I have asked many customers this question, "How much would you like to make in the stock market?"  The answers I get, rank from "as much as possible" to "enough for me to spend a holiday with my family", but sad to say, almost all of them could not give me a specific figure. This is a very dangerous sign for an investor, because you should know specifically how much you want to make before entering into the stock market. If you do not know how much you would like to make a year, then how could you plan your way to achieve it? And if you do not have a proper investment plan, chances are you will end up shooting without target and will probably be swallowed by the big sharks!

Considering that an average investment fund could actually bring you in the range of 10%-20% return a year, this could then be served as a yard stick for your investment. If you are to invest yourself in the stock market, surely you have to make an annual return greater than 20%, otherwise you must as well leave your money to the fund manager and forget about the hard work you need to put up for investing yourself. So, how much return is considered reasonable? 20%, 30% or 40%? Let us assume 30% is your annual target of return and you would like to make a million dollar with an initial capital of S$100,000. Could it be possible? How long does it take to achieve your goal? The answer is, "yes" it is possible and it takes only nine years for you to achieve your dream. The exact calculation can be found from the following Table 1. Compounded Increment. Of course to achieve that, you need to satisfy some terms and conditions. First, you should not take out any part of your investment fund until the completion of ninth years (this will allow the power of compounding to play into your investment). Second, you should continue making 30% return a year for nine consecutive years without fail. This is quite a challenge! The real story behind is, you need not make a killing of 100% return a year to achieve a million, rather, you should aim a smaller percentage of return, BUT, do not make big losses through the years! If you can achieve these conditions, a million is just not too far from you. Happy investment!

Table1: Compounded Increment (Initial capital S$100,000)

% 1.10 1.20 1.30 1.40 1.50
Year 1 110,000 120,000 130,000 140,000 150,000
Year 2 121,000 144,000 169,000 196,000 225,000
Year 3 133,100 172,800 219,700 274,400 337,500
Year 4 146,410 207,360 285,610 384,160 506,250
Year 5 161,051 248,832 371,293 537,824 759,375
Year 6 177,156 298,598 482,681 752,954 1,139,063
Year 7 194,872 358,318 627,485 1,054,135 1,708,594
Year 8 214,359 429,982 815,731 >1,475,789 2,562,891
Year 9 235,795 515,978 1,060,450 2,066,105 3,844,336
Year 10 259,374 619,174 1,378,585 2,892,547 5,766,504
Year 11 285,312 643,008 1,792,160 4,049,565 8,649,756
Year 12 313,843 891,610 2,329,809 5,669,391 12,974,634
Year 13 345,227 1,069,932 3,028,751 7,937,148 19,461,951
Year 14 379,750 1,283,918 3,937,376 11,112,007 29,192,926
Year 15 417,725 1,540,702 5,118,589 15,556,810 43,789,389