Wednesday, September 3, 2008

How To Become A Millionaire

by Malot Oquendo

Almost anyone can be a millionaire. All you need is to have the discipline to regularly set aside a portion of your disposable money and place it a high-yielding instrument.

Now, just how long would it take for you to have P1M? There are three factors to consider: a) how much are you willing to set aside in month or a year, b) how much interest is money earning in the instrument of your choice, and c) how long are you willing to save.

The table below shows the number of years you need to reach P1M.


Number of Years

Savings/Month

5yrs

10yrs

15yrs

20yrs

25yrs

30yrs

35yrs


P 1,000/mo or P 12,000/annum

90%

35%

19%

13%

9%

6%

5%

P 2,000/mo or P 24,000/annum

71%

25%

13%

7%

4%

3%

1%

P 3,000/mo or P 36,000/annum

59%

19%

8%

4%

1%

0%

0%

P 4,000/mo or P 48,000/annum

50%

15%

5%

0.5%

0%

0%

0%

P 5,000/mo or P 60,000/annum

43%

10%

2%

0%

0%

0%

0%

P 10,000/mo or P 120,000/annum

20%

0%

0%

0%

0%

0%

0%

P 15,000/mo or P 180,000/annum

5%

0%

0%

0%

0%

0%

0%

P 20,000/mo or P 240,000/annum

0%

0%

0%

0%

0%

0%

0%

RATE TO REACH P1M

At present, the most popular saving instrument is a time deposit account, which generates a gross interest of 8-9% p.a. or net interest of 6.4-7.2%p.a. However, if your timeframe is less than 15 years, you may want to look for an instrument where your money will have greater growth potential, such as stocks, bonds or mutual fund. However, before investing in any of these three instruments, one must first understand the risks involved in investing in equity, bond, and mutual fund, and accept that higher growth potential comes with greater risk.

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