this post was submitted on 04 Sep 2023
1378 points (87.2% liked)
Memes
45560 readers
718 users here now
Rules:
- Be civil and nice.
- Try not to excessively repost, as a rule of thumb, wait at least 2 months to do it if you have to.
founded 5 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
A few hundred per month. Let's do some math. Let's say you work and earn some form of income for 35 years, or 420 months. If you save 500 every month, you'll have a grand total of 210.000. That's 790k off of a million. Even at 1k per month, you're still less than halfway into being a millionaire.
You need to have a consistent salary of over 2.380/month (28.5k/year) to accrue a total of 1 million during those 35 years. So, supposing you earn 5k a month (60k/year), and can put half of that into savings, yes, you can "become a millionaire" by the time you're retiring.
Your comment shows exactly why not many become millionaires, because many people don't know how to invest.
Please explain how to turn $210k into $1m with interest alone. I'll even be generous and say you can take an additional 35 years of time to grow said interest.
Getsmarteraboutmoney.ca - go to their compound interest calculator. If you have 210k and put it into VEQT on questrade and set up a DRIP, in 35 years you'll have something like $3 million
Can you link to the actual calculator you're using for that? That page you linked is just their homepage. I've never seen a calculator that accounts for a DRIP.
It's just a compound interest calculator https://www.getsmarteraboutmoney.ca/calculators/compound-interest-calculator/
Use this one to calculate the value with inflation (average historically is 3.25% over the last century) https://www.wealthmeta.com/calculator/compound-interest-calculator
I've got 70 years? At 500 per month and 4% interest that's 2.3 million, with a contribution of 0.42 million. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator If you start with 210k and never input anything else you'll even end up with more.
I know it sounds like magic, but it's just simple math.
No, you have 35 years to earn interest, because the first 35 years was spent saving the principal, remember? And remember how I said with interest alone? So no more $500/month contributions either.
So with that calculator, $210k at 4% interest for 35 years puts you at $849,611.66 with monthly compounding.
So not a million.
If you spend 35 years to accumulate money and never earn interest on it, yeah, if somebody is that stupid, your comment is correct. That's nothing I ever claimed though, I assume people who save aren't total dunces.
Your comment what so intellectual and full of information I was about to save up 10 million+ dollars and own a cheap 3 story apartment complex. I now drain the legal maximum amount of money out of my tenants. Thanks! I can now buy that 2 million dollar house I was eyeing
Ah yes, tell me more about how everyone has an extra 2.500 lying around every month which they don't need to spend at all, which they could just leave in a savings account and never ever have to deal with unexpected, unpleasant, expensive surprises.
Yes, 2500 are not a few hundred, nobody ever said that, you're just stating truisms while ignoring the context. You might want to read about what compound interest is.
And you might want to read about cost of living
I was writing about people who earn enough to save, just read my comments.
Literal copy-paste of your first post. The math in my first reply showed you were wrong, that "saving a few hundred" wasn't enough. Your take, somehow, was, I quote:
I have literally no idea how "500 per month for 35 years will only get you 210k" and "You need ~2500 per month every month for 35 years to earn a million" could ever mean "people don't know how to invest, that's why they don't become millionaires".
My reply was a snarky "Ah yes, tell me more about how everyone has an extra 2.500 lying around every month". Which you simply dodged because I "ignored the context" and because interest rates exist - they still won't make less than 250k into 1 million if you start from zero. Also, allow me to remind you the context that you set up:
Now:
At no point in any of your other replies, to me or other posters, you ever mentioned "people who earn enough" in a direct or indirect manner. The only time you ever pointed to any group was "anybody who works their entire life".
You can't even do basic math, https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator, but thanks for playing.
You can only get 1m or more under SPECIFIC situations, one of them being: IF interest rates keep a mean of 7.5% per year for the whole 35 years AND the compound happens quarterly.
Using the current USA fed rates as an example, of ~5.33%, you can "get" a million IF: the compound is calculated daily AND there's a 2.3 variance upwards in interest rates, making it go as high as ~7.4%. Obviously, that happening later on is much more profitable than early on, when you have much less money to get the compounds on. If, however, something like the early 2010s happens again, where interest rates were below 1% for roughly 6 years straight, you won't get to the million mark.
The fact that you never, at any point, did your part to actually try and show how, why and where my math "was wrong" shows that you're acting on bad faith. You just say "you're wrong" without giving counterproof. You fail to point how I'm "wrong", you just point to a site and say it. Under specific conditions, yes, I am "wrong", but under more likely conditions, you're wrong. Unlike you, I'm also pointing out the where and how: most situations where interest, especially later on, is below 7%.
I'm so glad you finally made a minimal effort to understand what I wrote! Congrats!
Ironic that I put more effort than you did in any of your replies
All you ever said what not everybody can do what I said some can do. I already knew that.
And you never showed why-how-where I was wrong, you just said it and called it a day. The situation where you are right is so unlikely that assuming you're wrong makes more sense than assuming I was wrong