While looking at Moolanomy’s blog the other day, I stumbled on an intriguing post that illustrates why it’s hard to break that P1-million net worth mark.
It’s not just the persistence and focus needed to make your first million. Moolanomy correctly points out that it’s also mathematically challenging.
“If a person invests $15,000 per year starting at age 25 and the investment gains on average 10% a year, he can get to $1 million mark by 45. The first million took 20 years! But if you keep going down the table, it only takes…
6 more years to get to $2 million at 51
4 more years to get to $3 million at 55
3 more years to get to $4 million at 58
2 more years to get to $5 million at 60
2 more years to get to $6 million at 62
2 more years to get to $7 million at 64
1 more years to get to $8 million at 65
This confirms what one of the readers of this blog said in a comment on my post on The Science and Art of Making Your First Million. He said:
“Making your first million is the hardest because you’re starting from scratch. The next million is less hard. The succeeding millions are easier because you have a bigger base. Money begets money.
I made my first million at 25 in real estate during the real estate boom in early ’90s. I had to bet all my savings and borrow money to do that. Now I earn the same amount in interest alone.
Business is the fastest way to make money. It is also the fastest way to lose money if you fail. Don’t worry it’s okay to fail but don’t lose it all.”
Inspiring, right? As I was looking through MoneySmarts’ archives, I realize Pinoy Investor is only in his thirties. Unfortunately, he doesn’t want to be interviewed 
For average Filipinos, making the first million by 25 may not be as easy though. But what if we make some simple assumptions. Say, regular savings of P2,000 a month starting at age 20 when most of us start working? The table looks like this:
It will take 16 years to make your first million!
But it gets easier after that…
6 more years to make the second million
4 more years to make the third million
3 more years to make the fourth
2 more years to make the fifth
2 more years to make the sixth
1 more year to make the seventh
…then you’ll be making one million a year after the eighth.
Consider that this illustration is only for a P2,000 savings per month on a 10% return per annum. Come on guys, we all can do better than that!
48 Responses to “The first million is the hardest”
Pages: [10] 9 8 7 6 5 4 3 2 1 » Show All
Pages: [10] 9 8 7 6 5 4 3 2 1 » Show All
June 12th, 2009 at 10:15 pm
so we have to save 24,000 pesos a year till we reach age 36? Im confused if we have to continually save or just put a bulk of our money in an investment that yields some percent per annum?
November 22nd, 2008 at 6:19 pm
Hi Salve,
This post is indeed very informative, It’s a good timing- I’ve been searching in google for BPI Time Deposit Rates and it leads me here.
I want to ask your idea regarding Time Deposit in any Bank, example BPI, Is time deposit a safe way to earn money and soon achieved my first Million?
Time Deposit interest rate are confusing, example BPI, they are giving Time Deposit rates of 3.75% interest rate in 35 Days if you invest 50K to 200K Pesos. same rate if you choose 63 days,so if you invest 100K Pesos– you will get an interest of 3,750 Pesos after 35 Days?
4.0% if 91 and 182 Days and 4.25% if 364 Days, now I’m confuse with the rate of 4.25% in 364 Days,, does it mean you will get 4,250 Pesos only for 1 year from 100K pesos previously deposited? So if you got small amount for staying it in 364 days, it might be good if we choose 35 days basis at 3.75%.
here is the link for BPI rates at Nov.18-24, 2008: http://info.bpiexpressonline.com/bpiprod/produpd.nsf/Deposit+Rates/TimeDepositRates2
Any response soon very well appreciated.
Thank you very much.
September 5th, 2008 at 5:00 am
All you guys with 1 or 2 children, I think it would be very easy for you to reach 1M faster. Me? Got 6 kids, but working real hard to reach that mark. Easier to reach there by going abroad first, then invest. The rest will follow, with discipline, perseverance, cooperation within the family, luck, and God’s blessings. Don’t forget to make the kids do their part.
August 7th, 2008 at 5:43 pm
Hi Salve,
I find your blog very informative and helpful especially for average income workers like me. I’m 25, btw, married with a 4 yr old kid.
My husband and I were thinking of regularly investing the minimum 5000 pesos to the Sunlife balanced Fund in the hopes that it’ll get higher returns over time. I dont know much about stocks but what I do know from reading all those books by Colayco as well as other financial literacy articles is that one can hope for better returns when we hold on to that money in mutual funds (as well as the benefits of peso-cost averaging).
I would just like to get your opinion regarding this matter. We dream of buying our own house in around 10 years time and hopefully set up a retirement plan. We know that we should save and plan as early as now.
Any response would be helpful.
Thanks!
April 9th, 2008 at 11:44 am
gracie, the PDIC coverage is not a good way of giving us false security when investing in a less-stable bank. although the PDIC has a good record of paying out depositors of failed banks, it’s still tough to have to wait days and weeks for your money!