Double Your Money

If you put $C ($500,000) into investments that pays r% (3%) each period, then after n (24 years) periods the amount of money will be P ($1,016,397). (Example is italicized)

P = C (1 + r/n) nt

    P = future value
    C = initial deposit
    r = interest rate (expressed as a fraction: eg. 0.03)
    n = # of times per year interest in compounded
    t = number of years invested

Most people are fooled by bigger returns on a mutual fund leaving them exposed to fragility (read all of Nassim Nicholas Taleb’s books esp: Antifragile: Things That Gain from Disorder. An unknown downside (could lose everything) don’t make a decision based on the past.  Limited upside.

3 Rules

  1. Minimum $50,000 – maximum 10% Liquid Cash protected by CDIC
  2. Optimize the ROI on your business assets. Get out of your mutual funds and stock market (you don’t have a lifetime of contributions to make up for the upcoming correction).  Invest in yourself and in YOUR business (unlimited/exponential upside) – stuff that increases your productivity.
  3. Cover your living costs with insured GICs/real estate. Avoid leveraged real estate investments unless you are doing it right: if you can flip it for 50% increase on your purchase price after putting 25-33% down and doubling or tripling your investment in fixing it up.  Maximize your CDIC coverage for everything you can not afford to lose. 5-year GICs under $100K each paying 3%. ($3 million in CDIC protected GICs will in aggregate pay you $90,000 per year to cover your living expenses without even decreasing your principal.)