LOUISE FAIRSAVE: How to earn $1m
WHO WOULD NOT WISH to earn $1 million?
Yet to earn this sum suggests a rate of earning, for example, earning $1 million per year, per month or per day.
Really, earning $1 million is obviously not a sustainable activity at any rate unless you were originally wealthy in the first place.
So, our quest is really to have, rather than to earn, $1 million. What a comfortable security blanket $1 million would make! Ultimately, if we could accumulate $1 million in cash or cash equivalents during our lifetime, and hold on to it, that would be a real achievement.
Earning occurs in cycles. In our youth, we are forced to depend on others. Eventually, we get to earn our own living. We support ourselves until a time comes when we return to dependency on others for our support. Financially, in our old age, we may support ourselves from the funds saved and invested during our working/productive years; we may need others for social and care support.
Saving and investing $1 million by retirement can contribute well to feathering a bed of relaxation. Yet, depending on the chosen lifestyle, the impact of inflation, and the vagaries of one’s health, even $1 million may not be enough to retire on. It is possible to outlive $1 million. Many film stars have outlived their millions.
Accumulating the first million is the hardest, mainly because of the earning cycle. When you earn and manage to save and invest part of your earnings, the more and the longer you save and invest, the less you will have to depend on your current earnings to sustain your original level of earnings. By the time you’ve accumulated the first $1 million and are working on building your wealth, the first $1 million is also earning returns in propelling future earning levels.
That goes to the crux of the matter. If you would wish to accumulate $1 million, the first step would be to live beneath your means, saving and investing the excess. But most of us would never accumulate a $1 million even if we had many lifetimes, given the meagre amounts that we can afford to save and the limited investment vehicles.
Doctors Thomas Stanley and William Danko, co-authors of The Millionaire Next Door, provide a glimpse of the wealthy of America. These authors have found that, in addition to living within their means, many millionaires have accumulated their wealth through operating a successful small business.
So, a suggested way of turning $1 million is to find an area that you love, and give it all you’ve got in making it a successful venture – committed entrepreneurship. Another inveterate approach to accumulating wealth is through speculating in real estate or in real property development – sales or rental.
Real estate has had a pivotal role in the accumulation of wealth for many successful millionaires.
The first $1 million is also the hardest to accumulate because, once you have managed the knack of accumulating $1 million, it just seems that easier to keep on track of the other millions to follow.
Handling money is a process, not an end in itself. This partly explains why windfall lottery winners often find it hard to hold on to the millions they have won; they have not developed the skills of handling money, so it slips through their fingers.
Louise Fairsave is a personal financial management advisor, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances.