According to T. Harv Eker, author of best selling book, “Secrets of the Millionaire Mind”, “Most people’s financial thermostats are set for generating thousands, not millions of dollars; some people’s financial thermostats are set for generating hundreds, not even thousands; and some people’s financial thermostats are set for below zero. They’re frickin’ freezing and they don’t have a clue as to why!”
Most people are not successful. Research shows that 80 percent of individuals will never be financially free in the way they’d like to be, and 80 percent will never claim to be truly happy.
For instance, taking financial planning for old age, many people know the importance of doing it but few have any clue how much savings and investment incomes are required to live a comfortable lifestyle on retirement.
The challenges ahead are:-
- People are living longer these days => present retirement funds may not be sufficient to last throughout one’s retirement.
- Rising healthcare costs can easily deplete retirement assets.
- Inflation can affect the value of your savings. The value of the $5 note you have in your wallet today may not be worth the same in future. A plate of chicken rice may cost you $3.50 at current price. However, in 25 years’ time, that same plate of chicken rice will cost you $5.74, assuming an annual 2% inflation rate!
Let name the protagonist who is developing the right mental attitude and studying financial planning for retirement, as A.man.
A.man can be a man or a woman and from a different nationality, social class, culture or race and has a Wealthy Mindset.
A.man understands saving and investing play important roles in his financial plan. Without them, he may not be able to build up enough retirement savings or even pay for major items like the down-payment for his home.
A.man asks the following questions and try to make moneysense out of it:-
A million dollars for retirement, Anyone?
Thrive between survive now till wealthy?
Planning for retirement is simple, not easy?
Investing is simple but not easy?
Can I afford not to invest my money?
Key to desired life option is …
Typical Annual Rates (Compounding) Period
Inflation 2.0 – 3.0 %
Fixed Deposits 1.5 – 2.0 % Return 25.00 years
Gold 3.84 % Return 18.75 years
Corporate Bonds 6.40 % Return 11.25 years
Property 6.70 % Return 10.74 years
US Dow Jones 11.84 % Return 6.08 years
Hong Kong Hang Seng 10.64 % Return 6.76 years
Singapore STI 6.49 % Return 11.09 years
(The above illustrations are hypothetical and does not represent the return on any particular investment. All investing is subject to risk, including the possible loss of the money you invest.)
If you want to retire in 10 years’ time with a million dollars investment fund in your account, what should you do now?
Investing Reality Check on Return of Investment in ten years’ time
Initial Capital = $50,000
Every month, tops up $1,000 into fund for investment till 119th month’s time
The investment fund is compounding monthly at X% Annual Return Rate
At 5% Annual Rate, $403,557 (in 120 months’ time)
At 10% Annual rate, $557,670
At 15% Annual rate, $786,916
At 20% Annual rate,$1,131,142
It is a tall order to expect to achieve financial freedom in ten years’ time solely on investing on conventional investment vehicles on an annual return of about 20% (throughout the whole period).
Food For Thought!
Reuben H C Ong (a.k.a Reuben Ong)
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