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Become a millionaire. It’s easier than you think

The most important factor is in your control.
It may be surprising to learn that the return you are able to get on your investment is not the most important factor in determining whether or not you reach your goals. Image: Shutterstock

Investing is often presented as something complicated. Trying to make sense of the range of products available, the different asset classes, and the relationship between risk and return can be daunting to a lot of people.

In reality, however, the basic principles are extremely simple:

Start as early as possible. Save as much as you can. Be patient, and let time work in your favour.

Read: Don’t let the markets fool you

To illustrate this, Morningstar put together some data on what it takes to save your way to R1 million. Using different monthly contributions and rates of return, it calculated how long it would take an investor to become a millionaire.

Show me the money

“The analysis used a range of return outcomes varying from the current return investors can achieve by putting their money in a bank account up to a maximum of 17% per annum,” explains Victoria Reuvers, senior portfolio manager at Morningstar Investment Management. “Realistically, many investments can deliver higher returns in short periods of time, but 17% per annum was considered a large annual return and a prudent maximum, as delivering such a strong outcome would require some meaningful risk-taking.”

The findings are presented in the table below.

Source: Morningstar

The first thing to note from this analysis is that even at just R200 a month, and at the lowest rate of return, it is possible to become a millionaire within the average South African’s lifespan. It would take just under 63 years to get there, which is almost exactly equivalent to the country’s current life expectancy.

These numbers are even more powerful if one uses the return an investor could reasonably expect from a local balanced fund. It is fair to assume that these unit trusts can deliver a 10% return per year over the long term.

If someone contributes just R500 per month and receives that rate of return, it would take less than 30 years for them to become a millionaire. That is well within a normal working lifetime.

This shows that at an undemanding monthly contribution and at an extremely realistic potential rate of return, becoming a millionaire is simply a matter of time. If an investor keeps up the monthly contributions and shows the necessary patience, it is well within reach.

Size matters

The second observation is perhaps even more powerful. It is illustrated by the column furthest to the right, which considers what happens when an investor makes contributions of R10 000 per month.

At this contribution rate, it would take just seven years to reach R1 million, even at the measly return of just 5%. But more significant than that is that the higher rates of return do not get you to R1 million exponentially faster.

Doubling the rate of return from 5% to 10% only shaves nine and a half months off the time it takes to become a millionaire. Tripling it to 15% speeds up the process by just one and a half years.

This is something that a lot of investors fail to appreciate. Almost always, the main focus in any investment discussion is on the return. That is what leads to extreme views such as thinking that you have to take all your money offshore, or you should invest in a particular stock or sector because it is the next ‘big thing’.

However, the return you are able to get on your investment is not the most important factor when determining whether or not you reach your goals. If you want to get to R1 million, the surest way of speeding up that process is to save more.

Read: How much you save is more important than the return you get

“Yes, performance is important, particularly when monthly contributions are small,” Reuvers notes. “But what this exercise shows is that, more important than performance, is a consistent contribution and the size of the monthly contribution.”




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Million what? Pound, Dollar, Rand? We are all rand millionaires. With 1 million rand one can’t even think about retirement.
But the fact is one must invest some money. So aiming for a million rand is good. Very good.

Agreed 1 million rand is only 60 to 70 thousand dollars depending on the exchange rate. Also the argument above fails to take into account the inflation rate and the deterioration of the Rand with time. Over the long term it appears that the value of the rand is down i.e. 1980 rand more than the dollar i.e. R1 = USD 1.15 80’s and 90’s 1 USD R4-6. 2000’s 1 USD 6- R10 now 1 USD R14.5.

Why always look at the negative side?

When R1 = USD 1.15 in the 80’and 90′ did the Americans winge and not save?

So, save 15 times the rand so as to measure the dollar, if you can, but save something don’t play currency with your future.

I was going to make a similar comment.
Being a ZAR millionaire is close to irrelevant. Better than being Zim millionaire but only just.

Still, the point of the article is valid though.

Agree. The no 1 enemy is debt – avoid it if at all possible and get rid of it ASAP

Well that was a disappointing read. I thought the article would tell me how to become a member of the ANC elite!

Agree, and becoming debt free and putting extra surpluses to work that million becomes much more very quickly.

EYEWASH !! Most people are now teaching their spoiled kids how to consume. And consume the youth will. With designer this and that and credit up the wazoo. Then there’s the poor kept poor by government. Lack of toilets in schools??????????????????? Is this the dark ages??

The poor start poor, and are KEPT poor, by their OWN lack of values, PERENNIAL bad decision-making at every fork in the road of life they encounter, and continual support of incompetent, lying leaders that live off their plight instead of leading them out of their misery.

Personal Salvation (and wealth) starts from within.

