Here at PinoyMoneyTalk, we believe that the path to financial freedom is simple and straightforward. For us, it requires three (3) doable steps:

**Earn**as much money as you can;**Save**to generate extra cash; and**Invest**the extra cash to fast-track your journey to becoming rich.

This is what we call PinoyMoneyTalk’s **ESI Steps to Financial Freedom**. ESI stands for the three actionable steps of Earning money, Saving money, and Investing money in order to be be financially ready for retirement.

Let’s make the goal of “financial freedom” more specific, so let’s answer this question:

*How much money do I actually need to save in order to get P1 million by the age of 60?*

We’ve made the computations and summarized the results below. In the following examples, we computed the amount of money you must save every month, depending on your age, to enable you to get P1 million by the age of 60.

This is, of course, also dependent on the return of the investment where you’ll invest your savings into. This is why we’ll show three (3) scenarios, where your money is placed in an investment that earns any of the three attainable rates of return.

- five percent (5%) return;
- seven percent (7%) return;
- ten percent (10%) return.

We also assume that you’re starting with nothing, that is, no current savings or investments yet in order to be more conservative in the computations.

Article Guide

**How to get P1 million by the age of 60 (with Investment Return of 5%)**

In this scenario, we assume that your money will be invested in an asset that will earn 5% per year.

Which investments could potentially provide this profit rate of return of at least 5% per annum? This could be stocks, equity or balanced or bond funds, real estate, or any other investment that could bring in 5% return.

The table below confirms that the earlier you save, the smaller the required monthly savings is for you to achieve your P1 million goal by the age of 60.

If your Age is... | Save this amount per month to get P1 million by age 60 |
---|---|

20 | 655.30 |

25 | 880.21 |

30 | 1,201.55 |

35 | 1,679.23 |

40 | 2,432.89 |

45 | 3,741.27 |

50 | 6,439.88 |

Assumption: | 5% Annual Return on Investment |

So how much do you need to save to get P1 million by the age of 60?

**If you start saving at the age of 20, you’ll only need to set aside P655.30 per month.** On a daily basis, that’s equivalent to saving P22.00 per day. So to accumulate P1 million by the age of 60, save P22.00 per day starting at the age of 20! That’s doable, right?

What you must do is save P655.30 monthly and then invest this amount in an investment that can earn at least 5% return per year. If you do this from the age of 20 until the age of 60, you’ll end up with P1 million by the time you reach 60!

Now, the older you start saving, the higher the required monthly savings will be. If you’re **30 years old, for example, you’ll have to save P1,201.55 per month**.

If you’re **40 years old, the required monthly savings goes up to P2,432.89**.

Now, by the time you’re **50 years old, you’ll have to save P6,439.88 per month** in order for you to get P1 million with only 10 years remaining, that is, from the age of 50 until 60 years old.

As you can see, the required monthly savings increases if you will start saving later in your life.

Again, the computations above assume a 5% annual return on investment (ROI). If you can invest your savings in an asset that can offer higher rate of return, the required monthly savings will go down. This is shown in the second example.

**How to get P1 million by the age of 60 (with Investment Return of 7%)**

From the table below, the monthly savings required has gone down compared to the first example. This is because your money is placed in an investment with a higher return which compounds and fast-tracks the income you’re earning.

If your savings will be placed in an investment that earns 7% return per year, the required monthly savings, depending on your age, for you to get P1 million by age 60 is shown below.

If your Age is... | Save this amount per month to get P1 million by age 60 |
---|---|

20 | 380.98 |

25 | 555.23 |

30 | 819.69 |

35 | 1,234.46 |

40 | 1,919.66 |

45 | 3,154.95 |

50 | 5,777.51 |

Assumption: | 7% Annual Return on Investment |

In this example, a **20-year old only needs to save as little as P380.98 per month**! That’s equivalent to saving just around P12.00 per day! You only need to save P12.00 per day — easy, right?

Again, this amount has to be saved month after month from age 20 until age 60, and the total savings must be placed in an investment that earns 7% net return per year.

If you’re 30 years old, meanwhile, the required monthly savings is P819.69.

This goes up to P1,919.66 if you’re starting to save only by the age of 40 and goes up again to P5,777.51 per month if you’re saving only beginning the age of 50.

**How to get P1 million by the age of 60 (with Investment Return of 10%)**

Now, here’s our final example. If you can invest your savings in an investment that can consistently earn you 10% year after year, the required monthly savings definitely will go down. Take a look at the table below.

