Simple calculation to illustrate Financial Planning

• sgx_finance_amateur

  9 Feb 08, 08:01

  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

  9 Feb 08, 10:03

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

• sgx_finance_amateur

  9 Feb 08, 13:05

  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

  9 Feb 08, 13:27

  your idea is too good.....

  reality is always cruel