It's the gradient of the curve …

Making millions is serious business …

… don’t worry, here’s a short-cut where you can jump straight in  )

Now, back to today’s post ….


That’s right, it’s not the size of the mountain … but, the gradient of the curve that will get you!

Given enough track, any train can climb any mountain. The track just can’t be steep … hence lots of track … hence lots of meandering around and around to get to the top (if that’s where a train really wants to go) … hence lots of time.

The train can get you there, it just can’t do it very quick!

Similarly with your Number … the size of the number doesn’t phase me, nor should it phase you …

You want a million dollars?

Easy, buy a $100 unit in a low-cost Index Fund and wait …

83 years.

Want a million in today’s buying power? Then, you’ll need to wait another 38 years.

Want $5 Million in today’s buying power? Just wait 21 years more!

You see, it’s not the size of the mountain that will kill you, but the gradient (steepness) of the sides that you need to climb.

That’s why we also need to know the Date that we want to achieve the Number:

Enter your starting Net Worth, your ending Number, and the number of years in between into a simple on-line calculator, and it should tell you the Average Compound Growth Rate required to go from the bottom (you current Net Worth) to the top (your Number).

The Average Compound Growth Rate is a measure of how ‘steep’ a financial mountain you need to climb … and, that should tell you whether you need a train, a fast car, or a helicopter to get you to the very top in time.

According to Michael Masterson in his book Seven Years To Seven Figures:

Required Compound              Investments

Growth Rate                             Required

4%                                                  CD’s

8%                                           Index Funds

15%                                              Stocks

30%                            Real-Estate together with Stocks

45%              Real-Estate together with Stocks and Small Businesses

50%+                           Start Your Own Business

So, how big is your mountain? More importantly, how steep the gradient?

And, are you prepared to try a new mode of transport, if that’s what is required?

If not, you’ll either need to find a smaller mountain (deflate your expected lifestyle) or simply give yourself some (a lot?) more time!

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31 thoughts on “It's the gradient of the curve …

  1. OH MAN! You were smart enough to take a train up this mountain. I thought we were going to “climb” the thing. Oh well I guess that’s why you are so far ahead of the rest of us huh:)

  2. Mine rate wound up being 36%. Somewhere between Stocks and Real Estate….and Stocks, Real Estate, and a Business. A better scenario than I thought I was going to be in chasing 10M/10Y.

    I’m managing my own money, are you managing yours?

  3. @ Jeff – I would say that’s still VERY aggressive, given where Index Funds and CD’s sit … but, certainly in the ‘sweet spot’ for somebody determined to be an entrepreneur and investor … you’ll need to run some numbers if you intend to skip the ‘business’ part and rely on a high income, instead.

  4. AJC – In a few years I’ll have the added benefit of a military pension to add into the mix. 50K/year indexed to inflation as long as I can breath air.

    While not a business, stock or real estate, I think the pension is equivalent to at least 1-1.5 million in assets in the bank dependent upon your rate of return. So maybe I only need to get to 8.5 million. 🙂

    Learn how I’m managing money.

  5. @ Jeff – You just smoothed your gradient! If the pension is guaranteed, then you can adjust your Number accordingly.

    Also, if you are able to trim your living standard back to something approximating your pension, you can virtually ‘free roll’ your way through businesses or whatever investment strategies that you may be willing to try. In other words, your ‘rock bottom’ is still enough to put some sort of roof over your head and food on your table …

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  8. I started following this website and figured my compound annual growth rate would be 81%! Eeks. That some tall orders to fill. Looks like I should reconsider. But that wouldn’t be me. 😉 I have always wanted to start my own business. Hmmmm….

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