How to get to £1M in ten years?

[Aminatidi]

Bit of fun (sort of) after some playing with a compound interest calculator.

Let's say someone gave you £250K.

Let's say someone gave you £2k/month for ten years.

Let's say you wanted to stop working and be comfortable in ten years time.

Let's say you know nothing about this persons appetite for risk.

What would you do?

Including telling them it's totally unachievable.

[scrumpyjack]

Start with 2 million and let the fund managers manage it for you

[swill453]

Let's say someone gave you £250K.

Let's say someone gave you £2k/month for ten years.

Let's say you wanted to stop working and be comfortable in ten years time.

Let's say you know nothing about this persons appetite for risk.

If someone gave me £250K and £2k/month for ten years, then I would know my attitude to risk.

Is the goal £1million, or is the goal to "be comfortable in ten years time"?

Scott.

[Aminatidi]

Let's say someone gave you £250K.

Let's say someone gave you £2k/month for ten years.

Let's say you wanted to stop working and be comfortable in ten years time.

Let's say you know nothing about this persons appetite for risk.

If someone gave me £250K and £2k/month for ten years, then I would know my attitude to risk.

Is the goal £1million, or is the goal to "be comfortable in ten years time"?

Scott.

The latter.

£1M is a nice round number.

As in if I got to say £800K I wouldn't be thinking I'd failed

[dealtn]

Bit of fun (sort of) after some playing with a compound interest calculator.

Let's say someone gave you £250K.

Let's say someone gave you £2k/month for ten years.

Let's say you wanted to stop working and be comfortable in ten years time.

Let's say you know nothing about this persons appetite for risk.

What would you do?

Including telling them it's totally unachievable.

What I would do is ask him his appetite to risk.

[tjh290633]

You need to double in 5 years and again in 5 years, so if 7% compounds to double in 10 years, you need about 15% to double in 5 years. But where do you find 15% per annum to compound?

But I forgot the 2k/month. That is 10% of the original sum in a year, so maybe 5% would do it?

TJH

[kempiejon]

Bit of fun (sort of) after some playing with a compound interest calculator.

Let's say someone gave you £250K.

Let's say someone gave you £2k/month for ten years.

Let's say you wanted to stop working and be comfortable in ten years time.

Let's say you know nothing about this persons appetite for risk.

What would you do?

Including telling them it's totally unachievable.

Someone is, over the next decade, going to give me nigh on half a million, half upfront today the rest by monthly instalments over 10 years, I'd save all their money and my money and in 10 years time I'd be able to stop work and be comfortable.
Why would someone want me to have their money though?
What would I have to do marry them?

[Lootman]

But where do you find 15% per annum to compound?

Funnily enough I was checking the performance of some of my US funds the other day, and quite a few of them have achieved a compounded 15% annual return over the last decade.

Put another way they doubled in 5 years and then had quadrupled after 10 years.

Obviously that was from a cyclical low during the financial crisis. But I think that if someone needs double digit annual returns in the next decade then it is probably going to happen from the centres of global innovation and productivity: the US and China.

[GrahamPlatt]

But where do you find 15% per annum to compound?

Funnily enough I was checking the performance of some of my US funds the other day, and quite a few of them have achieved a compounded 15% annual return over the last decade.

Put another way they doubled in 5 years and then had quadrupled after 10 years.

Obviously that was from a cyclical low during the financial crisis. But I think that if someone needs double digit annual returns in the next decade then it is probably going to happen from the centres of global innovation and productivity: the US and China.

Pah! Bitcoin’s gone up ~120,000 times since inception over something like the same timescale.

[swill453]

You need to double in 5 years and again in 5 years, so if 7% compounds to double in 10 years, you need about 15% to double in 5 years. But where do you find 15% per annum to compound?

But I forgot the 2k/month. That is 10% of the original sum in a year, so maybe 5% would do it?

A £250,000 lump sum plus £2K/month needs about 9% compounded to get to a million in 10 years.

Scott.

[Lootman]

But where do you find 15% per annum to compound?

Funnily enough I was checking the performance of some of my US funds the other day, and quite a few of them have achieved a compounded 15% annual return over the last decade.

Put another way they doubled in 5 years and then had quadrupled after 10 years.

Obviously that was from a cyclical low during the financial crisis. But I think that if someone needs double digit annual returns in the next decade then it is probably going to happen from the centres of global innovation and productivity: the US and China.

Fundsmith more than managed that. Obviously, the last ten years may not be replicated over the next ten.

True but then doesn't he mostly invest in the US?

Pah! Bitcoin’s gone up ~120,000 times since inception over something like the same timescale.

Which of course was predicted by absolutely nobody. What is your 15% a year pick for the next decade?

[LooseCannon101]

You need to double in 5 years and again in 5 years, so if 7% compounds to double in 10 years, you need about 15% to double in 5 years. But where do you find 15% per annum to compound?

But I forgot the 2k/month. That is 10% of the original sum in a year, so maybe 5% would do it?

A £250,000 lump sum plus £2K/month needs about 9% compounded to get to a million in 10 years.

Scott.

A highly diversified world equity portfolio made up of one or more global investment trusts has made about 8% per annum on average over the past 20 years.

If all the cash is invested right away and all dividends are re-invested then the total sum after 10 years would be around £900k - assuming that the returns are 8% per annum. Two different accounts would be needed - an ISA (£20k per year) and a General Investment Account.

[Adamski]

Morning Aminatidi, I put the above into a compound interest calculator..

The £250k becomes £613k after 10 years with return of 9%.

