Something to help with long term planning here - I absolutely love this and it is surprising how often it proves useful………and how few people know about it. 72 has an amazing mathematical property - it helps us determine how many years it takes for our Money to double given a specific Growth Rate Percentage (CAGR - Compound Average Growth Rate). There is probably a better way to explain it but I will use a few examples:
Can you see a pattern? You can use it the other way as well - “What growth rate do I need to double my cash in 4 years?” Answer - 72 divided by 4 is roughly 18%. The drawback is that it tends to fail on low numbers of years and large growth rates - i.e. if your cash grew at 30% a year, 72 suggests it would take 2 and a bit years - in practice it would be slightly different. How is this useful? It helps us get realistic expectations about what we can achieve. Roughly speaking, the long term growth rate of the FTSE100 is about 7% a year (I think this excludes dividends). So, if we just track the FTSE100, then we can expect our Money to double in about 10 years. So, a realistic, but conservative, growth rate for our portfolios is about 10% - this means we are just beating the FTSE100 - this must be possible on a Long Term basis but will require effort. At 10% a year, our money will double in 7 years. If we are a bit better than this - maybe by using a bit of gearing with Spreadbets or just by being a bit sharper than the average tool - we might be able to hit 12% over the Long Term - this would double our dosh every 6 years. OK, let’s say we are really flippin’ good at this and can hit 15% a year - although this is unlikely as we are getting to near Warren Buffett levels of gains. In this case, we would double our money every 4 and a half years ish. Now, for real ultimate dreaming - let’s just do the maths on 20% a year - THIS WILL NOT HAPPEN, so pointless really - but I suspect that Robbie Burns does achieve this - your money would double in 3 and a half years…… This is a key element of how we should be planning our Investments and Lifestyle / Retirement plans and Expected CAGR is arguably one of the first concepts we need to nail down. If you aim for 10% then you are about bang on the mark - anything higher than this is probably unrealistic - especially if you have Full Time work commitments and other drags on your time - if you aim for much higher, you will simply be taking on too much risk. I look for about 10% to 15% on my portfolio but I use Spreadbetting for leverage and I do not have a ‘proper job‘. I knew you would like it !!
11 Comments
15/8/2016 06:32:04 pm
Roughly speaking, the long term growth rate of the FTSE100 is about 7% a year (I think this excludes dividends). So, if we just track the FTSE100, then we can expect our Money to double in about 10 years.
Reply
WheelieDealer
19/8/2016 10:08:04 pm
Hi IRA Gold Advisor - thanks for the useful comments. I think you are spot on, if we just track the FTSE100 then based on historical returns we should double our Dosh in 10 years. I think this 7% figure includes Dividends but I might be wrong.
Reply
16/11/2016 07:27:35 pm
Binaries are "all or nothing" options. You either receive the entire payoff plus a percentage or nothing.
Reply
25/3/2017 07:35:05 am
Aside from making a decent living in the restaurant business, I have found much happiness in the investing world.
Reply
25/1/2023 04:36:11 pm
Hello there, as a newbie to crypto currency trading, I lost a lot of money trying to navigate the market on my own. In my search for a genuine and trusted trader, i came across Mr Bernie Doran who guided and helped me make so much profit up to the tune of $40,000. I made my first investment with $1,000 and got a ROI of $9,400 in less than 8 days. You can contact this expert trader via Gmail [email protected] or on WhatsApp +1(424)285-0682 and be ready to share your own
Reply
5/4/2023 06:52:10 am
Do you know that with MasterCard & Debit you can withdraw cash from any ATM machine !!! , we provide programmed ATM cards that can be used to raise cash in ATMs or push, shops and businesses. We sell these cards to all our customers and interested buyers worldwide, the cards have a daily withdrawal limit of $ 5000 at ATM and up to $ 100,000 spending limit in the stores. Visit our website on noveltydmvexperts.com you can Download the Telegram APP and text us on the Telegram: @Octapusticket
Reply
5/4/2023 06:55:17 am
Where to easily obtain Fake birth certificate with raised seal . you can also get fake divorce papers , Forged Passports , False Passport , Fake UK Documents , Valid German driving Licence , Welcome to Octapustickets Group of Experts Best Producers of High Undetected Drivers License . We produce two types of documents qualities.
We have the Real registered Fake birth Certificate, Fake Divorce papers , and good quality Fake Driver License will be verify from any other country database system with no problems involved, meanwhile with the camouflage quality Fake drivers License , non of your biometric details will be under the government system, but it can not be detected as fake with naked eyes, except with the use of machines.
Reply
21/10/2023 04:37:06 pm
The comments here were just as instructive as your post
Reply
5/11/2023 05:05:52 pm
I just couldn’t go away your website before suggesting that I actually loved the standard info a person supply on your guests? Is going to be again frequently to investigate cross-check new posts.
Reply
22/11/2023 06:07:36 am
Within this theme internet page, you'll see the very best facts, you'll want to watch over that higher level of aspect.
Reply
Leave a Reply. |
'Educational' WheelieBlogsWelcome to my Educational Blog Page - I have another 'Stocks & Markets' Blog Page which you can access via a Button on the top of the Homepage. Archives
January 2021
Categories
All
Please see the Full Range of Book Ideas in Wheelie's Bookshop.
|