How To : Become a Billionaire
In the past, it was everyone’s goal to become a millionaire by the time they retire, so they wouldn’t have to worry about money. Well folks, the world is changing, and a measly million bucks isn’t likely to carry you through retirement. Unless you like eating rice and beans everyday, that is. Most of us want to retire in style, without worries about silly things like money. How much is enough? No one knows for sure, since every’s situation is a little bit different. With that in mind, I’ve decided on a cool $1 Billion as they target by age 60. $1 billion isn’t likely to run out on you, no matter how free of a spender you are. So, how can you make it to a billion? Let’s take a look:
Starting at age 26
If you start investing at the ripe young age of 26 ( that’s how old I’ll be in a few months ), then you have 34 long years to enjoy the magic of compound interest. Assuming you earn an average return of 10% per year ( shouldn’t be difficult if you stick with low-cost index funds ), then you must save $308,700 per month until age 60. At that point you will have just over $1 billion in your brokerage account.
Starting at age 35
If you putt off your grand investment plans until age 35 ( or if you’re already at that age ) things don’t look quite as rosy. To reach your $1 billion goal by age 60, you’ll need to sock away $693,900 every month. That’s over double the amount required if you start at 26 – that’s the power of compound interest.
What can you do?
Not everyone can afford to invest $693,900 per month – and that’s why you need to start early. If you start at 26, your monthly investment is much more reasonable. If you cut back in a few areas, I don’t see any reason why you can’t invest a measly $308,700 each and every month in your brokerage account.
That’s a little much
Ok, ok, perhaps not everyone can come up with $308,700 to invest monthly. If you can manage $280 per month in the same investment, you’ll still wind up with a cool million bucks. While they won’t carry you through retirement, it’s not a bad start. Oh, and the clock’s ticking.
February 25th, 2008 at 11:13 am
i dont have a lot of money.what and who can i do it
February 25th, 2008 at 1:47 pm
Surely you can find the $308,700 to invest every month so you can become a billionaire?
February 29th, 2008 at 3:24 pm
Is this a joke? Who has that kind of money to “put away” every month? Everyone is looking for some help and some insurance for their future. These tips aren’t feasible for your reader base, I would presume. Now, I’m not expecting advice on selling your blood for extra cash but something more realistic would help.
Jerry
http://www.leads4insurance.com
February 29th, 2008 at 5:35 pm
100% a joke
I surely don’t know anyone who has that kind of cash. My point was more to illustrate how ridiculously difficult it is to become a billionaire, and how large a sum of money a billion dollars is.
March 7th, 2008 at 5:07 pm
[...] How To: Become a Billionaire by Llama Money Sweet! I only have to save $308, 700 per month to become a billionaire by age 60. This should be easy for me since I’m really a highly-paid NBA star who just blogs on the side for fun. Also, Llama Money is the best name for a financial blog EVER. I wish I’d thought of it. [...]
March 19th, 2008 at 8:27 am
[...] among you to sock away. In fact, you might even decide to go above and beyond and decide to become a billionaire. After all, millionaires are a dime a dozen these [...]
April 4th, 2008 at 3:37 am
step one is the main problem, how to get the $308,700
April 4th, 2008 at 12:36 pm
Ahh Farouk that’s very true. Once you figure that out please stop back and let me know
April 4th, 2008 at 2:33 pm
Jerry,
Come on now. Have a little sense of humor. I guess we can’t expect that from someone who sells insurance leads.
August 4th, 2008 at 8:09 am
Ok… This seems like a bit of a long shot, but it is possible. Lets say you start at age 20-something and have a 50 year time frame(which is the case for most billionaires) i.e. retire at age 70-something or even later. Just to illustrate the power of compound interest, if you can earn an annualised rate of return of:
(a) 18% per annum you need to save $3238 per month
(b) 17% per annum you need to save $4720 per month
(c) 16% per annum you need to save $6884 per month
(d) 15% per annum you need to save $10,039 per month
(e) 14% per annum you need to save $14,634 per month
(f) 13% per annum you need to save $21,312 per month
(g) 12% per annum you need to save $30,991 per month
(h) 11% per annum you need to save $44,964 per month
(i) 10% per annum you need to save $65,039 per month.
So, we’re not all Buffet’s, but if we can get reasonably high returns, it is possible. Not so funny anymore. And the main problem now is not how to get the $308,700… It’s how to get 18%p.a. (or more).
August 4th, 2008 at 8:20 am
Something to note is that you did add a substantial timeframe to your projections – my longest projection was for 34 years. With an extra 14 years, compounding has a much, much longer time to work it’s magic. Also, I’m having doubts these days about sustainable 10% rates of return, let alone 18%.
Your calculations do show the incredible power of higher rates of return though. Making smart investment choices can have absolutely HUGE effects on how your money grows.
August 5th, 2008 at 8:14 am
Yes. You’re right. Finding good investments these days is difficult, but not impossible… especially if you’re in an emerging market. Anyway, something else to note which might pose a bigger problem is inflation. In 50 years time, even a billion might not be much although it should see you comfortably through retirement, you probably won’t be able to go around buying anything you want.
August 9th, 2008 at 4:44 pm
guys first can some one tell me how i can get the girl of my dreams. i tink ur dream girl is more important than billion bucks. dont ya think all haaaa. i tel u the truth i wont feel shit even i have trillion bucks and still i no have my beauty girl. any ideas haaa
October 16th, 2008 at 4:29 pm
The route to billionaire status is through business building and particularly wheeling & dealing in companies. Study the greats and you will see that all of them did it that way. They didn’t do it through a disciplined savings habit.
February 18th, 2010 at 6:03 pm
I worked for a local WalMart store in PA , When Sam Waltin showed up for are grand opening . He personaly walked around and met every associate working for him in the store . I shook his hand and ask him what was his secreat to becomeing a succesful business man such as he was. He said start small and think large have a future goal that you want to reach set before you even start your venture and with luck if you stick to to your vision you will achieve your goal and then some .
July 30th, 2010 at 4:13 am
@Suga, first of all the dream girl you’re talking about if my guess is right probably has the body of a victoria’s secret model, drop dead gorgeous and successful. These kind of girls are high maintenance e.g marissa miller. Make a billion then you can realistically afford to keep her happy.
August 6th, 2010 at 11:53 pm
I’m sorry, I’m a Dumba.. student just wanting to know something about this compound interest stuff, just out of couriosity and interest, Do you have to invest only once or do you have to invest monthly to receive compound interest on your investments?