Personal Finance (1) : Retirement Fund

Recently, I had come across two articles on the subject of personal finance regarding retirement fund. Both articles are trying to project the amount of money that would be required for retirement with the goal of financial independent in mind. The first article is from the US and the second is from China.

The first article was a summary from a survey with 226 registered investment advisors, and attached Table is the findings: Source URL Link :-> $1 Million Doesn't Cut It for Retirement

The second article is from a Professor, Prof. Zhong, in Financial Research Center, Beijing Pedagogical Academy, China, stated that: “For those who, stay in the first-line cities (such as Beijing, Shanghai, & ShenZhen), are going to retire in 2027, having a sum of 10 million (RMB) might not be enough.”
The article by Prof. Zhong had created a series of criticism in the web and media, as far majority of the people do not believe that they stand a chance to make 10,000,000RMB in their entire life. While Prof. Zhong defended himself by commenting that this would be the end result of continuous growth in Money Supply (or better known for the term as keep printing more money).


I think that these articles are of good intention to alert people in starting to plan for their retirement early. And, the following will add some mathematical charts to demonstrate why these article make perfect sense...

Albert Einstein had said:
“The most powerful force in the universe is compound interest”

And, this has proven been true as Warren Buffett made himself one of the richest man by compounding his fund - Berkshire Hathaway - with an average of 20 over percent over the last few decades. The following Chart (click on the chart to ZOOM) illustrate how money can growth in an exponential form want one learnt how to use the wonder of Compound Interest...

But, this is a double-edge sword. If one does not know how to invest and when the inflation rate keep climbing up directly proportional to the money supply grow. Then the Value of the Cash on hand will depreciate accordingly. The following is the chart to illustrate how fast the value (buying power) would evaporate over the years...

So, with both chart above, it clearly show that if one were to retire with the peace of mind... He/she really need to has a skill to earn more to cover both the expense plus capital depreciation due to inflation. Or else, at the age of 65, he/she will become the 95% of the people show in this diagram. :-> "What's Preventing Most People from Financial Freedom".

( be continue...)

"The Greatest Shortcoming of the Human Race
is our Inability to Understand
The Exponential Function." -
Dr. Albert A. Bartlett

"Some people spend more time planning a two-week
vacation than they do retirement planning."
~ Anonymous


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