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After a night of chatting with AK, who is truly inspirational, thoughts began to come to me until I can formulate a 10 yr plan. This plan occurred to me while I was on my way to work this morning. As a 'big-picture' kind of plan, it must be simple enough for me to be able to work out the sums with just a handphone or mentally, and also simple enough to be able to explain it to someone without that person going 'duh'.
Let me share with you:
The goal of the plan is to be able to stop working when I wish to, that is to reach financial freedom. Since my average monthly expenses is around 2.5k, let's put a good passive income as 3k per month. I thought of 2 plans.
Plan A:
Since I need to get 3k per month, the sum goes like this:
3 k per month x 12 months = 36k per year
If I'm able to invest at 10% yield, I'll need 360k of capital base in order to get 36k of income stream. So the question is how to get that 360k capital base. For simplicity, let's round to 400k. Let's ignore all the complicating compounding and keep it simple. If I'm able to save 50k per year, I'll need 8 yrs of savings to reach that capital base.
10%?? Too much? Let's put it at 8% - which means I need 450k and that will take 9 years. Let's put it as 10 yrs savings at 50k per year. Read more...[caption id="attachment_2801" align="alignright" width="150" caption="Photo by priagovindh"][/caption]
After a night of chatting with AK, who is truly inspirational, thoughts began to come to me until I can formulate a 10 yr plan. This plan occurred to me while I was on my way to work this morning. As a 'big-picture' kind of plan, it must be simple enough for me to be able to work out the sums with just a handphone or mentally, and also simple enough to be able to explain it to someone without that person going 'duh'.
Let me share with you:
The goal of the plan is to be able to stop working when I wish to, that is to reach financial freedom. Since my average monthly expenses is around 2.5k, let's put a good passive income as 3k per month. I thought of 2 plans.
Plan A:
Since I need to get 3k per month, the sum goes like this:
3 k per month x 12 months = 36k per year
If I'm able to invest at 10% yield, I'll need 360k of capital base in order to get 36k of income stream. So the question is how to get that 360k capital base. For simplicity, let's round to 400k. Let's ignore all the complicating compounding and keep it simple. If I'm able to save 50k per year, I'll need 8 yrs of savings to reach that capital base.
10%?? Too much? Let's put it at 8% - which means I need 450k and that will take 9 years. Let's put it as 10 yrs savings at 50k per year. Read more...
[/caption]
After a night of chatting with AK, who is truly inspirational, thoughts began to come to me until I can formulate a 10 yr plan. This plan occurred to me while I was on my way to work this morning. As a 'big-picture' kind of plan, it must be simple enough for me to be able to work out the sums with just a handphone or mentally, and also simple enough to be able to explain it to someone without that person going 'duh'.
Let me share with you:
The goal of the plan is to be able to stop working when I wish to, that is to reach financial freedom. Since my average monthly expenses is around 2.5k, let's put a good passive income as 3k per month. I thought of 2 plans.
Plan A:
Since I need to get 3k per month, the sum goes like this:
3 k per month x 12 months = 36k per year
If I'm able to invest at 10% yield, I'll need 360k of capital base in order to get 36k of income stream. So the question is how to get that 360k capital base. For simplicity, let's round to 400k. Let's ignore all the complicating compounding and keep it simple. If I'm able to save 50k per year, I'll need 8 yrs of savings to reach that capital base.
10%?? Too much? Let's put it at 8% - which means I need 450k and that will take 9 years. Let's put it as 10 yrs savings at 50k per year. Read more...
