September 27, 2020

Earlier, I made a video on 4 tips to invest in your 40s to be wealthy in your 50s. This time, I am going to talk about retirement, freedom and how you can achieve that by investing $100,000 in your 40s without saving additional money. The question is how you can retire by 55? Is that even possible? Watch this video to find out. First, let’s start with the goal. If you earn 30% per year for the next 15 years for $100,000 today, then you will reach $3 to $5 million dollars. That’s not bad, right? Whenever we are dealing with compound interest, our mind don’t comprehend the potential well. So let me break it down for you. For the first 10 years, your $100,000 will grow to $1,000,000 using 30% per year (10x in 10 years) From the 11th year to the 15th year, your $1 million will grow to $3 million to $5 million dollars. That’s really the math. You can build your own Excel model to play around with the numbers. Try puting 7%, 10%, 20% and 30% into your model and see what happens. So the key question is, how can you get 30% per year for the next 15 years? What are the 3 tips to get 30% per year for the next 15 years?

90% correct transcript

So earlier I made a video on four tips on how you can invest in your forties. So then you can be wealthy in your fifties. So in this video, I want to share a three step process for you to invest a hundred thousand dollars in your forties. So then you can retire by 55. And this is my proposed plan. If I am 40 years old today, and I have a hundred thousand dollars, what am I going to do with it? So then I can retire by 55.

So let's start with the goal. The goal is to have around three to $5 million by 55 years old. So then you don't need to work anymore and you can live off a passive income stream. Now you might think, wow, three to $5 million using a hundred thousand dollars. That's actually quite ambitious. And I would agree with you. And if you actually go to a Reddit or any forums, and you kind of look at what financial independence people are aiming to get is somewhere around 1 million. Maybe they can get away with 800 K. So 1 million is to typical amounts that people try to retire with. And I'm aiming for three to $5 million. And that is because I want to have some buffer. I want to live more comfortably and, you know, for investing, it is really a variable return. So then there's no guarantee. So that's why I like to have a larger balance to aim for before I consider retirement.

And this is really designed when you're 40, because I think that when you're 40, you can be a bit more ambitious. You're not retiring in the next five years. You have around 10 to 15 years to invest in safe. And I think you have time. So then you can be a bit more ambitious in terms of the amounts of net worth you have at the end of 15 years, which is 55. Now, when you think about it, I did the calculation using compound interest will have a hundred thousand dollars in the very beginning. So this means the number I just provided you does not include any additional money you save. So you might even make more, depending on how much money you save each year. So as a 40, let's assume you have a hundred thousand dollars. And for the next 10 years you invest and you make around 30% return.

So in 10 years, that's actually a million dollars already. And from a million, which is when you're 50 years old, you can invest and they're in 30% again. So then at 55, you'll be somewhere around three to $5 million in your investing accounts. So that's pretty good, right? So let's tackle the first problem, 30% return. Now this is a relatively high return. And if you look at the previous video, you can't really get that by investing in a mutual fund because mutual fund usually gives you around 7% return and you want 30. So that means when you are investing in the market, you need to be more selective. For example, Warren buffet has around 50 to 60 investments, that's it. But when you look carefully at his portfolio, his top 10 to 15 investments consists of 90% of his portfolio. So he's a really focused investor.

And when you think about the markets, there's around 2000 stocks on NASDAQ, there's 2000 stocks on New York stock exchange. There's another 2000 stocks on Toronto stock exchange. You're not going to find a hundred stocks that can grow 30% year after year. And it will be too time consuming for you. You have a full time job. I know you're busy. So that means you need to be more focused than that. So based on my calculation, reading and studying more Warren buffets for the next 15 years, you're really aiming for just around 20 companies that you think will give you that return. So when you think about that, wow, you're actually not investing that much. And you're right. And if you just kind of divide 20 companies across 15 years, then it'll work out to be approximately one to two companies a year. Now, of course you want to be fully invested.

