How much Annual Returns do you need to obtain to achieve state of Financial Unbreakability?

Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.

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1st, determine your figure required to obtain financial unbreakability.

• Refer to blog: https://www.maximizations.com/post/what-is-your-financial-unbreakability-amount to find out more.

Then work backwards to obtain the:

i) Amount of money you can invest (dollar cost average) every month

• For example, if you are able to set aside $500 per month to invest every month.

ii) No. of years you need to sustain this for (period)

• Usually done by taking the "Desired retirement age" minus "current age"

• For example:

  • Current age = 30 years old,

  • Desired retirement age = end of 61 years old

  • the no. of years you will need to continue to invest is up to 32 years (or 384 months).

iii) Annual returns you need to achieve every year

• After obtaining your:

  • a) Amount required to achieve a state of financial unbreakability

  • b) Amount of money you can invest (dollar cost average) every month

  • c) No. of years you need to sustain this for (period)
    

  • You can now find out the Annual returns you need to achieve every year to obtain the figure a) above.
    

  • In this example, we will use the figure 15%.
    

    • Try it out on this tool (Investment returns calculator)

    • method to use, download the sheet and pluck in your respective figures in the green cells
      

• Notes: you do not necessarily need to follow the sequence above, you can also start with working out what is the Annual returns you need to achieve every year to obtain the figure a),

  • then work backwards for for b) & c) above.

(Note): If your annual required returns are less than 10%, then it is recommended for you to take the passive investor approach and just invest through an Index like S&P500.

• However, if your required rate of annual return is higher than 10%,

  • then it would make more sense to take the approach of an active investor and add individual stocks into your portfolio.

For more in depth information:

• Read https://www.maximizations.com/post/how-much-should-you-invest-and-what-returns-should-you-aim-for-so-you-can-retire-comfortably

To read next:

• https://www.maximizations.com/post/how-many-stocks-do-you-need-to-build-a-diversified-portfolio

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