A diary which note down all the investment experience, knowledge, thinking and analysis. Welcome who interested in investment of Malaysia's Share Market(KLSE) to comment and discuss in this diary.

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Friday, December 5, 2008

How to be a millionaire by using compound interest

How to be a millionaire? This is such a difficult question in many people's mind. But it can be very easy too. Let’s see my analysis below:

1) Start with current saving: RM10000
2) 1st year saving(capital)= RM6000 (RM500 per month)
3) Every year add capital RM100 per month (means 2nd year saving is RM7200, 3rd year saving is RM8400, etc)
4) Investment get 15% return per year

Since you choose to invest in share market, 15% return per year is just a minimum target. If your target of earning is below 15% yearly then you can just choose other lower risk investment tools.

If you can fulfill the 4 requirements, 18 years later you will be a millionaire. If you start invest at 25years old, means 42years old you can get 1million from share market. This is the power of compound interest.