A Personal Finance Blog for Malaysian: Learn to Measure Investment by CAGR

Thursday, September 8, 2011

Learn to Measure Investment by CAGR

Investment simply means CAGR.

Can you achieve your target CAGR (Compounded Annual Growth Rate) over a long period of time?

There are two investment periods.

Period 1: Start Working to Stop Working (retire from full time job/career)
- Start with low income
- Start a family
- Pay for insurance and installment
- Pay for education for children
- Pay for lifestyle
- Prepare for retirement
- Finally, left some for investment

Period 2: Post full time job / career
- 2nd investment period is as important as well as Period 1 because you will have another 20 to 40 years to earn money, by investment

Why investment is so important?
  • Invesment provides an opportunity to live well without hard work;
  • You need to ensure your money work harder than you so you can enjoy living;


What does a young person start invest?
Example -

  • Alwin starts at age of 25 years old. 
  • Start with RM10,000 capital
  • Start with saving of RM150 per month for next 20 years.
  • Gets an CAGR of 10% for next 20 years.
  • How much Alwin have in this investment fund?