100 is many or less? 10% return is good or bad? Answer is: it depends. If you get $100 increment while your colleague gets $200, then it’s not good. But you will be very happy if you get $100 while your colleague gets $50. So, number by itself is meaningless until compare with something. We also need to compare using same category, as we always say “apple to apple” (No! Not comparing Apple Ipad vs Apple iMac).
It is important to familiar with the “norm” number or number sense. For example, Inflation average is 3%, Malaysia Fixed Deposit is around 2.5% to 4%. Singapore Fixed Deposit is less than 1%. So, you won’t be cheated if 1 day OCBC sell you a fixed deposit with 5% return. You will know the number is too good to be true and there must be something behind that.
You can read more from “How to Avoid Getting Lost in theNumbers (Harvard Business School HBS Note)”. Highly recommended! (Come on, just 5 pages....read it! it will benefit you forever!!)
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