Wednesday, November 2, 2016

Theoretical Calculation - Great Way If This Can Be Applied Practically.

I am going to write one sentence, which you may have to read it again to understand. This is very powerful.

If we invest Rs. 10000/- each month for a year, and have 10 % returns in one month, with complete stock sale/turnaround and invest the amount again without any withdrawals, at the end of the year you will have Rs. 2.13 lac stock.

The below table is just for demo.
Interest                        
10% 1 2 3 4 5 6 7 8 9 10 11 12
1 10000 11000 12100 13310 14641 16105.1 17715.61 19487.17 21435.89 23579.48 25937.42 28531.17
2   10000 11000 12100 13310 14641 16105.1 17715.61 19487.17 21435.89 23579.48 25937.42
3     10000 11000 12100 13310 14641 16105.1 17715.61 19487.17 21435.89 23579.48
4       10000 11000 12100 13310 14641 16105.1 17715.61 19487.17 21435.89
5         10000 11000 12100 13310 14641 16105.1 17715.61 19487.17
6           10000 11000 12100 13310 14641 16105.1 17715.61
7             10000 11000 12100 13310 14641 16105.1
8               10000 11000 12100 13310 14641
9                 10000 11000 12100 13310
10                   10000 11000 12100
11                     10000 11000
12                       10000
                      Total 213854.8
Amount Invested Each Month=10000. Returns Each Month: 10%. Assumption: Complete Stock Turnaround per month. Complete reinvestment.

If you are able to do the same turnaround in two months time, then you will have Rs. 1.6 lac stock. The calculations gives an idea about the turnaround of our stocks. From the time that you buy your material to the time of the sale, if you do complete turnaround in quick time, you will be far ahead. You just watched that you can quickly build wealth if you set short turnaround time and put in the money again in to the business. 

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