I’ve crossed the $1 million mark in liquid assets (excludes property and CPF) in Nov 2020, and it’s now passed $1.1 million. It makes me think of what’s possible to achieve.
While I had used to think that the best I could hope for was to match the S&P 500, I’m now considering that perhaps I can do better. I hope it doesn’t sound like hubris. I like to think of it as confidence and optimism. A bit of self-delusion is probably necessary to do anything special in life.
But when I think about it, is it that crazy? Assuming a 10% rate of return, $1.1mil will turn into $1.5 million in about three years. And my return for 2020 was more than 30%. Even if I consider all my mistakes from 2018-2020, my annual average return was about 12%. I don’t make so many mistakes now.
Looking at the companies in my portfolio, it’s not a stretch for them to grow their revenue by at least 10% each year. Palantir posted guidance for their revenue to grow 44% in 2020. Amazon will probably grow revenue by about 30% – 40%. While growth stocks probably experience higher volatility with steep decreases in value at times, on average it shouldn’t be unreasonable to meet or exceed 10% growth each year. If anything, 10% is a low-bar.
The environment for stocks looks a lot like the environment of the Great Financial Crisis (GFC) of 2008, which was a 10 year bull market. There were similar conditions of low interest rates (I think its even lower now), and the sense of coming out of a severe crisis. And there is even more pent-up demand. Businesses and travel didn’t shut down during the GFC. I expect people to spend recklessly to compensate for their suffering during lockdowns. We also need to remember during Obama’s time in office from 2009 – 2017, the S&P 500 grew about 170%, or over 21% each year on average. Considerably better than Trump’s return of 60% (15% on average). There is reason to believe Biden can be something similar.
Finally, I’ve read that believing in something leads you towards it. Believe in good thoughts and emotions, and good things will come to you. Whether you worry or not, it won’t affect the outcome. You can spend the whole day or your whole life afraid, and that doesn’t improve a thing.
So instead of worrying that I’ll run out of money in retirement, I will shift to thinking I can grow even more wealthy.