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 17th, 2007 at 11:37 am
hachiko, what a crazy idea :p. on blogging, believe me i’m not doing it for the money. i’m enjoying it too much! hubby has wanted me to quit working for many, many years now. I’m just too hardheaded, i guess.
oh, sorry about the “average” return. Should have been “overall” return.
November 17th, 2007 at 11:35 am
chris, from what I have seen so far in my interviews, stock market investing is not for everyone. but some Filipinos have made good money out of it, some naman have grown rich without putting a single cent in equities. to each his own, i guess.
November 16th, 2007 at 9:09 pm
Wait lang Salve… RE: 10% return?
Fund 1 — 12%, Fund 2 — 5%, Fund 3 — (-7%), Fund 4 — (-2%), Fund 5 — 2%
Average return is 10% / 5 = 2% only!
Your conclusions on diversification still hold, though.
November 16th, 2007 at 7:45 pm
Why would average Joe wait for 20 years to become a millionaire when he can do it in 10 years or better yet in 3 to 5 years? That’s too long to waste your life worrying about your first million.
There are many alternatives out there for the average person especially the younger ones to be a millionaire in about 5 years even if he starts from scratch. Instead of waiting to have his 1 million in 20 years he could have at his 20 million or XXX million by then.
Remember, mind over matter…
November 16th, 2007 at 10:00 am
Salve if only u married this guy and inherited his vast estate before marrying your hubby now then money wud b much easier for ur family nw! hehehe
wc means u also won’t be writing 4 Inquirer anymor n blogging here… rule f 72 