The title of this blog is kind of audacious. $10 Million? Really? I know for some people it seems way off. But the whole concept of this blog is to develop a path for someone that is 30 years old, and without much in the way of assets, to find a way to $10 million dollars by age 65.
I chose $10 million because thanks to inflation, $1 million probably won't be enough to live well in 35 years. I also think it is still an achievable number for most middle class individuals. Working backwards, we can arrive at weekly savings goals, and annual returns on our saved money/assets. With that said, let's begin calculating what it will take. Assume we can begin saving $100 every week. (This amount might seem like a stretch, but the whole point of this blog down the road is to evaluate ways to bring in this money). We begin saving $100 per week, and every year thereafter, we increase that weekly amount by $50. So in year 2 we save $150 per week. In year 3 we save $200. In year 4 we save $250. And so on and so on. You may be asking how we will afford to raise this amount every year, but the answer will be through passive income streams. We will spend many many blog posts discussing these. If you work along with the blog and add a passive income source every 6 months, you will be able to increase this weekly savings number every year. So $100 per week the first week, and then increasing $50 a week every year after. You need to make annual returns of 11.5% to have $10,456,620 at age 65. I think many financial "gurus" overestimate projected annual returns on stocks going forward. People forget that: 1) the U.S. benefited from the destruction of Europe's industrial capacity during WW2, leaving us the only game in town; 2) the fall of the Soviet Union in the early 1990's left us as the lone super power for 2 decades; and 3) the Federal Reserve has been manipulating the economy through monetary policy since the 1980s. Our stock returns since WW2 may very well be higher than we should expect going forward. So for that reason, lets assume stocks only average 810% going forward. Just to show you the power of compounding interest, can you guess what our savings total comes to if our annual returns only average 9%, rather than 11.5%? $6.6 million... So a 2.5% difference in annual returns can mean the difference of almost $4 million dollars ($10.456,620  $6,630,007 = $3,826,613) when we hit age 65. So how are we going to try and reach 11.5%? Patience grasshopper. There are ways to try and increase equity returns. We will discuss these strategies going forward. For now just know that we need to start thinking of ways to save $100 per week from our income. Until next time. Good night and good luck. 
Author I am a Chicagoarea financial adviser to young doctors & business owners. Archives
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