The truth of compounding Interest (Part 2)

Under what circumstances or environment would allow an individual to start compounding a bigger amount than usual???!

Firstly, an individual can increase his streams of income ( Part-time job, selling unused items, providing additional services/value to others ).

Secondly, he/she can start learning the art of money management. It basically means reducing your expenses and increasing your cash on hand.

Back to what can give us 10% interest

Screen Shot 2016-07-03 at 1.38.28 pm

SGX.com – Majority of the companies listed above 10% have financial instability 

As you can see Singapore Exchange has very little companies that are financially stable enough to give a 10% growth on your money. High returns (10%/+) comes with higher risk (only in Singapore)……… NOOOOOOOO!! Does it mean I will not be a millionaire????

Hmm, what if I apply the art of money management to increase my capital investment amount to make up the missing 3% annual of annual growth on my money?

Since Straits Time Index is growing at 7% annually, let see how I can be a millionaire or be close to one… based on the friends around me… majority of us are probably under this salary bracket;

  • Salary(After CPF) = $2,500
  • Transportation + Food  = $500 (I try to cook…. if not its just my peanut butter and I)
  • Watch movie through torrenting ( I honestly enjoy it though)

So, net I would be able to save $2,000 monthly and that will equate to $24,000 yearly!

Screen Shot 2016-07-03 at 1.59.17 pm

This is under the assumption that you have Pay Raise/Retrenched/Promotion and all the other crabs

 

Clearly, with high annual input it will quicken the process of you reaching your million dollar milestone. For now, Straits Times Index would have to be my BENCHMARK for every investment instruments. IF your insurance agent has a policy for you that is growing lower than 7%, you know what to do…. and if it gives you greater than 7% ALWAYS CHECK THE MAINTENANCE FEE, CLEANING FEE, ADMIN FEE.

-Knowledge will only be knowledge if one doesn’t applies it-

+1 Knowledge point

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