In an era of rising living costs but slower salary increases, many people are beginning to wonder how they can achieve "financial freedom" or find ways to make their money work to generate passive income for their lives.
Today, Thairath Money will guide everyone to plan and calculate precisely how much "principal" you must have in your portfolio if you want to spend from 10,000 to 100,000 baht per month!
First, set a goal of how much you want to spend monthly. For example, if your total monthly expenses are 20,000 baht, you can start with that figure for calculation.
We will use this calculation formula: “Desired monthly amount multiplied by 12 months” Then, divide by “annual return rate” to equal “required principal”
For example, 20,000 baht times 12 months equals 240,000 baht, and dividing that by a 2% annual return rate means you need a principal of 12 million baht.
Therefore, if the annual return rate increases, the required "principal" decreases. Using the same example, if the return rate is 5% per year, the principal needed is only 4.8 million baht.
You must also consider expenses or taxes on returns. For instance, if you invest this lump sum in stocks and receive dividends, a 10% withholding tax on dividends applies, which you can claim back! If your total annual income does not exceed the personal income tax threshold, this amount returns as "additional savings" helping you reach your goal faster without extra effort.
If you don't have a million baht now, start planning how to save your first lump sum and use the power of compound interest to grow your money. You don't have to be rich today, but you can be rich tomorrow.
For those with little money, use the DCA (Dollar Cost Averaging) method or monthly savings. Starting at 1,000 baht per month, investing at about 5% annual return, it takes 33 years to accumulate 1 million baht, coming from a principal of only 396,000 baht and growth of 612,803 baht from investment returns!
Therefore, to make starting savings easier, Thairath Money summarizes how much you need to save monthly at different return rates and durations to reach 1 million baht.
| Monthly savings (Baht) | 2% annual return | 5% annual return | 10% annual return |
| 1,000 | 49 years | 33 years | 23 years |
| 2,000 | 31 years | 23 years | 17 years |
| 5,000 | 15 years | 12 years | 10 years |
Money matters are important for our lives today and in the future. If we plan well, have "time" and "discipline," gradually saving and learning about investing, one day cash flow will return to us. Even if you don't have a million baht today, if you start and continue consistently, finding a balance of how much to save while living happily, you're already close to good finances and a good life.
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