7.3 What is to gain?

• Economie
• Middelbare school
• havo, vwo
• Leerjaar 3

Exchange over time

7.3 Time is money

Investing

If you want to invest in a company, there are generally two types of investments you can make:

• Shares (aandelen)
• Bonds (obligaties)

Most people have a portfolio: a mix of bonds and shares of different companies.

Shares and bonds

Shares

1. Are part of the owners equity
2. You get a part of the profits called dividend
3. Dividend is variable; there has to be enough profit

Bonds

1. Are a long term loan to the company
2. You get interest, which is stable

Which problem may occur when the price of the scooter increases with 3% each year?

Savings and loans

saving: postpone consumption

borrowing: consume now, pay later

price = interest 

Inflation

“Increase in the general price level of goods and services in an economy over a period of time”

2000: €1.00

2020: €1.49

if the inflation is 2% per year.....

Inflation

A product cost € 10 10 years ago. Calculate the increase in price in 10 year's time if the inflation is

 

3% per year

10% per year

Nominal and real

2022

Savings: €2000,-

Interest: 1.5 %

Inflation: 12 %

What happend to the purchasing power?

Index

Number used to show the relationship between a series of figures.

Base year always has the index 100

Increase in savings = 3%

Inflation = 2%

you express both increases as a index number

savings/inflation x 100 = 103/102 x 100 = 100.98

increase in purchase power = 0.98%

Increase in wages = 3.8%

Inflation = 2.1%

calculate the increase in purchase power 

Increase in wages = 3.8%

Inflation = 2.1%

you express both increases as a index number

wages/inflation x 100 = 103.8/102.1 x 100 = 101.7

increase in purchase power = 1.7 %

Increase in savings = 1 %

Inflation = 2.8%

As inflation is higher than the increase of your saving, your buying power decreases.

Calculate by how much.

Increase in savings = 1 %

Inflation = 2.8%

101/102.8 x 100 = 98.2

decrease in purchase power = 1.8%