Want to Be a Millionaire? Here’s the Secret.
Let’s be real—who doesn’t want to have R1 million sitting in their bank account? But instead of waiting for a lottery win or a long-lost relative’s inheritance (spoiler: they’re not coming), what if you could build that million yourself? And the best part? You don’t need to be a financial genius to do it!
The secret sauce? The magical power of compounding.
If you start right now, you can hit that million-rand mark in 10 years—and I’ll show you how. Ready? Let’s dive in!
Stock Market vs. Keeping Money in the Bank: What’s Better?
Many people believe that keeping their money in a savings account is the safest option, but while the money will not disappear or become less, inflation will make the money worth less over time.
Historical Returns of the JSE vs. Savings Accounts
- Over the past 30 years, the Johannesburg Stock Exchange (JSE) has averaged annual returns of around 12-14%. Some years are better, some are worse, but over the long term, it has consistently outperformed inflation.
- Bank savings accounts, on the other hand, typically offer interest rates of 5-7% at best, with many standard savings accounts barely keeping up with inflation.
- Inflation in South Africa has averaged around 5-6% per year, which means if your money is sitting in a savings account earning 5%, you’re barely breaking even. If inflation is higher than your interest rate, you’re actually losing buying power over time.
💡 Example: If you put R1,000 in the bank today at an interest rate of 5%, in 10 years it will grow to about R1,629. But if inflation averages 6%, the same R1,629 will have the buying power of only R915 in today’s money. Meanwhile, if you had invested it in the JSE, at an average return of 10%, it could have grown to R2,593, outpacing inflation significantly.
Step-by-Step Guide to Hitting R1 Million in 10 Years
1. Start Investing NOW (Seriously, Don’t Wait)
The earlier you start, the easier it gets. Time is the biggest ingredient in the compounding recipe.
💡 Real-Life Example: Let’s say you start investing R3,000 per month in a stock market index fund that averages a 12% annual return. Instead of keeping this contribution fixed, you increase it by 10% every year (to match inflation and growing earnings). By year 10, you’ll be investing around R7,083 per month, and the compounding effect will be even stronger.
With this approach, you could reach R1 million or more in just 10 years! 🔥
2. Automate Your Investments
Set up an automatic transfer to an investment account—treat it like a non-negotiable like paying your rent. This way, you’ll never “forget” to invest.
💡 Where to Invest in South Africa:
- EasyEquities – Low-cost platform to invest in local & global stocks.
- Satrix ETFs – Invest in diversified funds that track the JSE.
- Allan Gray & Coronation Unit Trusts – Actively managed funds with strong returns.
- Etc. there are many good platforms to choose from
3. Increase Your Savings Rate Annually
When you start investing, commit to increasing that amount by 10% each year. This not only keeps up with inflation but also ensures you’re accelerating your savings as your income grows. If you started with R1,500 per month, it will grow as follow.
💡 Example:
- Year 1: R1,500/month
- Year 2: R1,650/month
- Year 3: R1,815/month
- Year 5: R2,500/month
- Year 10: R3,500+/month
By doing this, you take full advantage of your increasing earning potential while keeping up with inflation.
In this example, if you start with R1,500/month and increase that by 10% a year and get a 12% return on your investment, you will have R516,203 after 10 years. If you kept your savings amount to R1,500/month only for 10 years you will only have R353,782 after 10 years.
4. Avoid Lifestyle Creep (Live Like a Future Millionaire, Not a Spender)
Every time you get a raise, increase your investments instead of increasing your expenses. Many people fall into the trap of spending more as they earn more—don’t be that person!
💡 Example: If you get a 10% raise, put that extra money into your investments instead of upgrading your car or buying more unnecessary stuff. Your future self will thank you!
5. Keep It Simple & Let Time Do Its Thing
Investing doesn’t have to be complicated. Stick to low-cost index funds or ETFs, keep adding money consistently, and be patient. The market will have ups and downs, but historically, it always trends upwards over time.
💡 Example: In our example of saving R3,000/month, growing those savings by 10% per year and investing it at 12% for 10 years, you will have R1,032,405. BUT, if you keep on going for another 10 years you would have saved R5,884,287. Another another 10 years? It will become a whopping R25m!
BUT…who has R3,000 a month to spare?
This is where you side hustle comes in! Nobody said it is easy, but it is not impossible. Think of what you can do and don’t stop thinking, dreaming and doing until you have a plan. It could be as simple as walking dogs, helping kids with homework, doing tutoring, helping elderly people with their daily tasks or arranging soccer coaching for the neighbourhood kids.
If you are willing to put in the effort you could line up 6 jobs that will pay R500 each or 10 jobs that pays R300 each every month to get to your R3,000 per month. If you invest that you will be well on your way to be a millionaire 10 years from now!
So… what are you waiting for?
Use a platform like Stintz to set up your side hustle, spread the word and start earning!
