Author Topic: Why becoming a milionaire and billionaire is difficult  (Read 4515 times)

shalab

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Why becoming a milionaire and billionaire is difficult
« on: July 29, 2017, 05:44:18 PM »
A million dollars a year is 2740 a day. If it is spread out over 40 years, it is saving 70 dollars/day. This is 25,550 a year.  Add in compounding, this is difficult but doable.

A billion dollars a year is 2740000 a day. If it is spread out over 40 years, it is saving 70000/day. If spread out over 60 years, it is 46,000 $s/day. It is safe to say that this is beyond the reach of most people.

Now, let us look at the first paragraph - average GDP in USA is 58K dollars, ( or 158 dollars/day)  so saving 20% over 30 years with 6% return will get one there.

cheers!
« Last Edit: July 29, 2017, 06:55:18 PM by shalab »


Morgan

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #1 on: July 29, 2017, 08:18:02 PM »
Of course you don't become a billionaire by saving and conservatively investing the average US salary. Great investing and you can become a millionaire over time.

The way to become rich relatively quickly is to start a successful business and make it large.

rolling

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #2 on: July 30, 2017, 02:39:47 AM »
A million dollars a year is 2740 a day. If it is spread out over 40 years, it is saving 70 dollars/day. This is 25,550 a year.  Add in compounding, this is difficult but doable.

A billion dollars a year is 2740000 a day. If it is spread out over 40 years, it is saving 70000/day. If spread out over 60 years, it is 46,000 $s/day. It is safe to say that this is beyond the reach of most people.

Now, let us look at the first paragraph - average GDP in USA is 58K dollars, ( or 158 dollars/day)  so saving 20% over 30 years with 6% return will get one there.

cheers!
The thing is: 40 years from now, how much will 1 million dollars be worth? Being a millionaire was a lot 50 years ago, it is now much less meaningfull and 40 years from now it might not be enough to even own a reasonable house.

My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.

shalab

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #3 on: July 30, 2017, 08:25:18 AM »
It is clear that 1 mm will buy less in 40 years but how much is not clear. It will still be a good chunk of change. As an example, US wages haven't advanced much in the past decade overall. Average US house price is 200K and median in 260K. It is a lot different in Canada and most of Asia. I think Canadian average is 400-500K and the big cities in Asia cost a lot.

A million dollars a year is 2740 a day. If it is spread out over 40 years, it is saving 70 dollars/day. This is 25,550 a year.  Add in compounding, this is difficult but doable.

A billion dollars a year is 2740000 a day. If it is spread out over 40 years, it is saving 70000/day. If spread out over 60 years, it is 46,000 $s/day. It is safe to say that this is beyond the reach of most people.

Now, let us look at the first paragraph - average GDP in USA is 58K dollars, ( or 158 dollars/day)  so saving 20% over 30 years with 6% return will get one there.

cheers!
The thing is: 40 years from now, how much will 1 million dollars be worth? Being a millionaire was a lot 50 years ago, it is now much less meaningfull and 40 years from now it might not be enough to even own a reasonable house.
« Last Edit: July 30, 2017, 08:28:41 AM by shalab »

Jurgis

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #4 on: July 30, 2017, 08:53:42 AM »
I'll just repost:

Quote
A young man asked an old rich man how he made his money. The old guy fingered his worsted wool vest and said, “Well, son, it was 1932. The depth of the Great Depression. I was down to my last nickel. “I invested that nickel in an apple. I spent the entire day polishing the apple and, at the end of the day, I sold the apple for ten cents. “The next morning, I invested those ten cents in two apples. I spent the entire day polishing them and sold them at 5:00 pm for 20 cents. I continued this system for a month, by the end of which I’d accumulated a fortune of $1.37.” “And that’s how you built an empire?” the boy asked. “Heavens, no!” the man replied. “Got married and then my wife’s father died and left us two million dollars.”
"Before you can be rich, you must be poor." - Nef Anyo
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

John Hjorth

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #5 on: July 30, 2017, 09:12:44 AM »
Jurgis,

It's called value investing in spouses, take the "puff" and move on to the next subject - not to be confused with "Merry up", like stated by Mr. Buffett. - To the contrary of what is generally accepted about value investing in stocks, it works very well for large sums.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

Jurgis

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Re: Why becoming a milionaire and billionaire is difficult
« Reply #6 on: July 30, 2017, 09:57:46 AM »
Jurgis,

It's called value investing in spouses, take the "puff" and move on to the next subject - not to be confused with "Merry up", like stated by Mr. Buffett. - To the contrary of what is generally accepted about value investing in stocks, it works very well for large sums.

If we are talking seriously, then all paths to become x-llionaire are listed and discussed in https://www.amazon.com/Ten-Roads-Riches-Wealthy-There/dp/0470481552

Not a great book, but it covers the ways to become billionaire as well as the classic CoBF way of saving-and-investing that won't get you past a (multi)millionaire. No, nobody here is Buffett.  8)
"Before you can be rich, you must be poor." - Nef Anyo
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"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"