What is the Rule 72 and how to use it?

The rule of 72 is a simple way to determine how long an investment (your capital) will take to double given an annual rate of return. It is a great way to see the effects on your capital with a yield that is known whether it be from dividends, fixed bank rates or bonds. I also use it as an “estimation” only on potential investment ideas if I am modelling ROIC (just for curiosities sake). It is best used for anything that grows at a compounded rate.

The Rule of 72 explained. The rule 72 is a simple way to determine how long an investment (your capital) will take to double given an annual rate of return. It is a great way to see the effects on your capital with a yield that is known whether it be from dividends, fixed bank… Continue reading →

A simple way to Calculate Portfolio Returns.

There is a multitude of portfolio, investment, and financial management software available. In my personal experience, I still after 15 years prefer to use excel for practically everything to do with investments. I have tried a lot of different subscription and software services, but I have tailored my own systems to reflect my own process and how I manage my wealth.

Calculate Portfolio Returns explained. This is a simple formula to calculate portfolio returns. I prefer to use it annually however you can use the formula monthly measuring performance depending how active you are. There is a multitude of portfolio, investment, and financial management software available. In my personal experience, I still after 15 years… Continue reading →

What is the Compound Annual Growth Rate?

The CAGR (Compound Annual Growth Rate) measures the average annual growth of an investment over a given period. CAGR is a helpful tool for investors because it measures investment growth (or decline) over time. This can be a useful way to measure against a benchmark if you have one.

The Compound Annual Growth Rate explained. The Compound Annual Growth Rate (CAGR) measures the average annual growth of an investment over a given period. CAGR is a helpful tool for investors because it measures investment growth (or decline) over time. This can be a useful way to measure against a benchmark if you have one…. Continue reading →

What is the Discount Factor and how to use it?

The Discount Factor is a metric that determines the present value of $1. It is used when conducting financial modelling such as the discounted cash flow or (DCF), net present value (NPV) model. The Discount Factor is used to estimate the present value (PV) of receiving $1 in the future based on the expected date of receiving it and discount rate estimation.

Continue reading →

What are some of the reasons people don’t invest?

Some people think investing is like the man in the picture solving a formula that very few understand. There are a lot ofcommon reasons that people don’t invest into stocks (or many other asset classes). Some understandable, others circumstantial but all mostly behavioural. Before we get into investing, understanding why others avoid the markets can be helpful. All though we may be advocates for investing in public markets we can not have the confirmation bias that it is for everyone. What is suitable for one person may not be for another.

There are quite a few very common reasons that people don’t invest into stocks (or many other asset classes). Some understandable, others circumstantial but all mostly behavioural. Before we get into investing, understanding why others avoid the markets can be helpful.

Continue reading →

What may be better than investing straight away and why?

I don’t think that everyone should simply jump in with both feet. Whilst investing can boast stable long-term returns, there is lower lying fruit to pick like better financial habits that can help build your wealth.

Continue reading →

Why is investing important and what are some key reasons?

Put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit. Investing is defined as the “commitment of resources to achieve later benefits”. If an investment involves money, then it can be defined as a “commitment of money to receive more money later”. It is the action to grow one’s money over time. We purchase an asset with the goal of generating income or capital appreciation (rise in value from what you forked out for it).

Investing is an effective way to put your money to work and build wealth in the long term. Wise investing may allow your money to outpace inflation and increase in value. Whether we are income seekers or capital growth builders, investing is about looking after our future selves.

Continue reading →

What does investing really mean and how to think about it?

Investing is an effective way to put your money to work and build wealth in the long term. Wise investing may allow your money to outpace inflation and increase in value. Whether we are income seekers or capital growth builders, investing is about looking after our future selves.

Investing is defined as the “commitment of resources to achieve later benefits”. If an investment involves money, then it can be defined as a “commitment of money to receive more money later”. It is the action to grow one’s money over time.

Continue reading →