What do you want to do after saving 100 million yen? Set a goal essential for investing
Many people feel vaguely that they would like to try investing, but not so many actually do. Even if you try a little, most will not do well and end up quitting.
Investing requires "power"
If you start investing from scratch,you need quite a bit of power. It starts with opening a securities account, selecting a few among the 3,000 listed domestic stocks, and you must watch the market and buy and sell accordingly.
With a traditional brick-and-mortar brokerage, all of this can be done by a sales representative, so perhaps it is still necessary for spreading investing. That is why it has endured even in this highly online era.
However,you won't make money just by following what the brokerage says. Recently, since stock commissions are being undercut, there is a tendency to recommend high-fee mutual funds. Higher fees do not guarantee better performance; in fact, they often lead to negative performance as a result.
Using a traditional brokerage isn't inherently bad, but you should not take the sales staff's words at face value.To build wealth through investing, thinking for yourself is indispensable.
This“think for yourself” is the part that requires the most power in investing.
What would you do with 100 million yen? Even dividend income can support semi-retirement
To continue investing with a strong power, you need a goal.
Even if you vaguely think, “I want to build 100 million yen,” the reality may feel distant. What matters is“what you will do with that 100 million yen”.
For example, if you invest 100 million yen in stocks with a 5% dividend yield, you would earn a post-tax dividend income of 4 million yen per year. That is roughly the average corporate salary, enough to live a normal life without luxury. This gives rise to the goal of“semi-retirement”.
Even without full semi-retirement, having this can prevent money troubles in old age.You can pursue your desires without hesitation.
Even with the same 5% yield outwardly, the actual investments differ in safety.If you have gained experience by then, you should be able to distinguish which are safe.
Investing helps realize dreams
It isn’t just about conservative topics like semi-retirement or old age.Investing is also effective for realizing dreams.
For example,the dream of someday opening a cafe. Opening a business requires money. Depending on the approach, generally about 10 million yen is necessary.
That is not all the money required. At first, profits may be slow, so you will also need living expenses in the meantime. Considering that,10 million yen alone is not enough.
You can borrow part of the startup costs, but repayments will eventually begin.The less your own funds, the less financial and psychological leeway you have as repayments approach.
I myself alsohad six months of incomeless days after quitting my company. During that time I managed to get by on savings, but I was lucky it only lasted six months; if it had lasted longer, savings alone would not have sufficed.
If this happened,and you grew 10 million yen into 20 million yen as your starting capital. With 10 million yen of cushion, your daily living can be managed for the time being. If you can use your own funds for the startup, you’ll have psychological leeway as well.
Ways to easily double your capital
Doubling 10 million yen to 20 million yen may not seem easy, but given time it isn’t impossible.
The average return of the stock market is said to be about 7% per year. If you consider compounding by reinvesting profits,it should double in 10 years. If you can time your investments and choose the right stocks, you could expect a somewhat higher level.
However, the difficult part isthe variation in annual returns. For example, it is quite possible that the first year is minus 10%, the second year minus 10%, and the third year plus 50%. That would still be about a 7% annual rate.
If you are lucky, the capital can double in the first year; if unlucky, it could halve. Still,if you keep the right approach, it is highly possible to double in 10 years.
We don’t know when it will double, but after achieving it, you could set a goal to become independent at that point.Setting a monetary goal can also help push your dreams forward.
Famous people who saved startup funds through investing includeNagamori Chairman of Nidec. He saved over 100 million yen through stock investment and used that money to establish Nidec. Andincidentally, that time’s investment method was value investing.
Even if you cannot become such a charismatic leader as Nagamori, investing is effective for realizing your dreams. If you are thinking of starting investing,set a goal and build power from it.