If inflation remains at around 5%, your R1m will be worth a far more modest R231000 or so in 30 years time. You would need to invest far more to have the equivalent of R1m in 30 years.


You’re onto something here, spot on man! The author completely fails to mention inflation, which is the thief in the night, that erodes your savings while you sleep.

I would say 5% is very conservative as the “inflation Rate in South Africa averaged 8.95 percent from 1968 until 2019”.

So I always argue if you want to save long term, you need to aim to get at least a 10% return every year, just to preserve your buying power against inflation in South Africa.

Compared to the US – “Inflation Rate in the United States averaged 3.25 percent from 1914 until 2019”.

So if you’re looking at the chart above it should be the say 5% plus 10% to fight off inflation.

I mean what happens when hyperinflation kicks in, then you can buy a roll of toilet paper with a million rand. The amount of money doesn’t matter, it’s what you can buy with that amount of money that matters.

Let’s just take Argentina as an example of what can happen to buying power.

January 2018:
USD 1’000’000 = 18’960’000 ARS

January 2020:
USD 1’000’000 = 60,000,165 ARS

If you had ‭18’960’000 Argentine Peso in January of 2018, 2 years ago‬, you were a USD millionaire.

If you have still have 18’960’000 today it would only be worth USD 316,006.67

If one thinks that is bad, that you lose two thirds in 2 years, don’t look at Venezuela.

January 2018:
USD 1’000’000 = 2’500’000 VEF

January 2020:
USD 1’000’000 = 74,021,615,646.84 VEF

It’s enough to make you never sleep again.

This is a nice nominal argument… Where is the inflation, who cares about R1m nominal, if thats what you care about, take R100 north of the border and boom you a Zim billionaire…

Heuristically, the purchasing power halves every 5 years… So thats actually a R500k purchasing power saving, wow, you can buy a VW polo now….

1m ZAR is not a great number anymore, $1m, now thats a real target….

Of course inflation plays a role. That’s hardly the point, however. The real point is if you do not save and invest you WILL be without capital. If you do save and invest, you put yourself in a position to be more wealthy over time. It is also easier than most people think once you practice the discipline and allow it to become a habit.

When I was 23 years old I took out a policy at Old Mutual who would pay me out at the age of 65 a paltry amount guaranteed. The monthly amount almost R10. Years ago I even took out a loan on the policy by Old Mutual which I eventually paid back. When I reached the ripe old age of 65 I was paid out the princely sum of more than half a million rand. That half million is now invested in ETFS that is making more money for me. The point is somewhere you must start to save and the earlier the better.

From personal experience, that’s how they used to sell RA policies. Tell your clients that if they invest R500pm they will have R1m in 30 years time, assuming a 10% return. Hats off, you’ll be a millionaire, just sign here.

Just don’t mention that fees (3%) would reduce that to R610k, and if we then factor in inflation (say 5%) the purchasing power of that money would only be R246k in 2050. There you go, all covered for a year’s worth of living expenses.

The concluding paragraph to this article is woeful. The importance of performance has nothing to do with the amounts invested, and everything with the investment term. Over 30 years, even a 1% difference has a massive impact.

Saving 10% pa more gets you 10% more money after 30 years (or any period). Earning a 1 ppt higher return (say 10% v 9%) will get you 23% more money after 30 years.


I agree with you it’s a total farce!
Just don’t use the historical inflation rate of 8.95% since 1968, it makes for much worse reading that the so-called 4.5% we get told it is, you might lose sleep.

All Zimbabweans were millionaires…stay vested in ZAR and you too will become a millionaire; poorer yes, but hey, a millionaire for sure.

The ANC makes South Africa the place where it is really easy to become a millionaire. Socialist policies will eventually turn every billionaire into a millionaire, before it turns him into a pauper. This process needs time. They call this compound destruction.

These articles are all smoke and mirrors – not sure where you will get some of the returns mentioned – why even our JSE is showing dismal returns – other than Click’s

My return on a long term RA I took out about 30 years ago is about 8% – so not a great return compared to the 10% used in the article. I realised about 12 years ago that the RA was not producing good returns and so stopped the annual increase – but looks like I should just have stopped all contributions.


When I look at long term investments, I look at the historical average of 8.95% inflation since 1968. So unless you’re getting at least 9-10% per year to curb against inflation your savings are shirking, at least that’s my opinion, but then again, those are the numbers.

I would only consider something worthwhile if I think I can get at least 10-20% per year, otherwise I can just about set my money on fire.

Or you could just become a member of parliament or work in an ANC Municipality and become a millionaire a lot quicker! LOL

It is easy to become a fake millionaire in terms of fake currency. A voter who does not have skin in the game, who does not own property, and does not pay rates and taxes, is fake. Such a voter will elect a government that implements anti-capitalist policies. Such a government promises wealth and property, but delivers famine and poverty instead. Here we have a majority of fake voters supporting a fake government in the implementation of fake strategies that will ultimately lead to fake currency.

