Sounds great, doesn’t it?
And you would be the first on this planet, provided that you measure your wealth in the current USD, since I am quite certain that there would already be existent trillionaires when measured in Vietnamese Dong or Indonesian Rupiah.
Trillions are flung around in the news nowadays to keep us informed or to scare us off. Are they successful in that? I sincerely doubt it. Abstract numbers, like trillions, really just roll off the tongue with no true meaning in everyday terms.
How much is a trillion, anyway?
10 to the power of 12 or quite a lot.
And how many seconds are there in a lifetime?
10 to the power of 9 sec (one billion).
So, if you’d earn a dollar for every second in your life, you would be only a billionaire.
And what is the GDP of the world?
$10 to the power of 14 or 100 trillion USD.
And thus you would need only 1% of the global annual GDP to be an instant trillionaire. Nice, but, I wonder, who gets the other 99%?
I don’t know about you, but that, for me, is a bit too far away, so let’s look at something closer to home; our brain.
Just how many synapses are there in our brain?
10 to the power of 15 (one quadrillion).
Our brain is made up of 86 to 100 billion nerve cells (neurons) and each cell is connected to around 10,000 others.
In other words, if we had a dollar for every synapse in our brain, we would be able to support the current economy of the world for ten years.
But let me digress a bit: The cortical neurons in our gray matter fire, on average, once every second, resulting in a bandwidth of around 10 to the power of 15 bits per second which happens to be greater than the total bandwidth of the Internet backbone. Isn’t nature fascinating? And isn’t our brain a fascinating piece of technology?
To return to the big numbers outside our brain: I looked out of the window the other day and wondered for how many seconds the sun will shine.
10 to the power of 17 (one hundred quadrillion or 0.1 quintillion).
It now becomes too big for my comprehension, but this handy table will undoubtedly put everything into perspective again.
Hmmm, maybe not, because I personally got lost imagining what one Nonillion is.
Could it be that all of this is too massive for our imagination?
Then, let’s look at some “familiar” numbers that do exist. Like the debt of nations, for example. The overall US-debt currently stands (gallops might be a better description) at roughly 60 Trillion USD.
How much is that?
Well, if you had started in the year 0 A.D./B.C. and had spent 81.5 Million USD every single day till today, you would have spent about 59.9 Trillion USD.
Now ask yourself: “Do you believe that the governments will ever repay those horrendous debts?”
Triggered by the mindless spending of politicians, whose main objective is to be popular and to get re-elected, central banks set the tempo and the melody at the dance hall. When they flooded the world with liquidity and set interest rates to close to 0%, they enforced a Hobbesian choice: either you play along in the risk markets, or you sit on cash, earning less than nothing as inflation eats away at your purchasing power.
No doubt, central banks are entirely to blame for mis-pricing money and that is the fundamental error that drives every bubble and betrays capital into hopeless investments.
Unfortunately for those hoping for a different outcome, history is 100% consistent on the matter: bubbles always burst. And when they do, what people thought was fabulous wealth is proven illusory and it simply vanishes.
Do note that it is this clear historical record that prevents humans from being able to cheat the odds.
Now, why do I bore you with all those numbers and the antics of those central banks? And what does all of this have to do with your personal finances?
There was a survey recently among university students in Singapore which asked how much they thought they would need for a comfortable retirement. The median result was 1’016 SGD (about 750 thousand USD).
I guess, if the same survey would be carried out in the US, the median result would be close to 1 million USD; in Germany, close to 1 million Euro.
One million is a nice number, with the added advantage that you feel that you have arrived at the “millionaire’s club”.
But in reality, one million buys you just a mediocre retirement even in today’s dollars. Accept that fact.
Because when inflation (that gift that keeps on taking) kicks in, that one million would hardly be sufficient in the future.
To that end, firstly, don’t carve your monetary retirement goal into stone (you do have one written down, don’t you?).
Secondly, stay flexible in your goal setting and don’t forget to adjust your goals and, thus, your savings or investments in tandem with inflation.
I can hear some of you saying, “Thanks a lot, Andy, for sharing those frustrating facts, really motivating indeed!”
Despite the above, don’t hang up your investment boots, because if 1 dollar—saved—a day would make you a millionaire in a lifetime, imagine what 10 or 20 dollars a day can get you to.
Thereafter, remind yourself that the primary purpose in life is to enjoy it.
“You would be tired, as well, if your troubles were in the same proportion as your fortune are, and yet, from what I see, people who have too much get as sick from having too much as those who starve and have nothing. It is no small happiness, therefore, to be right in the middle: having too much ages one faster, while having just enough extends your life.” — Nerissa in Merchant of Venice by William Shakespeare