The Formula for Becoming Rich

Rich – having a lot of money or valuable possessions. someone who has accumulated substantial wealth relative to others in their society or reference group

According to a common understanding in our era, a wealthy individual or global top 1% is defined as someone who possesses financial assets (a sum of cash and deposits, insurance, stocks, bonds, and other financial investment products) exceeding $1mn (based on UBS’s Global Wealth Report).

We all want to be rich, but how do we achieve that? Is there a formula?

Indeed, there is a formula for becoming rich. What is it, you ask?

FV = PV × (1+r)^n

Oh, it looks impressive … Just kidding. Sorry to trick you. Yes, the above formula is commonly seen in financial studies for calculating future value. But if you think about it, isn’t this the exact formula for becoming rich? As we saw from the definition, a rich person is someone with financial assets exceeding $1mn. So, shouldn’t we aim to make the result (FV) exceed $1mn? I didn’t deceive you at all!

FV = Future Value, PV = Present Value, r = rate, interest rate or return rate, n = number of years, period

There are three ways to make Future Value exceed $1mn.

  1. Increase Present Value

In simple terms, it helps if your father is Elon Musk. As of May 30, 2024, his assets were $204 billion. In this case, unless you are completely disinherited or cause a catastrophe on a global scale, your financial assets can easily $1mn.

  1. Increase Rate

No need for many words here. Are you a master gambler? Not the con artist type, but a genuinely skilled one. Are you banned from entering Las Vegas casinos, or are you a stock market guru who makes 30% returns daily with ease? Or are you incredibly lucky? Do you win the lottery’s first prize regularly, or does the real estate you buy immediately skyrocket in value? If you are such a person,,, please take care of my money too.

As mentioned in our ‘ABOUT US‘ section, if you make a 1% daily return, your investment can grow 100 times in 1 year and 10 months. So, if you invest $10,000 and wait for about 2 years, you’ll become rich. Just keep doing what you do best.

  1. Increase Time

Warren Buffett often compares investment returns to a snowball. Even a small snowball can become massive if rolled from a high enough mountain. If your father is not Elon Musk or Bill Gates, and you’re not a stock market genius or lottery winner, this is for you and me. Invest steadily over a long period. With an annual return of 15%, your assets will double every 5 years. In 10 years, they’ll be 4 times bigger, in 20 years, 16 times, in 30 years, 64 times, in 40 years, 256 times, and in 50 years, 1,024 times.

Even with a small seed fund and modest returns, time is equally given to everyone. By investing this time wisely and utilizing it well, we too can become rich! Let’s go!!!

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