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”
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Pages: « 10 9 8 7 6 5 4 3 [2] 1 » Show All
November 13th, 2007 at 4:43 pm
The table ignores the effect of inflation, which always has to be considered when evaluating one’s investment performance. For example, according the table, it will take 16 years to reach P1,000,000 assuming a 10% return. However, RP has often had an inflation rate of aroud 4.5%. Thus, at the end of that 16 years, the P1,000,000 would be worth a little less than P500,000 today. One should still save, but hopefully those investments outpace the rate of inflation.
November 13th, 2007 at 4:30 pm
Don’t forget inflation. At 6% inflation per yr, a million in 1995 is worth 2 million today and a million in 2017 is worth only 558 thousand today.
If inflation is higher than interest rate, it might be better to keep your investment in hard assets.
November 13th, 2007 at 4:07 pm
[...] Duplito blogs that the first million is the hardest in Money [...]
November 13th, 2007 at 3:08 pm
it’s an interesting table but i think anna is right, the 10% is not realistic. maybe it will benefit everyone if the article also mention what type of legitimate investment scheme can readily give the 10%. i have 2 children under 20’s and it’s worth looking at.
November 13th, 2007 at 1:32 pm
I made my first million when i was 26 years old…but i lost everything at 30. Now, I am starting again to raise a million out of nothing. it’s a tough work to do since I already had it but lost in an instant, as if I died. It turned out to be a good experience after undergoing all those hardships and adversity from all angles, it made me a better person understanding the life’s journey to “top” and how it feels to be at the “bottom”.