This is how easy it is for real socialists to become fake millionaires.

The Real political problem we have in this country is NOT so much an inept, crooked ANC government, but the complete LACK of ANY credible opposition parties filled with charismatic leaders bursting with energy and fresh ideas and a powerful enough ALTERNATIVE vision.

The present DA lot in Parliament are a feckless waste of time. In every department.

The EFF on the other hand, are super-dangerous PRECISELY because they have an alternative that appeals.

Cannot end well.

I would like to know what fixed deposit investment provide a return of above 13%? I am currently only aware of AFrican Bank that offers a 13%pa effective rate. Please help?

And not considering inflation and related bank charges does distort that above calculation and mention by the comments below.

There is no bank deposit that would give a return above 13%. The lowest return on the table of 5% is the only one that reflects ‘money in the bank’. The others are theoretical returns that you could earn from other forms of investments.

Thanks Patrick
Do you mind mentioning some of these other forms of investments that the theoretical return are based?

Mainly these would be unit trust investments, ranging from money market funds to multi-asset income funds, to balanced funds and equity funds.

African bank offers 13.3% simple interest over 5 years. That is 10.75% pa effective.

Yes but how do you know they’ll be around in 5 years? 😉

With the credit rating downgraded to junk, you have to factor in a 100% loss. Rather diversify your risk than putting it all into a bank that may loose it all.

I wanna start an app that might make me a million.

Grappie : Hoe maak jy R1 miljoen in boerdery? – Jy begin met R10 miljoen en eindig met R1 m.

Like someone said, it requires long-term DISCIPLINE…then battle is halfway won.

But it will be tough….

My own definition of Discipline: “…the choice not to finance that shiny new set of wheels with 72-month maxed out finance term + 40% balloon….but rather to persevere and save”.

Since I moved the majority of my portfolio directly overseas I am not on Moneyweb that regularly anymore, but every once and again when I am on the site and then reading articles like this absolutely infuriates me.

Call me pessimistic and a doom prophet, but any long term talk of investment in local investment vehicles are irrelevant. Any returns made will eventually be eroded to the point that even the capital invested has been eroded significantly (As many comments above already state).

Making hypothetical scenarios like these that do not even include inflation are misleading and have, although not stated, an inherent assumption that the South African economy, currency and politics will remain relatively stable in the long term. The chickens are coming home to roost and the only debatable variable is when.

All I know is I have evaluated the risk/return for South Africa VS the developed economies and have come to the conclusion that I can get better returns overseas for less risk. This is all there is to it, the current economic and political risks in South Africa coupled with low returns have and is still contributing to the current capital flight.

It would be interesting to hear what the youngsters taking out RA’s today have been quoted.I bet they’ve been told they’ll get 100 million in 30 years time.What they don’t realise is that they’ll probably get half that amount and it’ll be worth peanuts!

Theory is an amazing thing hence this article is flawed.Inflation is not considered but more importantly than that are the “fees charged by investment companies and fund managers” et al! They use your money, earned through blood sweat and tears and years of sacrifice to enrich themselves while giving you a paltry return and in some instances actually losing your money for you and then hiding behind the excuse “the markets are stressed”. There are many investors who have lost their entire retirement fund due to rogue fund managers and finance advisors and failed corporate governance. The media is full of stories concerning the like of Steinhoff, EOH, Tongaat, Lorna Jones, Aspen etc etc etc. Investors in these funds have lost everything with no hope of recovery. Where is the justice? Seek a trustworthy individual like Warren Buffett, if you can find them??

Although Mr Cairns mentions the chance of loss, there is a very valuable number you can calculate, called the Value at Risk (VaR) that gives you great insight into how much you can lose, at what chance, and over what time frame. Investors should really learn to calculate this number for their investments, although it is a hard number to calculate. Investopedia offers insight, here it is:

Even NAV of R10 million will give you a middle class lifestyle at best at a 5% return.

I would argue return is more important than savings. Especially over longer term. Over 10 years a 6% pa increase of return would be equal to 35% pa increase in savings. Over 20 this would require a 100% pa increase in savings. Over 30 years you would have to increase savings with 200% to equal a 6 % pa. higher return. IN savings you give up current consumption, with return you give nothing up in addition to your current savings.

So my savings goal is to have EUR 100, 000 in a Channel Islands account. Its not a lot in global terms but I feel that (a) it gives me a little cushion should I need to get out (b) its fully liquid so gives me flexibility and (c) I will never save in ZAR, just ‘save’ by being debt free (almost there). I have no local unit trusts etc – I want zero exposure to the ZAR economy, save what I live in and what I need to live a fantastic life. Its a very cynical view of course but its Africa and tough choices need to be made

End of comments.





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