If your Age is... | Save this amount per month to get P1 million by age 60 |
---|---|

20 | 158.13 |

25 | 263.39 |

30 | 442.38 |

35 | 753.67 |

40 | 1,316.88 |

45 | 2,412.72 |

50 | 4,881.74 |

Assumption: | 10% Annual Return on Investment |

If you’re 20 years old, you only need to save a small P158.13 per month. If you’re 30 years old, you’ll have to set aside P442.38 per month as savings.

If you’re 40 years old and will only start saving now, you need to save P1,316.88 monthly.

Finally, 50-year olds will have to save P4,881.74 per month to achieve their P1 million goal.

Is it possible to get 10% return consistently every year? Yes, but you should be ready to accept risk and volatility in the value of your investments in the short-term.

Stocks, equity funds, and higher-yielding investments could give you an average return of 10% after, say, 10, 15, or 20 years. But at the same time, it’s possible for your investment to lose money and value in the short run, so make sure you won’t be affected if your investment will lose value after 1, 2, or 3 years.

Think long-term since, historically speaking, investments are likely to recover after 10 or 15 or 20 years.

**Key Lessons: Save early and invest today**

Achieving your goal to become a millionaire is dependent on the age you will begin saving and on the rate of return where your savings will be invested.

We have two (2) key take-aways in this article:

**1. The younger you save, the smaller the required monthly savings will be.** As you’ve seen in the examples above, those in their 20s or 30s will need to save a smaller amount of money compared to those already in their 40s or 50s. So again, start saving today!

**2. Your savings must be placed in high-earning investments in order to capture the power of compounding.** The higher the rate of return of the investment, the faster you will grow your money, which means the lower the required monthly saving will be. So what you need to do is look for good investment options that can grow your money! Make sure, though, that your risk appetite is aligned with the associated risk and volatility of the investment.

In the end, we can see that the P1 million goal by the age of 60 is very, very doable regardless if you’re 20 years old or 30 or 40 or 50 years old.

What you need to do is to **Earn** as much money as you can, to consistently **Save** an acceptable amount per month, and to **Invest** your savings in investments that can reliably generate the required rate of return.

Follow PinoyMoneyTalk’s ESI recommendations and you’re on your way to becoming a happy millionaire soon!

*Must read these other awesome, related articles!*

DannyLet us earn, save and invest – ESI towards our 1 million pesos!

Dr. Pablo Jr. Angelo M.D. PhD.March 5,2018

Dear ,

Ang tagal naman. It almost 35 years of My stock in Philippines Stock Exchange, way back 1983. Its sad kasi konti palang nakukuha ko.

Pero napakalaking stock. Panalo sa world market. Sino kaya ang makakatulong sa akin para mailabas. Thank you.

Regards,

Dr. Pablo Jr. Angelo M D PhD

JoelAnu po co pany niyo sa psei? Bkitfi niyo pla na pick si pldt that time 1983 3 pesos oa lng si pldt

Dr. Pablo Jr. Angelo M D PhDYou know Sir / Mom,

We are the Owners and Over All Winner of Stock Exchange. Please

analyse the data, file and the problem encounter to the company.

I highly recomend to pass the necessary document to us. For analysis

and to know the present status of the company whether good or not.

I hope you help me in collecting fees . Thank you very much.

Juan GastadorAssuming you have were able to get 1 million pesos by the age of 60 and that 1 million is gaining an interest of 5% per year, then,

1,000,000 x .05 = 50,000 pesos

50,000 pesos / 12 months = 4,166 pesos per month

Is this even enough to live a comfortable life as senior citizen? Sa bagay, may SSS pa naman? Just my opinion.

Susan J Baniquedwhich trusted Bank to invest 3M pesos in Pinas?

At what rate?

xbox cardis this correct ? if it is,then it will be awesome

Banko ni RizalFor me lng, it’s too ambiguous too introduced this way of investing money. Hindi common sa mga Pinoy ito strategy para mag invest. First of all WALA proper way to address the issue why we lack entrepreneurs here in Philippines. Second mas prefer natin ang time deposits though ang baba lng ng interest need mo pa ng 10M to start counting days. And lastly government doesn’t have laws to protect invester from scams. Syempre ikaw ba nman mag invest na Hindi mo alam kung paano at kaylan pede iClaim is like your wasting your lifetime baka pa siguro mga apo mo sa tuhod na makikinabang sa pera pinaka hhintay mo… Jusko baka abutin ka pa ng centinalians mismo munisipyo magbigay sayo ng Php100k sa iyong 100th birthday para lng masaya ka mamayapa dito sa earth..