What does it take?

[gijoe9]

Waht does it take to make a million $$? If you had $100.00 a month to put away how long would it take you to get to one million dollars doing whatever you want with the $100.00? You can invest it put it in the bank ETC.

The math is easy $1200.00 after one year, $12000.00 after ten years, and $120,000.00 after one hundred years. So you got to do something to amp up your returns. At 100% return per annum it will take about 9-10 years to get to a million.

Anyone got any ideas or suggestions to how to accomplish this goal? All ansewrs serious or ridiculous are welcome.

[aquaswim47]

Extremely good estimate; it would take 9.704480069 years. That's why it's essential to save at a younger age as this risk trap is what 55 year olds get into. Oh I must get $1 million or my life won't be the same. However, taking on too much risk is dangerous. Over a 30 year period, it takes a 18.2603238% rate of return with $1,200 per month invested. On the other hand, if you have 50 years, all you need is 9.06254781% (more more reasonable and actually plausible). Now, if you invested $5,000 per year over 50 years and got a 7% market return, you would have only $2,033,000, while a 9% rate of return would be $4,075,000 (more than double a 7% rate of return). A 9% rate of return would require a minimum of 80-90% rate of return passively invested in index funds. A $4 million retirement might be reasonable for a person (or couple) who makes $50,000 per year saving 10% of his or her (their) income. 50 years from now, assuming a 6.5% inflation rate (9% ROI) that would only be worth $174,860. Assuming a more conservative 3% rate of inflation will be worth $929,631.

CSCO and MSFT are reasons that demonstrate why people who buy penny stocks aren't thinking; these stocks have beginning current valuations for 1990 of $.08 per share for CSCO and $.30 per share for MSFT. MSFT was around $.08 per share in 1986. However, the CSCO stock was priced at $22.50 on April 9, 1990 and MSFT was priced at $27 on September 3, 1986. CSCO has since split approximately 281.25 to 1 and MSFT has split 350:1 since it came public on March 13, 1986. The return on CSCO stock from April 9, 1990 to February 27, 1998 was slightly over 72.8% (137.25 ^ 1/9). The 20 year return on MSFT stock was (355 ^ 1/22) = 30.59%. Thus, you're only hope of having achieved 100% returns would have been to get these stocks before they became public. Most likely, had you unloaded your shares, you may have affected history as we know it and thus your actual results may vary. Also, call options would have likely been extremely unsuccessful from 2000 to 2002, thus lets say you cash out in February 1998 and you reentered in March 2003, you would have done extremely well, possibly (with the call options) exceeding 100%. Off course, that required a lot of luck, a lot of what ifs, and even the time machine wasn't full proof. In other words, expecting a 100% return is ridiculous and fool-hardy as luck typically never is that good.

[JeffBox]

I think that's way too little to grow on. I'd be looking for a non-passive way to sock away 40k/year or so and then work to develop cashflow, not some big number. My weapon of choice is commercial real estate, but I'm still developing skills. With cap rates at historic lows, it's okay to wait a few years to educate myself. Foreign real estate markets might be an interesting play as well, but obviously that takes specialized knowledge and usually there is very little if any financing.

[gijoe9]

If you take a penny and double it every day $0.01 day two = $0.02 how long til you get $1 million........ 28 days 30 days gets you about $5.6 million. every one could do the double thing for about 16 days before it got to hard to come up with the cash to redouble. If you had $1k to start and got 100% returns it would take 12 trades to get to $1 million $10K doubled up is even faster.

[MDZ]

Joe, interesting thead. I think that one thing being overlooked is the necessity to use your own money. Now everyones experience is different, so I don't want to sound belligerent, but in my limited experience once you prove yourself as a worthy investment, money will come to you suprisingly quick.

This applies more to both business and real estate than the actual stock market, but they are all related in a way. My personal approach: Aquire real estate, organized/find business to use that real estate, sell securities to speed up the financing of additional real estate, and repeat.