Wednesday, November 05, 2008

How to be a millionaire?

Based on the recent poll, most people actually got the right answer. I guess it's the way the question is structured and the answers are listed out. So congrats to those who chose the last answer (1.134mn answer).

Btw, the question is "If you save $1600 a month and your money earns you 10% return per yr on average, what is your total savings at the end of 20 yrs?"

So that's the answer, just save $1600 a month, let it grow at 10%pa, in 20 yrs you become a millionaire. I guess most readers would say, hey that's not exactly an easy think to do. Some households don't even EARN $1600 a month. And most households in Singapore can barely save a few hundred dollars. And 10%pa is very high target, what's more you need to make 10%pa for 20yrs!

Well, you are right! It is not easy, it's not meant to be easy. If it's that easy why don't we see millionaires everywhere? (Well actually they ARE everywhere, about 70,000 of them in Singapore.)

Nevertheless, I think there are a few takeaways here.

1) If you are really determined about becoming a millionaire, this is one sure way to reach your goal instead of relying on some lucky event to happen in your life. E.g. waiting for your HDB or condo en-bloc, or punting the stock market, or winning 4D etc.

2) Time is an element that you can control. Say if you are not sure you can hit the 10%pa, but we are sure about 5%pa right (bcos CPF pays 5%) then work with 5%. The same amt, $1600 compounded at 5% will reach $1mn in 27 years. So the trick is to start early. If poss. better start to start at age zero. Start for your children! Hehe.

Btw I have to spreadsheet that will calculate this for you. Send me an email at if anyone needs one.


  1. My estimate tells me that there are more millionaires than there are doctors (medical doctors, dentists, PhDs, and whatever honorary doctorate degrees) in Singapore.

    So the consolation is that if you didn't make it to becoming a "doctor", you can try being a millionaire. It should be easier.

    PS: They are not mutually exclusive though.

  2. Great concept to drill in peoples minds.

    It's all about time and a decent rate of return. When combined you can achieve really staggering results.

    You are spot on: It's not about one hit wonders that make you wealthy. But about intelligent capital allocation and time.

    It's sad more people don't grasp these fundamental principals, especially my instant-gratification generation.



  3. It's actually quite depressing. But $1600 a month is quite difficult to save...unless i don't eat or travel :(

  4. Hi cif5000

    That's is really an interesting statistics. I think you may be right. More millionaires than doctors.

    Ethan, it sounds easy in words and concept but difficult to execute, I guess. It takes 20 yrs to hit the magic no. on average. Marriages in US don't last that long... :)

  5. I think you have to account for inflation. For example, you get 5% from CPF and inflation is 5%, the 1 million 27years later is only worth 500k in today's value. So please consider real (meaning inflation adjusted) return.

  6. Hi Papabear

    You are right on spot. Inflation eats away return in a way that we dont realize. It's quite scary.

    In my post, it is already a real feat to save $1600 per mth and make 10% on that every yr.

    If we add inflation, you gotta save like $5000 per mth or something. That's the 70th percentile in personal income in Singapore.

    Sometimes, it's better not to handle the truth. Hehe.