This blog delves into a relatively common question amongst Trinbagonians who have saved enough to start investing, but are still very cautious and confused as to if they should begin investing – and wanting to know when their ultimate payout is going to come!
Answering today’s user submitted question is the brilliant financial analyst, Mr Jonathan Wilson. The question is: “So I have 50k saved now – how long till I can become a millionaire?”
Read on to get into it!
This article is a 6 min read.
First, well done on saving your nest egg and setting your goal(s) for what you want when it hatches. Looking for practical advice? Check your numbers and circumstances with a financial calculator (like the ones you’ll find in this link or on our website) before you seek opportunities to create and store wealth.
Just as your calories in and out impact your weight regardless of how you combine diet and exercise, so does the compounding formula impact your wealth regardless of how you combine investments and risks. That formula for target wealth or payout(s) depends on:
This applies to everyone no matter what. Read on for DIY calculators that will help you start or reassess how to combine your investments.
The truth is that because our circumstances differ, we each work the same formula differently. For health and fitness, yes, losing weight is harder for some of us, but the laws of physics will always mean that a sustained or deep caloric deficit causes weight loss.
The same goes for wealth.
We invest from years to generations, with debt to inheritances, and scale up from small, regular savings to large, irregular lump sums. Last, we create and preserve value using productivity from our skills and assets: private business(es), real estate, stocks, bonds, pension plans, fixed deposits, mutual funds, commodities, derivatives, foreign exchange, cryptocurrencies, collectibles, digital assets, savings, cash in the mattress or lottery tickets. Real productivity–with any scale and time–creates wealth.
So, before we can help with your “how” (#spoiler: “how” is neither crash dieting nor speculating), let us demonstrate how to answer your million-dollar question.
Any financial calculator will do, but follow with this link or this calculator on our website and enter these figures–and then yours–for each of the bracketed sections.
| Final Value Owned [FV] | TTD 1,000,000 | TTD 1,000,000 | TTD 1,000,000 | TTD 1,000,000 |
| Start Value Deployed [PV] | (TTD 50,000) | (TTD 50,000) | (TTD 50,000) | (TTD 50,000) |
| Monthly Contribution [PMT] | – | (TTD 1,000) | – | (TTD 1,000) |
| Annual Return (%) [Rate] | 1.50 | 1.50 | 8.00 | 8.00 |
| Months Invested [Click Periods] | 2398 | 601 | 361 | 263 |
| Or ≈Years Invested | 200 | 50 | 38 | 22 |
These mean that if you never add to the TTD 50,000 investment, then it must compound 1.50% returns for about 200 years to grow to a million, or for 38 years if compounding 8%.
That calculator simplifies straightforward circumstances. In practice, your formula is really a consolidation of repeated calculations comprising each financial goal and timeline or large debt or investment and calculating based on varied scale and timing as needed.
Weigh the solution you get for one aspect given the other inputs. Do your inputs seem feasible and desirable?
| FORMULA INPUTS | Investing Questions | Borrowing Questions | Action |
| Final Value(s) | How much is enough for each of your financial goals? | How much principal and interest will you repay? | Estimate the requirement for each goal, e.g. home down payment, retirement, education etc. |
| Time | Can you meet your goal(s) sooner or are they too soon? | Will you repay early, timely, late or never? | |
| Start Value(s) | Are your productive assets’ value large enough? | How much do you owe? Will you borrow to acquire productive assets or those that scale your skills? | Estimate asset and debt values as of today. Include all your assets that can earn but within reason; exclude cover for emergencies and other upcoming large expenses. |
| Additions, Divesting | Are your contributions big or often enough? How much or seldom will you divest, sell or withdraw? Last, how does your savings-to-income compare to the minimum 10%-15% traditional wisdom? | How much is the minimum payment on each debt? How much more will you borrow or prepay? | Estimate based on your budget and the assets themselves. E.g. a real estate project scales with development costs on a schedule whereas mutual funds require some minimum when you contribute. |
| Return | Are your expectations for compounded returns across assets reasonable? Are you taking more risk than necessary? Or not enough? | What is your actual rate cost? | Assume a weighted-average expected rate across like prospects. E.g. return on a portfolio of 60% private business, 30% fixed deposits and 10% banked will depend most on business profits then the deposit rates. |
The maths can be tedious or intimidating, but your goals are worth it. Do not settle for dreaming smaller or later because of not taking risks well, earlier or enough.
You can find and create productivity on your own or with a professional on your team.
The right health and fitness professionals can advise you on caloric density, cardio, progressive overload, supplementation and performance-enhancing drugs. The right financial advisory can help you apply your formula and understand how to combine risks in a way you can fight cravings, lose weight and keep it off for good.
1 Comment
Investing always seemed so technical and mathematical so on a personal level, it can be intimidating. The contributor of this article has dropped a critical takeaway that taking some time and effort to understand these things translates to us being committed to our goals. Our goals are so worth it! Luckily we don’t have to go it alone.