"
Robert Reich, once observed "
most minimum wage workers aren't poor."
He is right."
- Johny Isakson, U.S Senator (Robert Reich is former U.S department of Labor Secretary)
Minimum wage earners keep complaining about their salary. They say they cannot retire rich. Most of them just go through their work and retire relying only on their small SSS pension and the little retirement that their company will be giving them.
For most minimum wage earners, becoming a millionaire when they retire is quite an impossible dream. They contend that they can only be a millionaire if they receive a hefty sum of retirement money from their company.
Is it really possible to achieve millionaire status by your own efforts alone ? (Humanly speaking) Let us consider this actually scenario.
In the Philippines, Central Visayas Region, the current minimum wage is P 241.00. Multiply it by 26 days of work you get P 6,266.00.
Let's just say that you are 30 years old and you faithfully saved that P 266.00 per month and spent the rest of the P 6,000.00, that would amount to P 3,192.00 per year
Do the math. If you put that P 3,192.00 in an investment vehicle that would give you 10 % interest per month in interest (compounded), do you know how much your money would become in 30 years, that would be P 1,052,001.00. If you started this kind of savings program when you were 30 years old you will retire a millionaire at 60 years old by your own savings program alone, add to that the retirement benefits from your company, your monthly pension from the SSS and your PAGIBIG "savings."
What if you decided to add another P 500.00 in your monthly investment and invest P 766.00 instead? This would amount to P 9,192.00 per year and at the end of 30 years it would amount to a whopping amount of P 3,029,447.00 (At 10 % interest per year compounded)
Perhaps later on you would increase your savings to P 1,766.00 a month if you receive a salary increase. If you do that even on the 10th year after you start saving only P 266.00 a month, you will retire with P 4,472,777.00.
The growth of your money is possible because of what we know in the world of finance as the Rule of 72.
Albert Einstein's greatest discovery was not the theory of relativity, it was the Rule of 72. (Although some people say that the rule existed long before he was born, most would agree however that he has popularized it)
What has the Rule of 72 have to do with investing and growing your money ?
Basically knowledge of the Rule of 72 is the basic building block of learning that each budding investor should have.
Simply stated the Rule of 72 helps you determine the following:
1.) What interest rate you should avail of in order for your money to double quickly.
2.) How many years does it take for your money to double.
In a nutshell the Rule of 72 is stated as follows:
72 divided by interest rate return = No. of years it takes for your money to double.
So, if you put P 100,000.00 in a bank account, it will take 72 years for your money to become P 200,000.00 since the bank only offers a 1 % percent interest rate. (72 divided 1 = 72)
Let’s say you get a little wise and you put your P 100,000.00 in a time deposit account it will take 18 years in order for your money to become P 200,000.00 (72 divided by 4 = 18)
Basically the higher the interest rate the less number of years your money will it take for your money to double.
So if you put your P 100,000.00 in an instrument that would give you a 12 % interest rate it will only take 6 years for your money to double (72 divided by 12 = 6)
However take note that the Rule of 72 is more accurate with lower interest, the higher the interest rate rises the more inaccurate it becomes. (An example of this is that if you earn have P 100.00 an invest it in an instrument at 72 % interest rate per year according to the Rule of 72 your money will become P 200.00 in 1 year. However this is not entirely accurate since you will need a 100 % interest rate in order for it to become P 200.00 in 1 year time)
Interested in how many years would it take for your money to TRIPLE and what should be the interest rate that you should avail of? then you should use the Rule of 115. It works basically the same way as the Rule of 72, just substitute 72 with 115.
Earning the minimum wage ? No problem with the Rule of 72, You could be a millionaire !
ARTICLES
How To Be a Millionaire On Minimum Wage
Robert Reich, once observed most minimum wage workers aren’t poor. He is right.” - Johny Isakson, U.S Senator (Robert Reich is former U.S department of Labor Secretary)
Minimum wage earners keep complaining about their salary. They say they cannot retire rich. Most of them just go through their work and retire relying only on their small SSS pension and the little retirement that their company will be giving them.
By: Zigfred Diaz
Wealth 10 Basic Steps to Achieving it
For most of us, overspending can be very hard to tame. But if you already have bad credit, it is the number one strategy for getting your finances under control.
By: Gretchen Reese
5 Tips for Repairing Bad Credit
For most of us, overspending can be very hard to tame. But if you already have bad credit, it is the number one strategy for getting your finances under control.
