The truth power of Compounding effect will only show when your capital is
huge. The effort required to double up RM 100 compare to RM 100,000 is same, but
the end result is very different.
So CAPITAL is one of the Key for a more effective Compounding Effect. For early stage
investment, we have to find way to accumulate capital as much as we can.
How do I get my first 40k investment fund by doing nothing?
Fastest way to get RM 40k for investment fund by doing nothing is "Don't spend
it!". Yes, sound like a stupid answer but it's truth.
At Age 25, I have a choice to choose whether buying a Nasional made car - Proton
Saga(40k) or a Japan made car - Honda City (80k). The different of installment will be RM 500 vs RM 1000.
Obviously, I choose Saga with 5
year loan for monthly installment RM 500+- then save the other 500 for investment.
The different for these 2 decision 5 year later :
- "have an old Saga with 40k cash on hand" vs "have an old Honda City".
For me, I don't really see much
different for an old Saga vs old City, but if I go for Saga, I will have extra
40k cash on hand.
Fastest way to diet is control your meal instead of gym.
Cut away unnecessary spending are most efficient way for a Salary man like me.
But what if, you already cut all sort of unnecessary spending? Then you have to
go for second method.
Income Boost - Work smart, work extra! Yes another stupid answer but it work for me.
At workplace, working smart to achieve higher post in the company. For a, employee, fastest way to earn more money are promotion. Sad case but truth.
Then after office hour, I try to find second income source. I did work as freelancer and try various part time job. Even
not picking up any freelancing job, I spend time to learn and study anything to upgrade myself. These knowledge did help on my work, investment and also my
freelance. Invest in yourself not really a bad thing.
With Income Boost + Cutting unnecessary expanses this 2 method, around
8 year I accumulate a cash flow about RM 150k (exclude 50k urgent fund). At
the same time I did own 2 small property, 1 for invest 1 for own stay. I know
this article sound not so special, but trust me, there are many people who salary more than 10k but still don't have 50k cash on hand.
Investment is a Multiplier Machine, but before you use this machine, you need to have Capital.
If you want something extra, you have to do something extra.