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!
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!
April 9th, 2008 at 11:42 am
robert, you know what’s nice? a few months ago, I received two emails from two readers who said they were able to improve their saving habits since they started reading moneysmarts and hit their first million last year! it sure sounded like a nice pat on the back, but of course the real achievement there were their own determination. so kudos to everyone out there trying to save their first million. we’re cheering you on!
April 9th, 2008 at 7:46 am
some banks do offer 10%PA for 5 year TD, tax free. they even pay-out monthly interest. if you are wary of small banks just place 250T which is the max amount PDIC will cover.