Articles

Affichage des articles du mai, 2025

Baby millionnaire

We often hear the term trust fund babies. How can you create them? How is this relating to the time value of money? I want to explore how much do you need to invest in a baby to make him a millionaire in today's dollar.  Let's use the an aggressive portfolio returning 7.1%.  At this rate, we need to put aside for the baby only $120,000 for him to become a millionnaire at age 65!  Great, can we do better? Say that you are a new father and want grandkids millionnaire. Instead of looking at only a 65 years horizon, couldn't we invest 30 years earlier when your kid are still baby's? Sure, this would cost you just a quarter of the above $30,000. At this 90 years investment horizon, the rate of return impact is tremendous. Changing it to 8.0%, it would only take half, $15,000 to make a grandkids millionnaire. If you are not a millionnaire yourself, this seems like a lot of money. For a multi-millionnaire, these are peanuts, less than 1% of your fortune to ensure prosperity fo...