How To Invest Money - Money Value

I've currently been traveling in Bali and Malaysia over the past 1-2 weeks and its very interesting to see the different value of money in different country. Obviously to understand how to invest money we first need to know why people value money differently. Bali's primary industry is tourism, i.e. Bali derive a large proportion of its wealth from tourist spending their money in its country.

Looking at the conversion rate, 1 USD buys near 10,000 Rupiah and can buy you a decent bowl of noodles, a few kilograms of oranges, or just a couple bottles of water. Why is it that 1 USD can buy more in Bali then it can in USA? Did somebody worked harder to earn the USD than they did to earn the Rupiah?

A country's economy is very important when deciding where and how to invest money because if a country's economy is weak the money you earn can buy less when traveling around the world. Some things to look out for are:

• Economic Growth
  
• Inflation Rate
  
• Interest Rates
  
• Unemployment Rate

Economic Growth, obviously we want the economy to be growing, but not too fast otherwise there will be inflationary pressures etc.

Inflation Rate, we want positive small number, around 2-5% because we want money toe erode slowly which will make people to spend money today since money is worth more today than it is tomorrow. At the same time we don't want this to become too high otherwise there will be no confidence in your country's money

Interest rate helps controls inflation as it changes the cost of money and also the rate at which you earn money at a risk free rate. We don't want this to be too high also!

Unemployment Rate hopefully is obvious, the more people who are unemployed means the economy is not fully utilised and potentially higher levels of poverty. Though we will never be able to get 0% unemployment, we would like this to be as small as possible so that the economy is fully utilised.

Hopefully this has given you some ideas of how to invest money. An important factor is to select the economy which you want to invest your money.