20180813 (Mon)
If we adjust the return from Mutual Fund to be 15%, what would be the return be?
{(1+i)^n} – 1 / i; i = 15%, n = 20 x 12 = 240, monthly interest = 15/1200
(1.0125)^240 -1 / 0.0125 = 1,497
RM3,000 x 1,497 = RM4,490,000
Would you get a return of 15% on mutual fund? Well, this is hard to predict.
This question is the reason why some people recommend that when you have extra cash, do not pay off your bank mortgage.
Instead, put it into investment with good returns. By the time you eventually pay off the mortgage (after 20 years), your investment with this extra cash (indirectly from the bank) is able to give you multiple returns way above what you pay off mortgage earlier!
Well, it is all about how smart you are in investing. Everyone is different. You need to decide how your risk appetite is in this decision making. High return comes with high risk.