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A reader pointed out that it is nearly impossible to turn my $350k portfolio into $1M in 6 years time as I would need an annual compounded return of 19.1% to reach that amount.
Am I being unrealistic?
To be honest, I could possibly set an impossible target judging from current circumstances, as most people think. However, to put things in perspective, perhaps there is a way (at least theoretically) to meet the target.
As a portion of my portfolio consists of CPF stocks as well, the following calculations will be based on CPF investment returns and reinvestments.
Considering I earn $80k per annum now. I spent approximately $24K a year, or $2000 monthly. I have a remaining $56k for investment.
My dividend income amounts roughly $20k a year. Thus, I have about $76k for investment. To be conservative, I put the figure to be $66k. Hence I have $10k for CPF contributions to Medisave and Special account and other off budget spending, that cannot be invested.
Assume it is year 0 on Dec 2009.
Hence from year 1 to year 6, I have $66k for investment into my $350k portfolio every year, till 2015.
Question 1: What is the annual compounded rate of return do I need for my portfolio to hit my target of $1M by 2015? ($66k invested in year 1, compounded annually (7.1%) for 6 years will have a value of $99.6k in year 6) Read more...[caption id="attachment_1338" align="alignright" width="150" caption="Photo by Refracted Moments™"][/caption]
A reader pointed out that it is nearly impossible to turn my $350k portfolio into $1M in 6 years time as I would need an annual compounded return of 19.1% to reach that amount.
Am I being unrealistic?
To be honest, I could possibly set an impossible target judging from current circumstances, as most people think. However, to put things in perspective, perhaps there is a way (at least theoretically) to meet the target.
As a portion of my portfolio consists of CPF stocks as well, the following calculations will be based on CPF investment returns and reinvestments.
Considering I earn $80k per annum now. I spent approximately $24K a year, or $2000 monthly. I have a remaining $56k for investment.
My dividend income amounts roughly $20k a year. Thus, I have about $76k for investment. To be conservative, I put the figure to be $66k. Hence I have $10k for CPF contributions to Medisave and Special account and other off budget spending, that cannot be invested.
Assume it is year 0 on Dec 2009.
Hence from year 1 to year 6, I have $66k for investment into my $350k portfolio every year, till 2015.
Question 1: What is the annual compounded rate of return do I need for my portfolio to hit my target of $1M by 2015? ($66k invested in year 1, compounded annually (7.1%) for 6 years will have a value of $99.6k in year 6) Read more...
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A reader pointed out that it is nearly impossible to turn my $350k portfolio into $1M in 6 years time as I would need an annual compounded return of 19.1% to reach that amount.
Am I being unrealistic?
To be honest, I could possibly set an impossible target judging from current circumstances, as most people think. However, to put things in perspective, perhaps there is a way (at least theoretically) to meet the target.
As a portion of my portfolio consists of CPF stocks as well, the following calculations will be based on CPF investment returns and reinvestments.
Considering I earn $80k per annum now. I spent approximately $24K a year, or $2000 monthly. I have a remaining $56k for investment.
My dividend income amounts roughly $20k a year. Thus, I have about $76k for investment. To be conservative, I put the figure to be $66k. Hence I have $10k for CPF contributions to Medisave and Special account and other off budget spending, that cannot be invested.
Assume it is year 0 on Dec 2009.
Hence from year 1 to year 6, I have $66k for investment into my $350k portfolio every year, till 2015.
Question 1: What is the annual compounded rate of return do I need for my portfolio to hit my target of $1M by 2015? ($66k invested in year 1, compounded annually (7.1%) for 6 years will have a value of $99.6k in year 6) Read more...
