Scott Burns over MSN Money has written an article on how to save your first million dollars at the age of 16. Is it a magical formula? Not really – It is another good example of power of saving and compound investment.
… If your money is invested in common stocks and you achieve the average compound annual rate on large-capitalization U.S. stocks, 10.7%, your account will grow to $9,378 at the end of the fourth year. You will be 20 years old. Invested in the same way, with no additional savings, the account will grow to:
* $25,917 by the time you are 30
* $71,625 by the time you are 40
* $197,943 by the time you are 50
* $547,037 by the time you are 60
* And $1,114,423 by the time you are 67And you will have started and finished all of your saving before turning age 21…
Start on your first $1 million at age 16 – [MSN Money]
what are you going to do with a million dollars when you are 67? Buy a time machine?
A million bucks for retirement is great, just two cents!
it’ll make a nice birthday gift for the grandkids.
Nice thought exercise, but I think I’d rather have my kid get at least some upfront gratification from working. I don’t see anything wrong with letting the kid save up for a car — at least that way, he’ll have a positive association with both saving and working. There’s nothing wrong with waiting until college or graduate school are done to start saving for retirement.
Sadly, you are going to need at least a million if you want to retire at 67. Think about it, if you plan on not working again and plan on living, say, twenty years, that is going to be the equivalent of making $50,000/yr for the rest of your life. Now $50,000/yr is enough to get by certainly, but thats only for twenty years and with inflation and the value of a dollar, who is to say what kind of lifestyle you can live on 50k a year. Not to mention if you live more than those twentu years. Are you really going to want to start working again at 87? I doubt it.
Thats too funny…you think 67 is too old to enjoy a million dollars??? If you take care of yourself you can climb mountains at that age. I know, because my grandparents are like that. There are 20-somethings that cannot keep up with alot of 60-somethings. Open your eyes.
I remember when I thought 30 was old. hehe
67 may not be too old … but 40 is DEFINITELY not too old, and there’s no reason not to have a million by the time you’re 40 either.
Trying to use compound interest to get rich is like trying to use compound interest to lose weight … you’ll probably just end up being poor and fat. Also, if you’re going to use securities, use the ones that are growing NOW (i.e. India and China … there’s a reason everybody and their brother is talking about how much they’re growing: they ARE), not the ones that were growing 20 years ago.
Use Rule 7 (search for it on lifehack), E3 (my comment on Rule 7), and some caffeine, and get that first million 27 years before Scott Burns ever does. Think what those 27 years and some compound growth in an emerging markets index fund could do for that $1mil … you could BUY the mountain and laugh as you charge OTHER people to climb it.
Great great yeah… When i was sixteen i was like… money now = more money when im dead, or money now = beeeer
Building a passive income would work much better wouldnt it? Something like increaing the potential of your cash while reciveing money from it as well… mmmm money.
Real estate