The Language of Money

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Why do we go to school? Is it a way to keep us out of home to give our parents a break? I don not think so! We go to school to teach us the things we need to know to be productive in the economy. If you ask me, the school system is geared to create employees, not employers. That is just my opinion. At the same time I am grateful for the schooling I did have.  The basics that I learned, like reading, maths and science enabled me to learn a lot more. So perhaps, once you have the foundation, you can decide what to build on it.

Here is the thing: all learning is about language.

My eldest daughter went to medical school to learn the language of medicine.

My middle daughter studied for a social worker, she knows the language of social work.

My youngest daughter studied law, she knows the legal language.

I studied theology and business science. I know the language of business and management (and do not be fooled – theology overlaps with it!)


Where did I learn the language of wealth? There is no official course that I know of that will teach you the language of wealth. It seems some people are just born with it and we must learn from them.

You have to realize this: whatever the profession, it is the person who knows the language best who excels. In court, it is the lawyer who speaks the best legal that will win the case. It is the person who speaks maths best who excels at maths. It is the person who speaks “money” best who become financially independent and wealthy.


Any language starts with a vocabulary. Here is a shortened Money vocabulary

Savings – typically in the bank;

Investments – typically in stocks, bonds, property;

Speculation or trading – short term and normally risky, especially if you do not know the grammar!

ROI or Return on Investment – what do you get out of your savings, investments or trading;

Interest – could also be called ROI

Compounding interest – this will make you stinking rich, if you use the right grammar, interest on interest;

Nominal rate – the interest rate that is quoted. i.e. 5% p.a.

Effective rate – the rate you really earn or pay, based on the nominal rate;

Future Value (FV) – of something – could be higher or lower, depending on what you are looking at – investments should appreciate, cars depreciate, except collectables;

Internal Rate of Return (IRR) – the real return on any economic or financial activity.

Payment (Pmt) – either what you pay monthly or annually to have the investment or car, or what you earn from your investment;

Net Present Value (NPV) – the answer to the question: “Did you really make money?”

Many people know the meaning, even if they do not have the vocabulary.  If you know the meaning of these words and terms, you are well on your way to creating wealth. Vocabulary provides meaning and purpose. One word describes a world and conveys all the meaning.

For instance, if I compare two investments, I just need to know the IRR and/or the NPV to know which one is the better option.

Knowing the language of money and wealth can protect you against shysters and shamsters.


For instance, do you know the rule of 72? It helps you estimate the value of an investment. In essence, if you divide 72 by the interest rate, it tells you how many years it will take for the investment to double or halve. If the interest rate is 6%, the investment will double every 12 years. Or halve every 12 years. How is that useful? If somebody promises you salary increase of 10% p.a, ongoing, it means your salary will double every 7 years. Sounds good. It also means that his or her sales will have to grow by much more than 10% p.a! How realistic is that?

One day a salesperson came to see me with an investment proposal. She promises me amazing returns. Knowing the language, I take out my financial calculator and shows her the returns are exceptional. She works on her normal, four function, calculator and cannot get to my figures. She refuses to believe me that she cannot do the financial calculations that my financial calculator can do, on her four function calculator. She tells me I am wrong and her manager will not lie to her.

A week later I see her in town and ask her how her sales are going. She replies she drove from me to her manager and showed him what I told her. He told her I am right (not such a big liar). She resigned – she did not understand the language of wealth, but wanted to sell money products. That is why you should know the language of money. Too many people and companies abuse the fact that few people understand the language of money!

Please post questions in the comments section. I would love to answer those questions – you can also use the contact form.

Just remember: I DO NOT GIVE ADVICE. I will share knowledge and insights. But you should consult with a financial advisor or investment advisor before making any changes to your portfolio!


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