I was reading this blog from my accountant friend Laurent Dionisio, founder of Pinoy Financial Planning. I met Laurent through the Truly Rich Club of Bro. Bo Sanchez and he’s sharing his success stories to the world as well. I’m not very good in Math; that’s why I took up nursing but I want to share with you how Laurent made some computation on how to become a multi- millionaire easily and why you should not delay your investments. Have a good read.
How to become a multi-MILLIONAIRE easily!
If you ponder and think about, many people will make over a million pesos in their lifetime. If you were to earn an average income of P50,000 a month (P600,000 a year) over 40 years (age 25-65), then you would have a total of P24 million (P600,000 x 40 years) flow through your hands.
If you were like most people who spend all they earn, you would end up after 40 years with almost nothing. But what if you were to just save 10% of that income every month and invest it in stocks and mutual funds that earn you a 15% return a year and let your money compound? How much would you have after 40 years?
Using a financial calculator or your Microsoft Excel, you can easily compute that you would have accumulated P123 million. What? Is that right? Is there something wrong with my calculator? No. Through the power of compounding interest as discovered by Albert Einstein, saving just P5,000 a month accumulates to over P123 million in 40 years. That is the power of consistent saving and investing. But luranski, I can only save P1,000 a month or P33 a day. Fine, you will have 24.5 million in 40 years!!! My question, is that your best? You spend P50 a day on your cellphone load, P100 on coffee, P50 on cigarettes and many more. Why not for your future?
Most people feel that they do not have enough income to invest so they procrastinate by saying, ‘I will start when I earn more.’ Trust me, this is impossible. If you cannot save ten cents out of a peso, you will not save P100,000 out of a million. If you cannot start with a small income, forget it when you have a bigger income. Money is a reflection of who you are.
Remember that if you do not start the habit of saving and investing, you will end up with a lot more expenses when you earn more. Again, we, humans, are creatures of habit. Regardless of the amount, the important thing is that you create a habit of saving and investing.
Stop procrastinating. Start right away! Every day you delay is costing you hundreds of thousands of lost pesos in your future. Let’s look at the impact of procrastination….
If you were to save P5,000 a month for 25 years at a 15% annual return, you would have P15 million in the end.
If you were to start just one year later and save P5,000 a month for 24 years at the same 15% return, you would end up with P12.5 million. That’s P2.5 million less. In other words, waiting one year will cost you P2.5 million in future peso. This is equivalent to losing P6,800 (P2.5 million divided by 365 days) of future wealth every single day you procrastinate! P208,000 a month! Can you afford to do that?
So get ready to start increasing your monthly savings right away!