Your First Million

Money, and especially when in large sums, has always never failed to inspire. The ancients fantasised about it, and the peoples of the medieval age and the renaissance pondered with awe and wonder at the thought of it. Today, modern peoples become preoccupied with the idea of it. In pop-culture, money is the single attribute of success. And however much of it seems unfit to live a “good” life, we have all probably had the opportunity to daydream about what we would do if we managed to make millions.

As Jan Krzysztof Bielecki once claimed: one has to steal their first million. However, old, Polish industrial whispers claim that one grosz of one’s own design is worth more than one million freely given. So how must one therefore earn a million zloty? This perhaps is not so straightforward a question to answer as the answers to twelve questions on a popular television quiz show through the elimination of six winners from forty-nine participants suggests, but the answer nevertheless brings much satisfaction.

Some people dream of riches, not to speak the least of Nick Carraway, the protagonist of the novel by Francis S. Fitzgerald, The Great Gatsby, who won his riches by means of the market. Not one investor starting from zero in the trade of shares was able to make a fortune, and not one lost their fortune. But in the due course of things does the ordinary investor lose? As statistics seems to verify – not necessarily. Everything depends on the strategy taken, and moreover, how we establish three scenarios – assuming that while working we manage to set aside a somewhat lofty sum of 1,000 USD. For the requirements of the experiment we likewise will want to establish that the aforementioned thousand is distributed 10, 20, 30 and 60 years later. How much would we manage to save if we invested all of this money through an index? For the purposes of the experiment, let us assume that the invested sum is put into an index, because the movements thereof are restricted to the risk connected with individual financial instruments. However, at the same time, as has been shown by research conducted by Famy from the year 1970, it is not possible in invest in the long term while at the same time receiving the results achieved by the index – in reality only a very elite circle manages to do so.

However, our equity securities only exist for some time, so for this sort of experiment we will have to concentrate on the American S&P 500, an index that follows the market capitalisation of 500 of the largest American public companies. The first quotes for the index took place on the fourth of March 1957, so on the occasion of its sixty-year anniversary we will assume that it is there that we invest our thousand dollars.

60 years ago, our one thousand dollars upon the establishment of the index would have yielded a return of 3,656.85%, or 36,568.50 USD. These are huge returns indeed. This means that if we would want to have one million in the course of sixty years today we would have then had to invest 26,618.04 USD.

30 years ago, at the beginning of economic transformation in Poland, our thousand dollars invested in the American equity market would yield 6,265.20 of today’s dollars. However, in order to earn a million, we would have had to invest 137,642.64 USD at that point. Today we would have been more than happy to have such gains.

Two decades ago, when for one dollar we paid 3.07 PLN, our one thousand would have multiplied twofold, such that in 2017 it would have more or less doubled the current value of which would have amounted to 1,855.69 USD. In order to make a million, we would have to had put down 350,178.05 USD, however.

Investing one thousand dollars ten years ago we would have had gains of 76.84%, and so in order to have one million we would have had to have had 565,482.92 USD put down. It is important to recognise that all of these calculations are taken into account with due consideration for the changes in the amounts of money due to inflation (the effect of an increase in the prices of ordinary goods with the development of the economy).

As seen by the examples above, the earlier we are able to set aside sums of money, the less amount of money we need in order to realise the riches about which we so often dream. It is important to choose solutions which are appropriate to the needs of the investor. It allows one to reduce the unnecessary nervousness and maximise returns. This sort of a solution is provided by EFTs, because they effectively replicate the behaviour of indices, and those funds we need not take on any additional, unwanted risk, in the long term obtaining the chance for above-average risks as a result.

*The data for the level of returns are taken from



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