Worldwide Success

If you create an activity that generates $10 a day or $300 a month and you invest the money every year in a well diversified stock fund that returns 10% per year (10% is the historical average return for stocks), at the end of 10 years you will have accumulated $57,374.  If you let this $57,374 investment continue to grow at 10% without adding anything to it, in another 30 years you will have exactly $1,001,142 !  Remember the following rule of the One Million Dollars Generators:

Any activity that generates $10 a day for 10 years will turn into $1 Million in another 30 years if the money is invested at a 10% rate of return.

Why generate $10 a day for only 10 years and not longer?  First, because 10 years is a manageable amount of time.  It is an amount of time that you can see in the horizon.  It is too difficult to commit to or predicts anything longer than 10 years.

But perhaps the most compelling reason why you should stop after 10 years is that any income that you generate beyond the first 10 years will not contribute as much to the one million dollar goal.  The dollars generated after the first 10 years will not benefit as much from the power of compounding as the dollars generated in the first 10 years.  Let me explain.  If you continued the activity beyond the first 10 years it would have taken you a total of about 35 years to reach one million dollars.  However, if you had stopped after the first 10 years, it would have taken a total of 40 years to reach one million dollars.  In other words, you would need an extra 25 years of the activity (which usually involves some effort) in order to save 5 years to reach one million dollars.  Is it worth it?

The great thing about thinking in terms of One Million Dollars Generators is that $10 a day is not that difficult to achieve.  One million dollars is a very intimidating amount and most people are overwhelmed just thinking about it.  Most people will not believe that they can accumulate one million dollars and therefore they will not even try.  But if you think in terms of setting a goal of generating just $10 a day, just about anyone is able to achieve this goal.

You can generate $10 dollar a day by either creating additional income or saving income that you already have.  For example, if you are a smoker who consumes 2-3 packs of cigarettes a day, you can save about $10 a day by quitting.  That is a One Million Dollars Generator.  Perhaps you can save $10 a day by cutting back on a few things such as using less electricity and gas, eating out less often, and cutting back on the number of lattes at Starbucks.  That would be another One Million Dollars Generator.

In the article How to Become a Millionaire Blogging, we talked about how blogging can be a One Million Dollars Generator.  Another example on the income generation side is Agloco, which pays you to surf the internet.  If you are not familiar with Agloco see the article Users Can Now Tap Into Internet Money Machine.   Let’s assume that you are able to sign up 1,000 Agloco referrals, and that each of these referrals surfs the web 5 hours a month.  You will be credited with 25% of their time, or 1.25 hours a month for each referral.  At this point in time nobody knows how much each hour of Agloco internet surfing is worth, but just for argument’s sake let’s assume that each hour is worth 25c.  In this case you will receive 31c per month for each referral (1.25 hours x 25c).  Therefore your 1,000 referrals will generate $310 a month for you.  With minimum effort you just turned Agloco into a One Million Dollars Generator.

There are two things you need to be aware of before we finish.  The first is the impact of inflation.  Inflation eats away your buying power and consequently one million dollars 40 years from now will be worth less than one million dollars today.  In fact, if you factor in an average 3% rate of inflation, your one million dollars would only be worth about $412,000 in today’s money 40 years from now.  So in order to truly be a millionaire in today’s dollars you would need to have more than two One Million Dollars Generators working for you.

The second is income taxes.  This model does not account for income taxes as each individual situation is different.  If you want to account for income taxes multiply one minus your effective tax rate to the results.

Forty years is a very long time, and this may discourage some people.  However, if you are in your 20’s or even early 30’s you can benefit from this fortune that you accumulated with very little effort at a time when you are ready to enjoy your golden years.  The key is to start with your One Million Dollars Generators as early as possible to give it enough time to leverage the power of compounding and yet be available in time for you to enjoy it.

Start thinking about how many different ways you can generate $10 a day for 10 years.  If you come up with a few of these One Million Dollars Generators early enough in your life you can end up becoming a multi-millionaire in your retirement years.

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