Effects of Tax and Inflation

The table above shows how are money invested in lower than the Inflation looses its worth as time goes by.
We should Beat the Inflation. Look for investments which offers higher gain than loosing its worth.
Both of the Investors Left and Right invested 100,000 in different portfolios.
Left at 4% per annum,which was left and Right at 8% per annum which did the right thing.

Let us start discussing the Left's Investment portfolio.

His 100,000 gained 4,000 of interest, making his money 104,000. The government charged 20% of the interest earned so the total interest was deducted with 800 making his total money 103,200. The average
inflation rate of Philippines is 6% annum making the worth of 100,000 drop by 6,000 of its worth.
so the total worth of his money would be 97,200 only...though its real amount is 103,200.
Now let us discuss how Right Side's Investment Portfolio
His 100,000 gained 8,000 of interest, making his money 108,000. The government charged 20% of the interest earned so the total interest was deducted with 1,600 making his total money 106,400. The average
inflation rate of Philippines is 6% annum making the worth of 100,000 drop by 6,000 of its worth.
so the total worth of his money would be 100,400 only...though its real amount is 106,400.

Money's worth is it's buying capacity. The money increase its value but as time goes buy, things are getiing moreexpensive so you can't buy rice @P18.00 per kilo today because lowest price of rice today is at P28.00 per kilo. Your 100,000 today is not as big as 100,00 before.

The amount  may be bigger but its not the basis of its worth.