What is the magic number to conquer inflation

 Say, we are currently 45 years old and we might live for another 40 years. How much money must we have to maintain our status quo for the next 40 years.

On overage, we will need at least 2k per month to survive in malaysia and we put in mind that inflation will double every 10 years. 

Our needs for the first 10 years will be

Rm 2000 x 12m x 10y = 240k

In the 2nd 10 years will be

Rm 2000 x 12m x 10y x 2 = 480k

In the 3rd 10 years will be

Rm 2000 x 12m x 10y x 4 = 960k

In the 4th 10 years will be

Rm 2000 x 12m x 10y x 8 = 1920k

In short over the 40 years, we will need

Rm 2000 x 12m x 10y x (1+2+4+8) = 3600k to maintain our status quo in 40 years time. 

However, Thank God inflation does not increase in linear fashion as water, electricity, phone bills and insurance is not subjected to inflation rate as much as food and medicine. 

Therefore, we need to itemised inflation rate for each individual item and we will need a much lower amount of money than 3.6 million to maintain our status quo in the next 40 years.

We can roughly divide our source of income for the following 4 decade:

1.First decade from our daily job. 

2.Second decade from our pension or EPF. 

3.Third decade from our investment and insurance. 

4.Fourth decade from our property.

The biggest misery in human nature is fear of the unknown. 

Hence, we can creat a plan to overcome inflation and live a bless life. If we fail to plan, we plan to fail.

May God's blessings be with you always. 

Everything is possible through God who loves us, 

Dr. Lion. 

Effect of Consistent Compounding on the lifetime return of investors.

 Say, we have 3 brothers Joshua, Buffet and Soros who are investor and would invest over the horizon of 40 years. 

All three of them have just inherited 1 million from their grandfather recently. 

Joshua is a stock investor and hope to gain a consistent average profit of 10 percent per  year over his lifetime. At 10 percent return per year, his 1 million will become 64 millions in 42 years of investment.

Buffet on the other hand is more selective in his investment and only invest in high grade stock with average consistent annual return of 20 percent. His 1 million will become 4 billion in 42 years of investment. 

Soros on the other hand is a speculator and he speculate on high risk stock with average consistent annual return of 40 percent. His 1 million will become 4 trillion in 42 years of investment.

This show the magic of compounding on the lives of 3 types of investor. Which investor are you? Joshua? Buffet? or Soros? 

Moral of the story is If you take care of your losses the profit will take care of itself. 

God bless, 

Dr. Lion.