
But now BLR vs deposit rate gap is widening further.

I don't need to look at the chart to know,
because I placed it before....
It was more like promotion campaign.
Just like now interest rate is 3%, but you can find 3.5%, 3.6% FD out there.

You can see 1997 the rate is 9.3% for 1 year.
But the 10-11% I mentioned, is for 60 months FD, and with this FD, they even gave you free Astro decoder + subscription for 1 year.
At that time, banks were hunger for money/deposit.

Why I remembered? because it was a double digit FD rate, and first time I had Astro.

This post has been edited by cherroy: Sep 17 2011, 02:46 PM

If 1997 listed interest rate for 1 year is 9.3%, what is so surprise with there were banks gave 10%? Just a 0.7% difference.

Remember also the rate published generally is an average, because interest rate was fluctuation a lot during that time.
Yes, after Malaysia shut the door aka capital control 1998, our interest rate become stagnant throughout generally.

Now with low interest rate + cheap money environment, interest rate is 3%, yet there are banks give 3.5% for 6 month, 4.5% for 2 years.

As compared 1997-1998, when there was credit squeeze time and chaotic in financial market, with as significant higher SRR and money flowing out non-stop during that time.
So a 0.7% extra is not something "surprise" or huge, when banks were "fighting" their survival during that time.

The bank/finance company (there were plenty of finance company at that time) name start with "A..

I reckon you are old enough to experience the situation back then, or no?

I don't need one to believe me or not. The fact, it was happening before and placed it before.

This post has been edited by cherroy: Sep 17 2011, 03:20 PM

The extreme case, we don't need to discuss or bother already.
It is your life bother only.

The 2011 March Tsunami is the closer we can see in our naked eye.
Whether you have cash, or physical gold bar in your safety box, or whatever is irrelevant already, all wipe out.

You can also place a 60 months FD now with 4%, which is roughly 0.9% more than 1 year.
It is same situation with 9.3% vs 10% with 0.7% difference.

5 years FD most of the time is available one.

Unless bank is facing problem in loan growth, difficult to loan out, then they may make it unavailable or put up unattractive rate, for eg. lower than 1 year, automatically nobody will put a 5 years FD already.



Banks just earn the spread between BLR vs deposit rate. Banks generally do not speculate how rate will be, nor care much what is the rate. The spread is always there.

When they take in your 5 years FD, they also give out 20 years housing loan with lock in period of 5 years.
As long as the loan is performing, they are earning the spread already.

At that time, as I said before, banks were fighting for their survival, and money/deposit was highly sort after.
The longer duration deposit they can get, the best, especially in crisis time, it secured them the liquidity needed for the next 5 years.

Banks just want to secure their funding. At crisis time, the worst situation bank can face is everyday need to source for massive liquidity needed, just like what is currently feared in Europe banking market right now.

Remembered money was flowing massively out during that time, so banks were very welcomed most long term deposit.
A prolonged liquidity freeze in financial market, bank can close shop overnight.

This post has been edited by cherroy: Sep 17 2011, 05:37 PM

Do you think you alone staying in nice bungalow and having 500k gold is safe when others or millions people are searching for shelter, no water, no food just outside of your bungalow?

Hyper-inflation often associating with social unrest
and little people have faith in a hyperinflation countries economy nor want to own anything in the country, and doing business there, because the currency can be worthless.

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Added on September 19, 2011, 5:37 pmFeel good about hyperinflation that can solve your debt problem?
You lose even more.

This post has been edited by cherroy: Sep 19 2011, 05:37 PM

Recession:
Quality asset can turn into junk in recession, how one can assure it will be quality in the future?
Nobody can ascertain of.
Look at Japan, more than 2 decade already aftermath of RE bubbles, still not fully recover.

Hyper:
You RM10 cash under the pillow still a Rm10, it won't grow due to hyperinflation.
Only when you income grow exponantial in hyperinflation time.

Nobody want to lend you money in hyperinflation situation, who is the fool to lend you money in a hyperinflation situation?
Banking system may not even exist or run properly.
Loan? where to get?

You cannot take in what happened during stability time and put into those extra-ordinary time and expect it works the same (banking system). It doesn't work this way.

See how Lehman filing bankruptcy can cause the entire financial market into liquidity freeze, all stand still. All financial game change during that time. People fear about banks ability to return on money, instead return of money.

War, buy building? buy asset? buy stock?
If really war, then it means we are talking of changing gov entirely.
So the new gov will recognise this building is owned by you or not?
They can just confiscated like that, why you can do?
Nothing.

Stop believing nonsense, no offence, if bad situation happens, everyone is the loser.
Nobody gain if war coming, nobody gain if economy run into crisis, chaotic situation.

It is aftermath, when thing settling down, aka the new era, you can take advantage of, because it start off clean or all over again. But again this may mean you lose everything previously.

You are talking about small small war, conflict.
I am talking about big war.

WW2, you use banana money buy land?
buy from whom?
Japan?
British?
Malaya?

Who issue the grant to show the piece of land is belonged to you?
Japan?
British?
Malaysa?

One is running for life already, still care about land, stock & properties?

As I said before, it is aftermath, when thing settling down, then it provide the opportunity, but not during war time.

This post has been edited by cherroy: Sep 20 2011, 11:01 AM

Continue to build nest, continue to equip and improve yourself in term of skill, knowledge and ability.

Earth one day surely will be destroyed one.
But you don't stop your activities just because it will end one day.
Just like we, or everyone surely will die one day, so you stop learning, working, earning money right now?
This is not something one needs to think too much, but prudent financial management is always needed in whenever time.

Nobody knows the future, but skill is something most valuable asset one has.
Money can come and go, skill and knowledge remain.

It is skill that can generate your wealth.