The £2k p.m. becomes £390k after 10 years with returns of 9%. So 9% would get to £1m.

Obviously achieving that long term is going to be difficult. I've only been investing 2.5 years and returns have been good, probably a lucky period, despite terrible last year. Think would require a big amount of luck if you have a bull market or not in that 10 year period. Cheers, Adam

[tjh290633]

My record over the years does not suggest that an HYP will do anything like that needed unless the dates are fortuitous. These are the results from the dates shown to the present date:

Since        Acc Unit   IRR    
26-Dec-96        3.39     9.09%
01-Jan-98        4.86     7.82%
31-Dec-98        5.89     7.24%
30-Dec-99        6.85     6.83%
31-Dec-00        6.68     7.31%
31-Dec-01        6.43     7.94%
31-Dec-02        5.23     9.64%
31-Dec-03        6.38     8.95%
31-Dec-04        7.59     8.36%
30-Dec-05        9.69     7.18%
31-Dec-06       12.25     5.93%
31-Dec-07       12.41     6.30%
31-Dec-08        7.41    11.51%
31-Dec-09       10.24     9.37%
31-Dec-10       12.32     8.34%
31-Dec-11       13.45     8.24%
31-Dec-12       15.80     7.15%
31-Dec-13       19.56     4.97%
31-Dec-14       20.34     5.13%
31-Dec-15       21.42     5.09%
31-Dec-16       24.37     3.03%
29-Dec-17       26.70     0.96%
31-Dec-18       24.06     6.81%
31-Dec-19       28.84    -4.60%
31-Dec-20       27.01

From the low point at the end of 2008, the IRR has been 11.51%, and from the high point the year before it has been just 6.30%. The latest value for the Accumulation unit is £27.49 (April 1987 was £1.00). The IRR since 1987 has been 9.35%, but it certainly has its ups and downs.

TJH

[agomez]

I believe if interest is applied annually then a compound interest rate of 19% is required to grow 250k + 2k monthly into 2million in 10years. 19% sustained average on the whole portfolio would be phenomenal achieved by very few investors. (calc https://www.thecalculatorsite.com/compo ... p=&c=3&di=)

Year Year Deposits Year Interest Total Deposits Total Interest Balance
1 £24,000.00 £49,904.39 £274,000.00 £49,904.39 £323,904.39
2 £24,000.00 £63,946.22 £298,000.00 £113,850.61 £411,850.61
3 £24,000.00 £80,656.01 £322,000.00 £194,506.62 £516,506.62
4 £24,000.00 £100,540.65 £346,000.00 £295,047.27 £641,047.27
5 £24,000.00 £124,203.37 £370,000.00 £419,250.64 £789,250.64
6 £24,000.00 £152,362.01 £394,000.00 £571,612.65 £965,612.65
7 £24,000.00 £185,870.79 £418,000.00 £757,483.45 £1,175,483
8 £24,000.00 £225,746.24 £442,000.00 £983,229.69 £1,425,229
9 £24,000.00 £273,198.03 £466,000.00 £1,256,427.72 £1,722,427
10 £24,000.00 £329,665.66 £490,000.00 £1,586,093.38 £2,076,093

[agomez]

and 1million would be 10%

Year Year Deposits Year Interest Total Deposits Total Interest Balance
1 £24,000.00 £26,281.07 £274,000.00 £26,281.07 £300,281.07
2 £24,000.00 £31,309.18 £298,000.00 £57,590.25 £355,590.25
3 £24,000.00 £36,840.10 £322,000.00 £94,430.35 £416,430.35
4 £24,000.00 £42,924.11 £346,000.00 £137,354.46 £483,354.46
5 £24,000.00 £49,616.52 £370,000.00 £186,970.98 £556,970.98
6 £24,000.00 £56,978.17 £394,000.00 £243,949.15 £637,949.15
7 £24,000.00 £65,075.99 £418,000.00 £309,025.14 £727,025.14
8 £24,000.00 £73,983.59 £442,000.00 £383,008.73 £825,008.73
9 £24,000.00 £83,781.95 £466,000.00 £466,790.67 £932,790.67
10 £24,000.00 £94,560.14 £490,000.00 £561,350.81 £1,051,350.81

[swill453]

and 1million would be 10%

9%, as already stated by at least 2 people in the thread.

Scott.

[Mike4]

"How to get to £1M in ten years?"

Puts me in mind of Richard Branson being asked by a school-kid how to become a millionaire.

His pleasingly witty suggestion was first become a billionaire, then start an airline.

[Aminatidi]

and 1million would be 10%

9%, as already stated by at least 2 people in the thread.

Scott.

I actually forgot I'd also posted the question on this forum which is embarrassing.

The 9% figure you mention is kind of what I was driving at in my question.

If you'd asked me how to do this my instinct wouldn't have been that the answer was "just" a consistent 9%

Coincidentally I'm reading an interview with Ruffer who have averaged 7.5% and the bulk of my money is with them, Personal Assets and Capital Gearing Trust so hopefully in safe steady hands.

I guess whether that average is achievable over the next 10 years is one question.

The other is how to drive the extra required return?

Right now I have around 15% split between Scottish Mortgage and Baillie Gifford US Growth.

I know last year was a freakish year but it's staggered me the difference that a small (15% ish) amount of "rocket fuel" can make.

[dealtn]

and 1million would be 10%

9%, as already stated by at least 2 people in the thread.

Scott.

I actually forgot I'd also posted the question on this forum which is embarrassing.

I'd still ask the same question in my original (unanswered) reply.