One million in 11 years - how true?

Dogma_I

I have just read an article that claims that if you invested £1 per day at 10% then you would have a million pounds in 56 years. £2 a day then you could achieve this in 28 years and £5 a day you would have a million in 11 years.

I know getting a 10% rate is the immediate difficulty with this but is the above statement true? Is there a calculator available to verify this (I have seen calculators for monthly compound interest but not daily) and where do you get an account that would make this work in reality (albeit investing longer at a lower rate, but compounded daily).

kogsawelly

Dogma
Sorry to burst ya bubble but...
£1 a day would indeed get you around a million in 56 years (worth around £160,000 in todays terms).
£2 a day would get you around £110,000 in 28 years (worth around £50,000 in todays terms).
£5 a day would get you about £35,000 in 11 years (worth around £28,000 in todays terms).
chrs

Dogma_I

Thanks for that. Those are the figures I got when using the many available online calculators. I wonder what the author was on about then. Here are her exact words:

' If you saved only £1 per day and invested it at 10% you would have a million pounds in 56 years. If you invested £2 per day then that halves to 28 years and if you saved £5 per day (the amount some people spend on cigarettes) you would get to the million mark at slightly over 11 years'.

This is from page 12 of Gill Fielding's The Wealth Alphabet (http://www.wealthcompany.com/resources/books.phtml)

kogsawelly wrote: »

Dogma
Sorry to burst ya bubble but...
£1 a day would indeed get you around a million in 56 years (worth around £160,000 in todays terms).
£2 a day would get you around £110,000 in 28 years (worth around £50,000 in todays terms).
£5 a day would get you about £35,000 in 11 years (worth around £28,000 in todays terms).
chrs

hellows

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kogsawelly

She was showing you the power of compounding over a long time.
Using the example of 10% per annum return on your investment.
Whether the interest was calculated daily, weekly, monthly or even yearly...
it doesn't really matter. 10% is 10%
chrs

ManAtHome

The author doesn't understand compound interest and is simply dividing the number of years by the increase in daily savings from the initial 56 years. They could have gone down to £55 a day and you hit a million in a year...

Retired_I.F.A.

Whether the interest was calculated daily, weekly, monthly or even yearly...
it doesn't really matter. 10% is 10%

Bloomin well does matter that's why they passed laws making the APR know

For example a credit card that charges 2% p/m on outstanding the balance.

2% p/m is 24% p/a yet its 26.82% APR

dunstonh

And if we are talking one million in petrol price inflation or council tax inflation terms it will be even worse.

merlinthehappypig

Though using the 'official' inflation figures it will take about three centuries............

McSaver

£5 a day at 10% Interest Rate Takes Nearly 42 years.
£2 a day at 10% Interest Rate Takes Just Over 51 years.
£1 a day at 10% Interest Rate Takes About 58.5 years.

Thats Assuming Its Tax-Free.

ManAtHome

merlinthehappypig wrote: »

Though using the 'official' inflation figures it will take about three centuries............

Well, you cynic - CPI will reflect reality (possibly even 2.3%) just as soon as the DFS sale ends.