From Allowance to $3 Million: A 12-Year-Olds Blueprint to Financial Freedom
Warren Buffet purchased his first stock at 12 years old and has a net worth of $146 billion dollars. Not too shabby. Our 12-year-old son recently started investing the money he earns from splitting firewood into a Vanguard retirement account. His current balance is $960. We reviewed his holdings and performance the other day and he asked an intelligent question; how much money do I need to invest to become a millionaire? So, we broke out the investment calculator and ran different scenarios. Just for fun we ran scenarios based on 31 years of investing or until age 43 (his dad's age)
Scenario #1: Slacker
Starting balance $960
Invest $1,000 per year for 31 years at 8% return
Total = $133,788
Scenario #2: Realistic
Starting balance $960
Invest $1,000 per year for 2 years at 8% (Middle School)
Invest $5,000 per year for 4 years at 8% (High School)
Invest $10,000 per year for 10 years at 8% (College and/or Skill Training + First job/business- age 19-28)
Invest $25,000 per year for 8 years at 8% (Earnings have increased, starting a family and combining incomes/ living expenses- age 29-36)
Invest $50,000 per year for 7 years at 8% (In the year 2050 salaries will most likely be quite a big higher than in 2026 which is why this is easily possible- age 37-43)
Total = $1,545,500
Scenario #3: Overachiever
Starting balance $960
Invest $2,000 per year for 2 years at 8% (Middle School)
Invest $10,000 per year for 4 years at 8% (High School)
Invest $20,000 per year for 10 years at 8% (College and/or Skills Training + First job/business- age 19-28)
Invest $30,000 per year for 8 years at 8% (Earnings have increased, starting a family, and combining incomes/ living expenses- age 29-36)
Invest $132,000 per year for 7 years at 8% (Very doable with increased salaries over a long period of time, and combining incomes with a spouse- age 37-43)
Total = $3,000,000
No one can predict the future but having a vision and hope is a solid starting point for anyone. Our son was quite surprised at how quickly the numbers added up. Wealth, ideas, and movements all begin the same way: as a spark small enough to be ignored until the whole forest is on fire.