How to Become A Millionaire in 10 years

This is actually an idea I got from Frugal Dad, an excellent blog on frugality. I’m trying to make a similar post regarding this but from a Filipino perspective (in Philippine Pesos).

One million is a very nice round number for anyone. Although one million isn’t that BIG as it used to be, it’s still a goal worth achieving. Remember that the road to wealth is paved with goals and this could just be a start to wealth.

My calculations are based on September 11, 2009′s 5 year annualized mutual fund return of Equity Funds. In my list, I have Philam Strategic Growth Fund, Inc (12.79%), Philequity Fund, Inc (16.59%), Philequity PSE Index Fund, Inc (17%), Philippine Stock Index Fund Corp (10.39%), Sun Life Prosperity Phil Equity Fund (11.6%), Inc and United Fund, Inc (18.86%).

The average for the 5- year period is around 14.54% for the 6 different mutual funds. A bit unrealistic but still is what our average is showing.

Our calculations based on 14.54% compounding interest rate reveal that monthly investing in equity funds should just be 3,600 Php and you could be a millionaire in 10 years. A lot less than I expected.

If you could save 3,600 Php every month and become a millionaire in 10 years, could you do it? If not, here are a few ways I am sure will get you to millionaire-dom.

Earn More Income
The more money you generate, the faster it will be to become a millionaire. If your income doesn’t cut it, you could always start a sideline. Some people have become bloggers, some have tried selling items to co-workers and some do freelance jobs on the side. It’s all up to you as how you would be generating more income.

Save more
No matter how much money a person can earn, it won’t matter if all of it is being spent. Try to pay yourself first rather than last. Remember that you need to save only 36 Php a day to become a millionaire in 10 years.

Invest Wisely
Savings money in a regular savings account won’t do any good at the present time. The average savings account just earns just about .75% interest which way way lower than the inflation rate which means that you will lose money in the long run.

It’s always wise to invest the money in mutual funds. Of course, risk tolerance should always come first when thinking of investing.

Note: This post is for amusement purposes only. Don’t expect to get the same results in the real world.