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When will you be a milliionaire?
Have you ever tried to calculate what your projected net worth would be in the future? If so, at what year or age do you expect to be a millionaire?
I did this two years ago using conservative historical averages. I also assumed that my behaviors weren’t going to change. And, I used only three things to calculate this: home, salary, & retirement fund.
For my home, I calculated what my home equity at the end of each year would be after paying my mortgage at the normal rate. Then, I assumed that my home would appreciate 3% per year (historical average).
I created a projected salary based on a 3% increase per year. I thought that 3% would be conservative. I’m not sure if it is or isn’t. I want a job that, at the very least, keeps up with inflation.
I used my salary to calculate what my future contributions would be to my retirement fund. Then I used 8% rate of return (historical market return) to calculate the future value of my retirement fund.
I did all of this in excel. It was an interesting exercise. Based on these calculations, from two years ago, I expect to be a millionaire by the age of 52. I don’t know if that’s good or bad. That’s still 22 years away. I created a spreadsheet with my projected net worth for each year until I’m 65. Every year I’m going to track my progress and see how well I’m doing. I guess it’s sort of like yearly mini-goals.
So far, I’m doing considerably better then planned. It helps to have goals.
I did this two years ago using conservative historical averages. I also assumed that my behaviors weren’t going to change. And, I used only three things to calculate this: home, salary, & retirement fund.
For my home, I calculated what my home equity at the end of each year would be after paying my mortgage at the normal rate. Then, I assumed that my home would appreciate 3% per year (historical average).
I created a projected salary based on a 3% increase per year. I thought that 3% would be conservative. I’m not sure if it is or isn’t. I want a job that, at the very least, keeps up with inflation.
I used my salary to calculate what my future contributions would be to my retirement fund. Then I used 8% rate of return (historical market return) to calculate the future value of my retirement fund.
I did all of this in excel. It was an interesting exercise. Based on these calculations, from two years ago, I expect to be a millionaire by the age of 52. I don’t know if that’s good or bad. That’s still 22 years away. I created a spreadsheet with my projected net worth for each year until I’m 65. Every year I’m going to track my progress and see how well I’m doing. I guess it’s sort of like yearly mini-goals.
So far, I’m doing considerably better then planned. It helps to have goals.
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