10 January 2013

26% - A Magic Figure in Investment Journey

It's been about 10 years plus since I learnt about shares investment and practiced it a lot. Quote from Cari Guru - KLSE.8K, I learnt about this number 26% from him, and it is an eye opener to me.

With 26% Compound Annual Return Rate, we can grow our money to 10 times after 10 years. Yes, do not be surprise if you know that someone can achieve this in long run ( > 10 years) and still continue to do so. Below is the illustration of the Magic 26% figure:
                            
Year  Year End Value
1 12,600
2 15,876
3 20,004
4 25,205
5 31,758
6 40,015
7 50,419
8 63,528
9 80,045
10 100,857

Illustration: 10 years growing trend with 26% Compound Annual Growth Rate

It's quite impressive right? So now we have to find out the ways to achieve 26% CAGR return. Below are some of my thoughts that we can achieve it:
  • Buy a Company that Worth to Hold for a Long Term, yet still can beat the rest for its performance. Look for those companies that enjoy higher profit margin than its peers. The only the company that can still making money during downtrend is the company that enjoy higher profit margin compared to the peers, especially when they started to have a pricing war. Higher profit margin makers will win the battle. To stay in higher profit margin for sustainable period, the company should come out with certain strategies - Cost Leadership or Niche Market. When middle class is growing, what I think is that, those niche market leader could earn more compared to Cost Leadership players. Anyway, this is only my guess, as I do not think that The largest is the best, but the best niche players can survive eventually, due to higher client's loyalty and a better long term relationship in between itself and clients.  This strategy only suitable for those investors who do a lot of homework and have a very strong belief in the management in their integrity as well as capabilities to grow the business in sustainable way. 
  • Buy when Market Crash and Sell when Market Boom - As this invites more frequency of trading, it may create opportunity cost for you. Anyway I believe that the more experience you have, the better you can get. How do we know whether the price is cheap? Or the price is Expensive? To me, it is a combination of Art and Science in determining the intrinsic value of the companies. However, I believe that a company that can perform well in bad times can always perform better in good times. So, it is time for you to look for a good company that can still make $$ when market crash, and just to buy it until you can find another undervalued stock. Always stay monitoring the market to find a hidden gem.
  • Leveraging - You can leverage on people and money. In Real Estate Investment, you can leverage on money you borrow from bank. In Equities Investment, you can leverage on management of the public listed companies you invested in. Once you can get to know more people, you can start growing your circle of competence, so that you can have better ideas in your investment / business. 
When you have a lot of experiences and hard work, you will understand that it is actually not too hard to achieve this Magic Figure. Let's work harder to achieve this. Yup, this is my long term goal as well. Welcome to leave your comments here. 

2 comments:

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  2. WHITE LOANS
    Windsor House, Greville Road,
    Bristol, BS3 1LL United Kingdom.
    Email: whiteloans@admin.in.th

    White Loans is a trading name of Freelancer Financials Ltd, Avondale House, 262

    Uxbridge Road, Middlesex, HA5 4HS.
    Company Number: 07676401.
    Data Protection Number: Z2957996.
    CCL Number: 562464

    We specialise in finding short/Long term credit solutions for customers in the

    hurry. The instant payday loans available through this contact can be arranged

    online without deposit of valued asset.


    It can occasionally take up to three working days to have the funds cleared,

    depending on who you bank with. Most mainstream banks however are extremely quick at

    allowing you to access the funds.

    Our service is available to you at 2% interst rate. We do however receive commission

    from payday lenders and brokers when customers enter into a consumer credit

    agreement with the them, having been introduced via our service.

    Specialize in offering:

    *Refinance
    *Home Improvement
    *Investment Loan
    *Auto Loans
    *Debt Consolidation
    *Business Loans
    *Personal Loans
    *International Loans.

    Applying for a payday loan through White Loans couldn’t be easier. Simply choose how

    much you’d like to borrow and when you intend to pay it back.

    If you really acknowledge this content, you are to send the details information to

    the account overleaf.


    EASY WAY TO APPLY.


    (1) Full Name:

    (2) Loan Amount Needed:

    (3) Duration of Repayment:

    (4) Country:

    (5) Marital Status:

    (6) Gender:

    (8) Age:

    (9) Occupation:

    (10) Mobile:

    Email: whiteloans@admin.in.th
    Tel: +447042035199
    CUSTOMER CARE
    Enjoy Online Banking Services.



    ReplyDelete

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