When I started investment, I take it as a tool to generate alternative income.  As I learned more about investment and especially from Wallstraits, I like the idea of having a target of 15% CAGR because, with such a return, your portfolio doubles every 5 years.  It makes tracking easy.  It happened that I have about $25 k in liquid assets 1999 and thus by using the rule, I will have $1 mil in 2024, after 25 years.  I was able to double my liquid assets to $50 k in 2005 even though marriage preparation took up some parts of my savings.   So it seems that I am on track with my goal.

With the decision to be more analytical about my investment, I recently re-look at my cash-flow and verify if my goal is achievable or if the growth rate is sustainable.  The picture does not look as rosy as I have in mind.  Reason being my earlier projection has been made due to a lower equity base.  Also, I need to set aside a sum of money for renovation in this 1 ½ year which reduces the amount of money available for investment lesser.   As I put in the new factors, I will need to achieve a CAGR of 15% on my investment to achieve $1 mil by 2024.  At this current moment, I have little confidence of hitting that target.

Instead, I aim to achieve a liquid asset of $650 k by 2024 (CAGR of 14.5%).  This will be attainable through increase of both cash portion (including $40 k from insurance by 2023) and investment return.

With some planning from 2025 to 2029, I will probably achieve my $1 mil target by 2029 when I am allowed to withdraw from my CPF with the option of not working from 2025.

Translating all these figures to my investment goal means that I would need to achieve a return of CAGR of 10% from my stocks from 2005 to 2024, with an injection of $80 k into the portfolio from 2007 to 2024.

Why not 8% or 5% CAGR?  With such return, I do not think I am able to be financially independent by 2024.

Advertisement