Tuesday, January 22, 2008

The Million Dollar Game

A million dollar is still the gold standard when it comes to "big money". Some interesting facts surrounding this magical figure.

Millionaire at 65
If you start at 25 and save $286/month - you will retire a millionaire at age 65. Assumption is that your savings grow compounded at 8% per year.

If you delay that savings habit by 10 years and start saving $286 from age 35 onwards - you will retire with about $350K. Yup - 10 initial years of savings will cost you big time in the long run.

For other catch-up calculations check out Kilpinger's How to Make a Million.

Beware of Inflation
A million in 2006 is not the same as, lets say, 1900. According to Wikipedia, a million in 1900 is equivalent to the following 2006 US dollars.
$24,766,584.77 using the Consumer Price Index,
$21,224,697.05 using the GDP deflator,
$114,128,571.43 using the unskilled wage,
$162,813,054.25 using the nominal GDP per capita,
$641,531,874.47 using the relative share of GDP,
Thus we see that at the turn of the 20th century one needed twenty to a couple of hundred times more US dollars than one does today, to qualify as a millionaire (in the US).

How Many Are Out There
According to the World Wealth Report published by Cap Gemini there are about 9.5 million individuals with net worth exceeding $1 million. And just to clarify, for this study, net worth includes all assets except primary residence.

Forbes counted a record 946 billionaires in 2007.

"Ingenuity, not industry, is the common characteristic; these folks made money in everything from media and real estate to coffee, dumplings and ethanol. 60% made theirs from scratch."

What Do You Do When You Get There
Retire. Travel the world. Spend like crazy. Or maybe go back to work.

That's the multimillion-dollar question for hundreds of early Googlers. By some estimates, more than 900 employees became instant millionaires when Google went public in August 2004, and that total has likely ballooned along with the stock price.

Some ex-Googlers are chasing summer around the world, raising families, or just sleeping late. Others are teaching art, going to law school, writing books, or stumping for politicians. Still others, having made their fortune, are taking on all those things.
The New York Times

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