“The Million Dollar Formula”
A million dollars seems like a lot of money, right?
If you are like most people on earth, a million dollars might seem like something you would only get if you win the lottery, inherit a huge legacy, or stumble upon a bag full of rare diamonds at the beach. However, ordinary people make millions of dollars without any stroke of luck or accident. How do they do that?
Because it is possible. And there is a formula to it. A million dollars seems like a huge sum when you think of it as a single piece of fortune, like a gold nugget or an expensive pearl. But there is a secret.
Let’s break down the numbers a little bit.
What is a million dollars? It is one followed by 6 zeroes, or 1000 times 1000, or 100 times 10000.
Selling
For instance, if you have a product that you can sell for $2740 and you sell one of those each day, you make a million dollars in a year. If you have a product or service that you can charge $1000 for, selling it to 1000 people would make a million dollars. If you have a service like a subscription that you can charge $100 per month for and you have 1000 customers, you make more than a million dollars in a year.
It’s up to you to figure out what your product or service is going to be and how much you would charge for it. But once you have the formula in hand, it’s easier for you to figure out how to make a million.
You could have a simple product that sells for just $10. You then need to sell it 100,000 times to make a million dollars. If you have a consulting service that you can charge $10,000 for, you just need 100 clients to make a million dollars.
Commissions
You can also reach the million dollar mark by earning commissions. It’s the exact same formula. Divide a million dollars by the commission you earn. For example, if you make a $500 commission for every sale, you need to sell 2000 times to make a million. Don’t get discouraged by that number. Let’s break that down even further.
By making two sales per day with a $500 commission, you can reach a million dollars in less than 3 years. Alternatively, making 10 sales per day with a $50 commission each can also lead to a million dollars in less than 6 years. It’s a matter of mixing and matching the numbers.
There are various types of commission structures. You have to just figure out which ones works best for you.
Here are the examples with different numbers to illustrate the impact of various commission structures:
Straight Commission Plan: If you make three sales per month, each with a $7,000 commission, you would earn $21,000 in a month.
Tiered Commission: A tier can be like 6% commission rate for sales up to $15,000, 8% for sales between $15,001 and $25,000, and 12% for sales above $25,000. If you make a sale of $30,000, your commission would be calculated as ($15,000 x 0.06) + ($10,000 x 0.08) + ($5,000 x 0.12) = $900 + $800 + $600 = $2,300.
Residual Commission: Let’s say you earn a 4% residual commission on a monthly service costing $150. If you sign up a client for this service, you would earn $6 each month the client remains subscribed.
The examples provided offer insights into how different sales volumes and commission structures can result in diverse earnings. The choice of structure should align with the specific situation, and a combination of structures can also be considered. It is essential to determine the earnings per transaction and then project the number of transactions or days required to achieve a desired sum. This approach allows for a clear understanding of the path to reaching a significant financial milestone.
Investing
Selling is not the only way to make a million dollars. You could also save and invest. It takes a bit longer with that route, however.
If you invest $5000 per month in an investment vehicle like a mutual fund that gives a 10% return per year, you would make a million dollars in 10 years.
Investing at an early stage offers the advantage of an extended period for potential growth of the invested funds. This is underpinned by the concept of compound interest, which is a fundamental principle in finance. Compound interest allows for the reinvestment of returns generated from an investment, leading to an expansion of the overall investment base. As a result, a larger sum of funds is available to generate further returns, creating a snowball effect that becomes more significant over longer periods. This emphasizes the benefits of commencing investment early and maintaining consistent contributions. The phenomenon of compound interest is often described as the “eighth wonder of the world,” highlighting its remarkable ability to multiply wealth over time.
Real Estate
Investing in real estate can be a path to achieving a million dollars. By strategically managing the investment, a significant portion of the initial investment can be tied to the down payment, with other costs such as mortgage payments, maintenance, insurance, taxes, property management fees, and miscellaneous expenses being covered partially or fully by rental income, depending on the property’s location. Over time, these properties can become mortgage-free and appreciate in value, contributing to wealth accumulation.
For instance, investing $40,000 as a down payment for a $200,000 property can eventually lead to full ownership of the property by offsetting mortgage payments and costs with rental income. Acquiring multiple properties in a similar manner over 20 to 30 years can result in property ownership and substantial appreciation, potentially exceeding a million dollars.
Investing in real estate involves carefully managing the various costs and income streams associated with the properties, ultimately leading to long-term wealth accumulation through property ownership and appreciation.
Buy and hold real estate encompasses various investment strategies, including Single-Family Rentals, Multi-Family Buildings, Vacation Rentals, Turnkey Rentals, and Commercial Real Estate. Each of these strategies presents unique opportunities and considerations within the buy and hold real estate approach. In addition to these, other types of real estate investments include Investing in undeveloped land with the potential for future development or appreciation, Real Estate Investment Trusts (REITs), House Flipping, and Crowdfunding. These diverse investment options allow individuals to tailor their real estate portfolios to their specific financial goals and risk tolerances.
Choosing the right career path
A higher income can accelerate the path to wealth accumulation. The more you earn, the greater your capacity to save and invest, making the journey to a million dollars more attainable. A combination of a high income and strategic investments can lead to a million dollars relatively quickly. For instance, an individual with a $250,000 household income who saves and invests 70% of it, amounting to $14,500 per month, can reach a million dollars within 5 years, even with a conservative rate of return of 7%.
If you are not a high earner, do not be discouraged. Augmenting your primary income with a side business or freelance work can contribute to your journey toward a million dollars. Combining multiple income streams and investing diligently can lead to exponential growth of your wealth.
Taxes, Fees, Operating Costs and miscellaneous expenses
Earning a million dollars does not equate to keeping the entire amount. This is the gross income, and to determine the actual profit, one must deduct the costs and consider taxes. After accounting for all expenses, including the cost of goods, services, subscription fees, and tax filing fees, one can ascertain the amount that can be saved. Making a million dollars is a significant achievement, marking the beginning of a journey towards financial prosperity.
The process of reaching a million dollars involves calculating the profit from the revenue by subtracting the costs and considering various expenses and taxes. While earning a million dollars is a noteworthy accomplishment, it is also essential to prudently manage the income to achieve long-term financial goals.
In the grand scheme of things, a million is simply a numerical value. With a grasp of fundamental arithmetic, it’s evident that numbers can be added or multiplied to yield larger sums. Once you deconstruct the figures, the path to achieving your objective becomes more attainable. Upon reaching a million dollars, the process of accumulating additional millions becomes notably more feasible. This is the undisclosed secret, the fundamental formula. It’s remarkably straightforward. Fortune favors those who possess a precise plan to realize their goals and take uncomplicated steps toward it. Therefore, delineate your figures and set out to amass a million dollars. Best of luck on your journey!
Thank you!