My thoughts on savings

I have $100,000 in my equity portfolio. A conservative estimate for my savings each year is around $30,000 a year. Given these figures I can calculate how much I will have in 10 years, depending on my return.

YoY Return Expected saving per year value of portfolio in 10 years
5% $30,000 $540k
10% $30,000 $737k
15% $30,000 $1mn
20% $30,000 $1.4mn
25% $30,000 $1.9mn

Even the lowest estimate is enough for me to retire in India; if I aim for $12,000 in yearly spending (2.2% return suffices). The high estimate is probably going to be very difficult to achieve. I am targeting 30% return — which will be very difficult. But a high target is going to help me weed out low margin of safety investments. I want the undervaluation to be enough to warrant 30% return.

A conservative estimate is around $40,000 saving every year and a 15% return. With a starting portfolio of $100,000 today; this gets me to: $1.2mn.

My goal for 2013 are:

  • Save $40,000.
  • Target 30% return.
  • Never go below 20% cash.

I will see if I achieve these this year or not.


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