From R100k to R100 million in 20 Years At 40% Growth Possible?

[Sly21C]

So I recently read an old article about how if one invested R100k in PSG Konsult in 1994 would have been worth R206 million in 20 years, i.e. year 2014. That's taking into account that all dividents are reinvested. PSG grew about 40% annually. Below is the link and an extract from the article.

http://www.moneyweb.co.za/archive/sorry-honey-i-wasted-r624-million-on-a-car/

I had some spare cash at the time, around R300 000 or so, but I politely declined Jannie’s offer and he went his way and I went mine.

Instead, I splashed out my new-found wealth on a brand-new BWM 740i which, I must add, is one of the best cars I have ever driven; large, spacious and powerful. Or so I like to console myself.

But here is the part where it hurts, really really hurts.

I mean really.

You see, an investment of R100 000 into PSG in 1994, with dividends and special dividends and an allocation of shares in Capitec, would today be worth an astronomical, astounding, mind-blowing R206 million!

Let me repeat: R100 000 invested 20 years ago and left untouched would have made you into one of the richest people in South Africa today.

It’s the stuff investment dreams are made of, an investment that grew at 50% per annum over 20 years.

What could one buy with R100 000 in 1994?

A decent second–hand car, a small flat or perhaps a round-the-world trip for you and your wife.

Or you could have, with one inspired investment decision, created enough wealth for generations of your children and grandchildren to live off, far outpacing the returns you could have made had you invested with Buffett, which you couldn’t in 1994 in any case, considering the foreign exchange regulations that were in place at the time.

My desire to be a “Groot Meneer”, it turns out, has cost me R624 million had I instead elected to take up Jannie’s offer and buy some shares in his new compan.

I was thinking, is it possible for almost any market condition that average Joe retail investors like us can achieve an annual growth of 40%? Are there people who are doing it? Are there people who, for example, started with R100k so that 20 years later have R100 million?

Below is what R100k invested, at an annualized growth of 38.4% can bring you. That's excluding tax.
End of Year 1 = R138 000
End of Year 5 = R572 000
End of Year 10 = R3.3 million
End of Year 15 = R19.8 million
End of Year 17 = R40.3 million
End of Year 20 = R117 million

The above, if it had to be calculated monthly, can result in 3% portfolio growth.

Would I be out of my depth to say I can do it? i.e. invest R100k and play the stock market so as to achieve 3% monthly growth and therefore 38.4% annual growth?

EDIT (2nd time):

I have decided that as from the 1st of September 2016 I will try to grow my portfolio at 40% annually (minimum).

I will update you guys by posting annually. I will only state what my percentage growth is during the past year.

Good Luck to me

 

[Slootvreter]

 

[rpm]

This is a very special story. There are more examples of moderate growth, or even negative growth.

 

[Hamster]

If I was able to get 40% growth annually over 20 years I would register as a fund manager and charge a 1% annual fee and make all of you bastards 39%.

 

[MaximusZA]

 

[theratman]

/Inb4 thor and his lommy.

 

[Jehosefat]

Possible? Sure.

Likely? No. You basically need to pick the 1 company out of hundreds that is going to get that sort of return.

 

[Thor]

/Inb4 thor and his lommy.

That guy. eish

 

[FrankieK]

Possible? Sure.

Likely? No. You basically need to pick the 1 company out of hundreds that is going to get that sort of return.

With hindsight being 20/20, if you invested $1 000 in Berkshire Hathaway in 1964 at $19 per share, your shares would be worth $11 700 000 today at $223 000 per share.

But as Jehosefat said, you need to pick that specific one at that specific time.

 

[Toxic T]

With hindsight being 20/20, if you invested $1 000 in Berkshire Hathaway in 1964 at $19 per share, your shares would be worth $11 700 000 today at $223 000 per share.

But as Jehosefat said, you need to pick that specific one at that specific time.

Want to invest in a time machine anyone?

 

[FrankieK]

/snip

Would I be out of my depth to say that I can do it? i.e. invest R100k and play the stock market so that I achieve 3% monthyl growth and therefore 38.4% annual growth? I wuld really like to be a multi-millionaire in 20 years. I don't mind having a lower standard of living now.

You will not get 3% a month by investing. This is where you enter the realm of trading. Getting 3% a month in that case would not be that difficult if you use the correct trading vehicles and you really, really, really know what you are doing.

 

[Toxic T]

You will not get 3% a month by investing. This is where you enter the realm of trading. Getting 3% a month in that case would not be that difficult if you use the correct trading vehicles and you really, really, really know what you are doing.

Put it all on red please.

 

[HavocXphere]

20/20 hindsight

 

[SauRoNZA]

It's much the same as the Apple story or anyone who invested in Naspers years ago and stuck to it.

It's about backing the right horse and STICKING to it instead of jumping around and speculating.

 

[Sly21C]

20 years ago nobody in their right mind would've put R100 000 into a penny stock.

I was only making about R30 000 a year back then.

And if you had invested that R100 000 in PSG, it would most likely have been a small part of your R5 000 000 portfolio.

Agreed, I wouldn't have done it either if I was that guy in the article. I would have probably bought property to let instead of a car though.

You will not get 3% a month by investing. This is where you enter the realm of trading. Getting 3% a month in that case would not be that difficult if you use the correct trading vehicles and you really, really, really know what you are doing.

Agreed, investing R100k to achieve 40% growth annually over 20 years is near impossible since a penny stock needs to be identified that will grow as much as PSG did. As you've said, a 3% monthly portfolio growth is possible if you trade and you know what you are doing. I know the basics of trading, I'd like to try this 3% monthly growth or 40% annual growth and see how far I get a year from now. That's a challenge for me for now .

Edit: Garth Mackenzie, on his Traders Corner show on the Business Day TV channel, makes about 35% to 40% a year using R250k. He donates profits to charity though. If he can do it, so can retail traders provided they know what they are doing as you've said.

 

[SauRoNZA]

20 years ago nobody in their right mind would've put R100 000 into a penny stock.

I was only making about R30 000 a year back then.

And if you had invested that R100 000 in PSG, it would most likely have been a small part of your R5 000 000 portfolio.

That's also very true.

100k back then was a fortune compared to today's money.

 

[crackersa]

I have heard stories of people turning down Microsoft in the beginning. If true....they are passed off

 

[froot]

I have heard stories of people turning down Microsoft in the beginning. If true....they are passed off

I think it was one of the founders of Apple who sold his stake because he didn't want to continue.... he owned 10% or something. Sold it for something silly.
Ah, here we go:

Wayne received a 10% stake in Apple but relinquished his equity for US$800 less than two weeks later, on April 12, 1976

He would have been worth in excess of $70bn now.

 

[FrankieK]

Agreed, investing R100k to achieve 40% growth annually over 20 years is near impossible since a penny stock needs to be identified that will grow as much as PSG did. As you've said, a 3% monthly portfolio growth is possible if you trade and you know what you are doing. I know the basics of trading, I'd like to try this 3% monthly growth or 40% annual growth and see how far I get a year from now. That's a challenge for me for now .

What type of trades would you do for that 3%? I personally like options but they are fickle mistresses.

 

[Sly21C]

What type of trades would you do for that 3%? I personally like options but they are fickle mistresses.

For now I'll be concentrating on normal shares, I've been burnt by CFDs and SSF so I'm staying away from them.

EDIT: I'll be using CFDs if I want to short, but not in the next 3 months or so.