Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

Wednesday, December 19, 2012

~ Road to My Investment Goal ~

I, like majority of the typical fresh graduates who stepped into working society without much savings and being took up a study loan to finish my tertiary education didn't make me feel better in terms of financial situation

I started to invest in share market during my first year of working with no investment background and knowledge, follow the rumours, purchase the share and pray the price will goes up the next day and sell it off. During that period, I made profit but at the same time also lost it back. What I get at the end is just waste of time and higher heart beat rate.

That changes when one of my friends introduced me some books regarding long term investment based on fundamental analysis. I read and learn all the way until today, learning just never stop. I earning some passive income through the dividends distributed by the companies I hold. There are many experts willing to share their knowledge too in the forums.

But one of the advice given is I need to set a goal. A goal that makes me stick to the plan and investment philosophy. My goal is simple, to get 15% annual return and reach RM1 million in my investment capital at the age of 55.

I just wrote a post regarding the power of the compounding interest earlier. Let's say I didn't invest in the first year and save RM250 monthly to get my initial capital of RM3k. Sparing RM250 monthly for investment will just keep on continue. At the end of the second year, I target to get 15% of my initial capital of RM3k plus another RM3k that I save every months, that will be RM6450 and the result of the following years will be as shown in the table below. 

Take note that the 15% annual return is based on the investment capital from previous year which does not include the annual RM3k that I spare out monthly for investment on that respective year. 

I will have RM1 million if everything goes according to the plan at the 29th year. Of course I will reach my goal faster if I can get higher annual return, or pump in more monthly investment especially during the early stages. 

One million may not seem quite much 30 years later compare of today due to inflation. But I believe if I have the ability to get this amount of money, it should not be problem to go on further from there. 

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