Recently, I talked to a close friend about financial journey, how I seem to be taking 2 steps forward and 1 step back.
She becomes very interested in the concept of investing and compounding returns. She told me she was sold a few times before about the idea and was worried that she get conned by salesmen.
There is so much to explain about investment, so I Think hard how to explain the most important quickly. I thought my explanation to her might be useful to beginners.
How it works:
Assume a 6% return of dividends (Not capital gain), and reinvestment of that return yearly, it will take 12 years to double the capital base.
Build up a base portfolio of say 50K first, keep the rest of the money as warchest to enter the market as correction happens, or bear returns.
I highlighted 2 important criteria:
1) The sustainability ......