With all the plans in place, the next step was
to set a financial target in the accumulation of a net worth of RM1 million. There
are 2 key variables in the formula of wealth accumulation, i.e. annual savings
and the investment return for the annual savings.
Initially in the 1st scenario, I set
an annual saving target of RM10,000 and together with an annual investment
return rate of 10%, I realised I may not be able to achieve the mark of RM1
million within 20 years or before age 40. Below is the illustration that I
could only achieve a networth of approximately RM640,000 within 20 years.
Scenario 1
In view
of the above, I revised the variable on the annual savings from RM10,000 to
RM20,000, and I would be able to reach the mark of RM1 million in year 18 as
shown in 2nd scenario below:
Scenario 2
Well, I was not content with the result of only
achieving the mark of 1st million net worth in year 18, I wanted to
make this happens more earlier. So subsequent 2 more scenarios with the
assumptions that I could up the higher annual rate of return to 20% and/or have
my savings increment will inflate at a rate of 3% annually.
Scenario 3
Scenario 4
Looks like the 4th scenario would be
the ideal plan on meeting my 1st pail of gold within 12 years. I was
excited and started to dream that should I not only work hard so I would earn
and save more and have salary/savings increment, but I would also spend time on
doing lot of research in finding good investments with an annual return of 20%,
then I would be able to be a millionaire when I’m at age of 32!
This year I’m at the age of 31, am I close to be
a millionaire now? Well, things seem not going as planned.
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