REFLECTION (MATHEMATICS OF INVESTMENT)

In the world of mathematics, several fields portrays complexity to learn and solely focus on the application of cognitive aspect since it flaunts to emphasize skills such as critical-thinking and problem-solving skills. However, mathematics of investment, a course in the college degree does not only portray formulas that can only be stored cognitively, but highly emphasizes worth-while lessons in real-life applications as well. This is a math course that helps us, learners in ways we can be wise and financially literate. Hence, mathematics of investment comprise of topics commonly known as interest, annuities, and the time value of money. These topics awakens my inner self to view financial matters in other perspective point. In the past, I do not comprehensively understand the significance of knowing these topics since I find it difficult to grasp the idea. I just only saw real-life applications of these concepts in loans (pautang) like ASA Philippines Foundation in which I am also a scholar since my mother is one of their clients. Knowing this course is like sitting in a gold. Why? Because it entails us a habitual behavior and a wise mindset in handling financial matters that cannot be only acquire temporarily yet can also be of great help in our entire human being living to this unstable and changing world.

 

Interest, as usually heard, this is the monetary charge for borrowing money commonly expressed as a percentage. Well, let us say that money will not grow if it will not have an interest. In contextualization, for example, my dream is to graduate with a latin honor, if God’s will, however I am not showing any interest in pursuing and completing all my academic tasks because of several factors affecting me, then in this way, I may not be able to achieve what I want to reach in life. This simply implies that we will not grow or rather a money will not grow if interest is not being into it. In finance, I learned that interest specifically simple interest is percentage charged on the principal amount, while the other concept which is better than this is the compound interest that charges both the principal amount and the accumulated interest that may be compounded quarterly, monthly, semi-annually, and annually whereas it is more benefited to do since it leads to exponential growth over time. Likewise, this catches my attention because I thought interest is merely just simple interest but it is truly more than that. Indeed, a person without enough knowledge about monetary aspect will not really know these things. Nevertheless, I am fond of the idea of compound interest especially in the context of businesses, or when you make pautang to others but compounded in a way you didn’t expect it to be as much. However, sometimes I am having a difficulty in analyzing its concept when it is applied in real-life scenario like literally out of nowhere I am again thinking and rigorously slowly comprehending its essence. This is really one of my exhausting time but perhaps, when I am interested of knowing something, I really find time and give effort to know and understand it more clearly.

 

Those are already the foundational concepts of mathematics of investment but here’s more to that, we have annuities. Annuities in the simplest descriptions talks about the series of equal payments in regular interval in such aspects of loan or savings plan. Thus, we have to two options in selecting when to pay, it is either we pay at the beginning (Annuity Due) or paying at the end (Ordinary Annuity). I have learned also that annuity varies differently, it can be in its self, the ordinary annuity, the deferred annuity, or the general annuity. All of these annuities has its own function in the aspect of finance. Ordinary annuity is a series of equal payments with the compounding period similar to the payment interval. While deferred annuity, this is the annuity when supposedly the first payment will be delay or pause for a period of time with its period of deferral. Lastly, the general annuity which is the opposite of ordinary annuity wherein the series equal periodic payment have compounding period differing from the payment interval. In utmost appreciation to these concepts, they really enlighten my mind about how money or monetary aspect flow in our society and to be able to live comfortably. Yet, as a student who somehow experience confusing situations, I am not fully well-known when to use or how can these annuities will be distinguish efficiently. They literally making my head hurt. But above all else, even though it is really hard to cope and learn,  it is invaluable in several ways.

 

After all recognizing the sentimentality of interest and annuity, here comes now  the time value of money, perhaps the most sagacious concept which emphasizes that the present value of money may be worth-accumulating more than the same amount in the future due to its potential earning capability. Consequently, this concept really hit me in a good way. In a sense that it heartily changes my perspective on financial decision. Making me realize that I am already an adult, not a kid anymore. It sadden me on some situations where I do not give value to what small amount I have, I just used it whenever I want without thinking of other things. Actually, I am not a spendthrift (gastadura) type of person, but a person who seldom use money without critical thinking the value or necessity of using it. Hence, with this concept emphasizing how accumulating money can be a very good routine for future savings, it encourages to craft financial planning and investment strategies such as applying the concept of amortization schedule, sinking fund schedule, and also bonds may it be for future purposes or current urgencies.

 

In all, my journey in this course, the mathematics of investment is like a roller-coaster ride, sometimes I am at peak of greatly comprehending it well, while also being at my lowest when I do not wholly understand the totality of its application  to real-life problems. This course challenges me well in an advantage way, not foreseeing that I have to be excellently good and have the greatest grade amongst all, but the essence of investment that I can acquire which is much better because it will not only help me in my academics, but can be my company in pursuing a wise and stable life. Nonetheless of its beauty and benefits, the voluminous formulas needed to memorize or apply in these concepts made me felt overwhelming especially near exams. It actually triggered me to study almost  24 hours without sleep just to understand its application and be able to distinguish it with the other concepts. Even in identifying “n” or “d” in the problem given is quite difficult especially that I am not really that good at analyzing word problems. But despite all of these challenges, I still find it interesting to learn. Thus, to address these challenges, I’ve tried hard and seek help with my classmates, collaborating and sharing ideas of how to distinguish it efficiently. Practicing some word problems, and learning beyond memorization because even though I have memorize all the formulas if I do not know when to apply it, it is still useless. So,  knowing that I am struggling and doubting sometimes with my capability to answer, I actively set my mind to always listen into the discussion of our very passionate instructor, that is not only an instructor of this course, but also a man of financial mindset. With his words of wisdom and encouragement before delving into our discussion, this helps me to be motivated and inspired to learn.

 

Furthermore, the real-world applications of these concepts are which matters the most. Understanding the concept of interest has significantly impacted my perspective on saving and investing routine. I realized now the significance of consistently saving even in small amounts, it can be much if persistently done. Moreover, I am crafting currently my personal financial plan or financial blueprint to make my habit of spending and saving a disciplinary routine considering the concept of interest and investment. The concept of annuities directly help me in applying it in my retirement savings in the near future when I have a job already. With these concepts, I think I can be able now to vision my projected expenses necessary only in my daily living that may also allows me to flaunts saving objectives and further adjust my financial strategy if needed. Then, the time value of money concept is the one which I really use in the future specifically for evaluating loan offers and crafting informed borrowing decision making, helping me to possess an ability of avoiding possible threats to financial aspect.

 

In conclusion, my journey in the Mathematics of Investment has been my very best experience which is a constructive one. I have gained several learning not only concepts focusing on theoretical applications but also the practical use in real-life scenarios. In all, my key takeaways are the  advantage of interest, the essence of annuity, and the utmost significance of time value of money. Hence, with all these reflections and introspecting moment, I’ll still continue to improve my ability in investing and possess financial skills. This course molded me not only a student but a student with a wise financial mindset responsible for managing monetary matters.