By: Gretchen Reese
Debt Consolidation Tips: An "All in one" Guide!
Debt Consolidation loans merge all your debts and bills into a single payment. This means, that if you have several monthly payments or a number of different loans, you can make things easier by consolidating them and taking one single loan to pay off the total debt. Debt Consolidation loans reduce your monthly payments by lowering the interest rate or extending the repayment period or sometimes both. Debt Consolidation Loans are ideally offered to those who are unable to manage their monthly payments. They are a good option for you to reduce your debts and gradually move to a debt free life.
By: Marsha Claire
Adverse Credit Debt Consolidation Loan to Mitigate Ills of Bad Credit
An individual's credit rating plays a key role while borrowing money from the loan market. It becomes difficult to get a loan when you have adverse credit rating. Adverse credit debt consolidation loan can work as an effective solution in this case. It helps in consolidating a borrower's debt into one affordable loan at better terms. Read the article to know how an adverse credit debt consolidation loan can help you get out of debts.
By: Rick Russell
Debt Problems - Learn how to deal with them boldly
Debts become a problem when you don't know how to manage it and the way out of it. Debt is a serious problem. It is easy to run away or to ignore a problem. But, a wise man will face the problem boldly and will try to find a remedy for it. It is always best to deal with debt problems from its developing stage. Read the article to know how to get out of debts... ... ...
By: Rick Russel
Everything About 0% Intro Rate Credit Cards
Tired of reading review after review about 0% APR intro rate credit cards? Having no luck when it comes to finding an all-in-one-review about 0% APR intro rate credit cards?
By: Michael Colucci
Need to reduce debt? Consider a home equity loan.
High interest rates take a long time to pay off. Consider a home equity loan and get rid of high interest burdens.
By: Adam Jackson
Tips On Reducing Your Current Debt
Nobody enjoys being up to their eyeballs in debt. I mean let's face it life is hard enough without having to worry about how you're going to pay bills that seem to keep piling up all around you.
By: Tim Gorman
Can a Debt Consolidation Loan Help Your Credit Record?
Everyone hits occasional financial snags in life. Going to college, buying a home, or having a child can hit a personal budget hard, sometimes setting back the finances several months or even years. When that happens, a person's economic status can quickly spin out of control as one credit card after another gets maxxed out, building a mountain of debt that can be nearly impossible to dig out from under.
By: Katie Morgan
Credit Cards: Non reward Type vs Reward Type
There are just two basic choices for you - do you want a credit card that offers rewards and one that doesn't?
By: Michael Colucci
Credit Cards: Low APR vs 0% APR
Mano y mano, which one is better do you think - a credit card with low, ongoing APR or one that offers 0% APR as an intro rate?
By: Michael Colucci
Acting Smart With Your Credit Card
Whether you own a credit card that offers reward points, a credit card with a low ongoing APR or one with a 0% APR intro rate, it helps - and pays - to act smart with your credit card usage.
By: Michael Colucci
How To Manage Your Debt
Credit counselling agents will help you get out of debt, though they don't actually consolidate your debt.
By: J Shipper
Need More Credit, Come And Get It
Supposedly, the American economy has been thriving in the past 5 years, with a steady growth in the GDP. However, 90% of this growth has been due to the housing bubble.
By: Frank Hague
Is Bankruptcy The Right Way To Go? You Decide
For businesses, relying on issuing credit, the new personal bankruptcy law is doing great, reducing personal bankruptcy claims from the thousands to double digits.(In the short run).
By: Frank Hague
Did You Score Credit Today?
Keep Your Credit History Clean - Remove A Negative Credit Record From Your Credit Report
By: J Shipper
Keeping Your Credit Clean
Keeping your credit clean is a matter of due diligence and you should make it a priority to give yourself a "credit checkup" every year, much like you would make it a priority to get a medical or dental checkup.
By: Lee Dobbins
Eating Away At Debt
Use small steps to eat away at your debt and eventually you will be debt free!
By: Lee Dobbins
Cutting Back Today Can Get You Out Of Debt Tomorrow
If you want to get yourself out of debt, you must cut back and start applying the saved money towards your debt.
By: Lee Dobbins
Play the Credit Card Game and WIN
When we got married we had over $34,000 in outstanding debts, much of it on credit cards. After sitting down to have a good cry I got things into perspective. With a solid plan and the determination to stick with it, we could have those debts completely paid off within a couple of years.
By: Heather Peters
Save this page del.icio.us