Before I started trading, I read books about investing. I read how some of the world’s richest investors like Warren Buffet, Peter Lynch, and Li Ka Shing made billions of dollars, just by investing, generating an average returns of 20-25% annual returns.
I thought that is really amazing, until I did some simply math.
Say I have a capital of RM10,000 to invest, and I will be happy if I can make 15% return in my first year.
It’s way much higher than the bank rate of 1%.
But I calculated again… 15% of RM10,000, it is only RM1500 a year.
Divided by 12 months, I only made a miserable RM125 a month (how attractive is that?!)
That got me thinking…Even if I can achieve a high 15% annual returns, I can only make additional RM125 a month only, because I don’t have a huge capital to begin with.
But if you have a huge capital to start with… then that’s a different story!
Say if this person have RM500,000 capital, and with a poor investment strategy, he only managed a low 8% annual returns.
Now, even with a lower return than mine, he can still make RM40,000 a year, or RM3,333 passive income every month!
Now… this is a much more attractive sum you can retire on!
If you can do simple maths, I’m sure you’ll agree with me investing is not the way to go.
This is also why I turned to financial trading… which gives much higher returns, with smaller capital!
(and this turned out to be the best decision I ever made!)