Want to be a Millionaire ? Calculator.


wealthymatters.comA million dollars is about 4.6 crore rupees.It is still not such a small amount but then again it’s not a figure we can’t wrap our minds around.A millionaire has a net worth of a million dollars not including the price of his/her primary residence.These days helped by inflation and the vast universe of opportunities available many many people are joining the Millionaire Club.So why be left behind?Here is a calculator to show just what you need to do to become a millionaire. http://www.religaremf.com/want-millionare-calculator.aspx .Just clarify your goals,work out the exact course of action you need to follow and stick to the plan.Voila, one fine day you will be a millionaire!

Distribution of Millionaires by Country


Number of millionaires by country

HNWIs (more than US$1 million, in 2009)
Rank Country Number
  World 10,000,000
1  United States 2,886,200
2  Japan 1,650,000
3  Germany 861,500
4  China 477,400
5  UK 448,100
6  France 383,000
7  Canada 251,300
8  Switzerland 222,000
9  Italy 179,000
10  Australia 173,600
11  Brazil 146,700
12  Spain 143,000
13  India 139,835

This is some interesting data I came across today.I did some basic math with the figures.Apparently 0.167% of the world’s population are millionaires.About 0.013% of Indians are millionaires.1.4% of the world’s millionaires are in India. Do you know some or any of them?Who are they?What sort of people are they?How did they get to this position ? By any chance are you one of these people ? How did you make your first million?Or are you someone who would  like to be a millionaire? Here is a tool to help you on your way – https://wealthymatters.com/2011/01/26/want-to-be-a-millionaire-calculator/ .Or if 4.6 crores seems a long way off, here is a tool to help you get started – https://wealthymatters.com/2011/01/26/target-crorepati/

PS:Here are some updated figures,thanks to blog reader RC

Top 10 Countries (Net worth of US $1 million, as of May 2011)

Rank

Country

Number of (USD) millionaire households

Rank

World

37,978,000

1.

 United States

10,541,000

2.

 Japan

5,705,000

3.

 Germany

3,485,000

4.

 United Kingdom

2,904,000

5.

 France

2,653,000

6.

 Italy

2,476,000

7.

 Canada

1,745,000

8.

 China

1,312,000

9.

 Spain

1,022,000

10.

 Taiwan

719,000

 

Rule of 72 , Rule of 70 , Rule of 69


wealthymatters.comThese are nifty rules of thumb to quickly calculate the  years it will take to double our initial investment in a compound interest scheme.

The Rule of 72 is the basic thumb rule to be used in case of annual compounding.Rule of 70 is used in case of semi-annual compounding.Rule of 69 is for continuous compounding.

For example, to find out how long we have to wait for our principal to double in a scheme with an interest rate of 8% compounded annually,we have to divide 72 by 8 to get the answer 9 years.

We can also use the thumb rules to find out how fast the purchasing power of a currency will halve under an inflation regime.So if the annual inflation is 12% the purchasing power of the currency halves in 6 years.

Another cool use of the these rules is to figure out  the impact of management fees,entry and exit loads,mortality charges, administration fees etc. of  structured financial products such as mutual funds ,ULIPS and Pension Plans on potential gains. To find out the impact we divide 72 by the expense ratio. For example, if the mutual fund has an expense ratio of 2%, then  in 72 / 2 = 36 years,half the potential gains have been lost because money deducted for various charges does not get the chance to compound.

As a foot note,let me add that the Rule of 72 is most accurate in the 6-12% range.Also we can extend the Rule of 72 out further,and determine other approximations for tripling and quadrupling. To estimate the time it would take to triple our money, we can use 114 instead of 72 and for quadrupling,  144.

CAGR Calculator


wealthymatters.comCompound Annual Growth Rate (CAGR) is a measure that can tell us just how well any of our investments have done.We just need to know the price at which we bought the investment,the current market price of the investment and the number of years that we have invested in it to calculate CAGR.

We could of course key in this data into the compound interest formula and solve for the rate to get CAGR but here is a readymade calculator to figure  out CAGR.http://www.investopedia.com/calculator/CAGR.aspx.

CAGR can be used for all types of assets :bullion,real estate ,securities and even businesses.We can use CAGR to compare individual investments against some benchmark,or two investments within the same asset class and even investments across asset classes.We can calculate CAGR of incomes, profits etc.too.This should help us figure out how profitable it is to invest in our own businesses so that we can decide whether we can accumulate more wealth as business people or investors.Also we could treat our own lives as businesses.Of our many  income producing activities, CAGR can help us figure out out which activities produce the highest return.CAGR is thus a great productivity enhancing tool.

There is only one danger in using CAGR figures,it masks extreme volatility and periods of negative returns.So, for example, before we abandon some income producing avenue just because its CAGR is lower than another we need to check if the  volatility in the higher CAGR line is something we can live with.So, if doing something produces returns in fits and starts or even forces us to live with losses for a while we need to figure out a way to sustain ourselves and the activity in the low or negative return phase.

Benjamin Franklin’s Will


wealthymatters.comWhile checking up the facts of the story at http://www.crackerjackgreenback.com/the-basics/compound-interest-a-lesson-from-benjamin-franklin/ , before posting  https://wealthymatters.com/2011/01/25/benjamin-franklins-gift/  , I came a cross the text of of Benjamin Franklin’s will at  http://fi.edu/franklin/family/lastwill.html .I have highlighted the parts I found interesting and added a few observations.I plan on using this will to help me draft my own.I hope you find this will as interesting to read as I did.

 The Last Will and Testament of  Benjamin Franklin

I, Benjamin Franklin, of Philadelphia, printer, late Minister Plenipotentiary from the United States of America to the Court of France, now President of the State of Pennsylvania, do make and declare my last will and testament as follows:

To my son, William Franklin, late Governor of the Jerseys, I give and devise all the lands I hold or have a right to, in the province of Nova Scotia, to hold to him, his heirs, and assigns forever. I also give to him all my books and papers, which he has in his possession, and all debts standing against him on my account books, willing that no payment for, nor restitution of, the same be required of him, by my executors. The part he acted against me in the late war, which is of public notoriety, will account for my leaving him no more of an estate he endeavoured to deprive me of.

Having since my return from France demolished the three houses in Market Street, between Third and Fourth Streets, fronting my dwelling-house, and erected two new and larger ones on the ground, and having also erected another house on the lot which formerly was the passage to my dwelling, and also a printing-office between my dwelling and the front houses; now I do give and devise my said dwelling-house, wherein I now live, my said three new houses, my printing- office and the lots of ground thereto belonging; also my small lot and house in Sixth Street, which I bought of the widow Henmarsh; also my pasture-ground which I have in Hickory Lane, with the buildings thereon; also my house and lot on the North side of Market Street, now occupied by Mary Jacobs, together with two houses and lots behind the same, and fronting on Pewter-Platter Alley; also my lot of ground in Arch Street, opposite the church-burying ground, with the buildings thereon erected; also all my silver plate, pictures, and household goods, of every kind, now in my said dwelling-place, to my daughter, Sarah Bache, and to her husband, Richard Bache, to hold to them for and during their natural lives, and the life of the longest liver of them, and from and after the decease of the survivor of them, I do give, devise, and bequeath to all children already born, or to be born of my said daughter, and to their heirs and assigns forever, as tenants in common, and not as joint tenants. Read more of this post