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Simple calculation to illustrate Financial Planning

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  • sgx_finance_amateur
    sgx_finance_amateur's Avatar
    45 posts since May '07
    • 09 Feb `08, 8:01AM

      Suppose an amount 3000

      Current inflation stands at 5%

      to overcome inflation

      to achieve an amount of 7000

      0.35% Per Annum

      put in bank----solution 1

      7000/ 0.35% X 3000 = 2.25 years to reach that

      put in diversified investment 6-8 % ---solution 2

      with case 1 : 50% -bond , 50% - equity

      bonds - 2 - 3 %

      worst case 50% equity loss

      7000/1500 x 2% = 3.8 years considering the worst case scenario of a poorly managed fund portfolio

      which means

      best case scenario . 50% bonds give 3 % growth and 50 % equity give 8 %

      7000 / 4650 = 1.5 years

      Not factoring in sudden withdrawal for personal consumption

       

      So the above is self-explanatory

      a investment portfolio earn and rides over the effect of inflation ,ensuring capital growth

       

        

  • xavier1979
    xavier1979's Avatar
    6,273 posts since Aug '02
    • 09 Feb `08, 10:03AM

      This is an overly-optimistic projection. You forgot to include transaction costs and implementation costs.

  • sgx_finance_amateur
    sgx_finance_amateur's Avatar
    45 posts since May '07
    • 09 Feb `08, 1:05PM
      Originally posted by xavier1979:

      This is an overly-optimistic projection. You forgot to include transaction costs and implementation costs.


      ya ,not factoring in transactions cost and implementation costs

       

  • BangHong
    BangHong's Avatar
    957 posts since Sep '03
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