In The Toyo Keizai ONLINE, a column is posted — How to grow your funds tenfold in five years?

Good morning, this is Matsushita.

The other day, from a certain individual investor,

I received the question,

"What methods exist to increase funds tenfold in five years?"

I found it quite interesting and fairly concrete,

so I thought about it a little.

Even if you say you want to increase funds tenfold in five years,

it's too vague and I don't know what to do.

So I experimented with calculating, using Excel,

what annual return would be needed to achieve this in five years.

I found that if you achieve 63% annual return for five consecutive years,

then, with funds after taxes,

your capital would be tenfold after five years.

※Because my Excel calculations are rather crude,

there is a possibility that they are wrong.

If you want to know concretely, I recommend you check it yourself.

An annual return of 63% for five consecutive years is a fairly harsh condition.

This goal itself is not so cruel.

So, how can we achieve a 63% annual return?

The person who sent me this question was a stock market investor,

so let's consider it in terms of stock investments.

For example, by investing all funds in a single stock,

if that stock's price rises by 63%,

and you successfully take profits, you can achieve 63% annual return.

If it rises even more,

even more than that is possible.

At last, the possibility of realization becomes visible.

But there are still many gaps.

Investing all funds in a single stock is not feasible from a capital management standpoint.

Thus, diversification is needed,

and the overall gain across all stocks must reach 63%.

As I think about it this way,

new ideas pop up one after another.

However, none of these ideas is realistically easy to realize.

Because, after all, the goals are unbelievably high.

An individual investor may have high goals,

and work backward from those goals to daily buying and selling,

in building their approach, and I do not deny that at all.

However, the higher the goal,

the more stringent the content becomes,

and the more it drifts away from reality.

What is important in investing is

to maintain consistency between goals and reality while constantly chasing high goals.

Keep that in mind,

set your goals, develop them concretely, and

link them to your daily trades.