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.