How to Be a Millionaire Even If You Are a Minimum Wage Earner
Minimum wage earners keep complaining about their salary. They say they cannot retire rich. Most of them just go through their work and retire relying only on their small SSS pension and the little retirement that their company will be giving them.
For most minimum wage earners, becoming a millionaire when they retire is quite an impossible dream. They contend that they can only be a millionaire if they receive a hefty sum of retirement money from their company.
Is it really possible to achieve millionaire status by your own efforts alone ? (Humanly speaking) Let us consider this actually scenario.
In the Philippines, Central Visayas Region, the current minimum wage is P 241.00. (Philippine Peso) Multiply it by 26 days of work you get P 6,266.00.
Let's just say that you are 30 years old and you faithfully saved that P 266.00 per month and spent the rest of the P 6,000.00, that would amount to P 3,192.00 per year
Do the math. If you put that P 3,192.00 in an investment vehicle that would give you 10 % interest per month in interest (compounded), do you know how much your money would become in 30 years, that would be P 1,052,001.00. If you started this kind of savings program when you were 30 years old you will retire a millionaire at 60 years old by your own savings program alone, add to that the retirement benefits from your company, your monthly pension from the SSS and your PAGIBIG "savings."
What if you decided to add another P 500.00 in your monthly investment and invest P 766.00 instead? This would amount to P 9,192.00 per year and at the end of 30 years it would amount to a whopping amount of P 3,029,447.00 (At 10 % interest per year compounded)
Perhaps later on you would increase your savings to P 1,766.00 a month if you receive a salary increase. If you do that even on the 10th year after you start saving only P 266.00 a month, you will retire with P 4,472,777.00.
Not bad for a minimum wage earner.
Published by FROG
I'm a financial broker with the International Marketing Group(IMG)(Bassed in the Philippines) I have made a serious commitment to learn about financial management, investing and how to handle money wisely th... View profile
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3 Comments
Post a CommentOf course this is just an overview. This is not a comprehensive financial planning guide. When you do financial planning you consider everything including taxes.
Of course, if a minimum wage worker pays his/her bills and feeds the family, there will not be anything to save. Average rent for a 2-bdrm apt: $600. Electric/gas: $100. Phone: $50. Food (family of 2): $400.
How many mimimum wage workers can even afford the basics, much less save?
This is unrealistic.
The article does not take into account taxes. Nor does it take into account that the 10% rate of return suggests that at no time should the investment pay less than 10%. If I invest today and get 10% return, and the following year my investment grows at 5%. The third year I must invest at a rate of more than 15% in order to get back in track. That would mean that I must actively take on more risk. While the numbers presented may pan out, in actuality this is a risky venture. Past performance is no guarantee of future results. This statement signifies the random walk that in inherent in the investment world. While numerically the idea of min wage earniers becoming millinaires is possible given certain assumptions, the truth is that a person should not depend on Min wage for 30 plus years, but develop a skill that is competative and marketable in order to command a higher salary.