Do You Understand Your Interest?

Attended a seminar by Mr. T. G. Tay last year on "Being SAVVY With Your $$$" organised by MoneySENSE. Here're the notes I've taken.

Understanding Loans
Suppose you are buying a life insurance, you can choose to pay either annual premium of $1,000 or semi-annual premium of $510.
Question: How much interest are you paying if you choose to pay semi-premium of $510?
(Answer is at the end of this post.)

Other money savvy tips...

Know where you are
Know where you want to go
Know how to get there

Cashflow Quadrant (from Robert Kiyosaki):
Quadrant I: Employee (have a job)
Quadrant II: Self-employed (own a job)
Quadrant III: Business owner (own a system)
Quadrant IV: Investor (money works for you)

Quadrant I & II are active income, Quadrant III & IV are passive income.

The key is not about which quadrant you belong to but whether you can maintian positive cashflow regardless of the quadrant you are in!

Content - makes a person rich
Discontent - makes a person poor
"Contentment is knowing how to control your spending when you cannot control your income."



Answer: 8% p.a.
$1,000 - ($510 x 2) = $20 for delayed payment of $490.
This works out to about 4% (20/490), ie. about 8% p.a.