So then your portfolio will work for you. So that means, I would assume you need to get around five to seven opportunities or five to seven companies a year in order for you to grow your own count by 30% year after year. Now, the second tip I got for you is really to wait for the right time. So when it comes to your portfolio, you already know that. So you need to invest in 20, maybe 30 companies in total. So that means you need to invest in around five to seven companies per year. So when you think about it, you actually have time. And if you want, I make 30% a year to get good at timing. The markets. Now, a lot of people think you can't time to markets. There's no point in timing to market. Yeah, there's a lot of research study tell you that we need to time the market, but the truth is timing does matter and you won't get timing perfectly, but you should at least try your best to get into a stock at a discount in terms of tools or techniques to use.

I like to use Bollinger Band. And it is a very famous technical indicator developed by mr. Bollinger. And it is basically a statistical tool where it will look at the last 20 weeks or 20 days or 20 minutes of the charts, data and calculate what the upper band and the lower band is. So what does that mean? I actually explained a bollinger band in much greater detail within my free case study below. But a brief description is that imagine you have a bell curve and you want to capture it 95% of the opportunities within the bell curve, you draw two lines and say, that's okay for the last 20 weeks, 20 days or so most of the data points are within this curve. So this band, the upper and the lower band. So then that means if it is near to top of the band, chances are as the high.

And if it is near the lower part of the band, then chances are, is a low. So this will allow you to get into a stock at a discount. So it's much more efficient and it is very easy to see. So if you are not using the Bollinger band yet, then I will suggest you to add that to your chart, because that will really help you out in terms of timing so that you can get it at a discount. So imagine you can get into a stock at a 10% discount and then to stock as a good stock, obviously. And it goes back up by 10%. So by getting into a stock at a 10% discount, you are making 10% return when the stock reverts back to normal. Now, of course in reality is a bit more complicated than that to use bollinger band, which is why I have to free case study below.

So you can go to the first link and you can sign up and watch it in your spare time after this video. When you are able to master a timing, that's when you're able to get an extraordinary return. So in investing accelerator here, you're going to see a case study from Theresa and she made 78% from FedEx to stock using stock options. She invested in FedEx when it was low, when it was at a discount. And this is Ashley shortly after COVID when the market has taken a beating and the stock dropped a lot. So after doing some additional research using Bollinger band, Theresa is able to figure out that FedEx is at a low so that she invested within three months, Theresa made 78%. So congratulations, Theresa the third and the final tip to invest your a hundred thousand dollars is to really use leverage.

Now, there are mainly many, many forms of leverage. Personally. I don't like to use margin accounts. I have a margin accounts, but I don't use margin at all. Even though I haven't, I use something called stock options, and that is a Nevada topic. That's, it's very confusing. And if you go online and research, chances are, you're going to find 20 to 30 different options strategies with varying returns. But it is important for you to learn off options or their leverage. Because once you're able to use leverage in your favor, then it will further multiply your return so that you can get to 30% returns faster. So within investing accelerator, we learn how to use the options, which is a form of leverage. And we also learn when not to use it, because whenever you're learning a tool or a technique, it is important to learn when you are supposed to do something and when you're not supposed to do something.

So here is another case study within the program where Adrian made 91% from Corning, which is GLW and 95% from United airlines. He invested with good timing because the stock market was down. So then he got in for both of these stocks at a discount and he used stock options to multiply his return. So that's why you see that he's to get close to almost a hundred percent for these two stocks, because he used leverage. He got in at a good time and he focused his portfolio, such that he's only investing in the best opportunities. Only. He's not trying to invest in a hundred stocks in the markets. He's not trying to buy ETFs, but he focuses his capital so that he's only investing in around five to seven companies a year. So that is pretty much it. If you want to learn more about investing and how to evaluate whether something is good investment, then you want to click on the first link below so they can watch the free case study.

Now, after you finished a free case study and you want to join investing accelerator, then you can schedule a call with me. So the second link below is to schedule a call with me and you can find a time that works for you. And then you can fill out the application form, I'll review it and prepare for our call and then we'll have a chat! It's fairly straight forward. So I'll see you on the call. So thank you for watching and I hope you enjoyed the video. Please help support me by like subscribe and you can watch the next recommended video here as well. So I'll see you next time.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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