Is it true if you put $1 a day into savings when a child is born, when it turns 18, it will be a millionaire?

Question

I heard this on the Oprah show about 3 years ago. A lady was on their and said that small amount of money would make a kid rich and she went on to say $1 dollar a day for a childs life would make the kid a rich adult. . My niece is about to have a baby, and I would like to invest some money for it, not a lot, just about a dollar a day. Where did Oprah's guest get that idea? Do you have to be smart about investing because God knows, I am no Allen Greenspan.

Answer 1

This is very possible... in an extremely high-interest / yield scenario only. If you invest $1 daily at a rate of at least 49% per annum, you can yield a million dollars. Anything below 49% p.a. interest, you will fall short of your goal.

Answer 2

No, its not true , but it is possible if you make a certain percentage rate per year , and your certainly not going to make that at the bank . if you invested in some mutual funds through Fidelity, Janus , Van Guard , Aim , these usually have minimum amounts like $ 2,000 dollars to start and then you can put in $30 a month if you want for your $ 1 dollar a day and the kid would have built a big chunk of change , but its very unlikely going to be a million in 18 years , also there is Share builder .com for little trades of stock that are not to expensive , you can read and learn about investing in Yahoo finance , and they have calculators that show you how much you would have to earn to make a million on your Dollar a Day , Best of Luck

Answer 3

Oprah was wrong, why.... 1. once that kid is born it gets harder and harder to safe some money. 2. Any one that knows anything about money know that the best thing to do is to get them a CD or a MUTUAL FUNDS account, ofcourse you need mone now to do that but even if you save a dollar a day and actually get to a million 18 years from know that wont help him much if his on his own. The way the stock market is going having a million then will be like having half of that know.

Answer 4

You could invest in a good mutual fund. You could also automatically have money deducted from your paycheck and invested without commission and automatically re-investing dividends and capital gains without commission.

Lets say that this means you are putting $91.25 of new money in each quarter, and that the fund gains 2.41% each quarter. Dividends are usually paid out quarterly and the 2.41% quarterly rate is exactly a 10% annual return rate.

The total amount after 72 quarters (or 18 years) is $17,245. This is far short of $1M.

However, if you and your child keep it up 'till your child is 65 years old, he/she will have $1.846M, so yes he/she will be a millionaire and then some. However, $1M won't be such a big deal in the year 2071.

Don't forget that the fund needs to do a 10% annual return, AFTER the management and brokerage fees.

Answer 5

Nowhere near, even counting leapyear days. Savings accounts give miserable rates. But it would be a nice gob of dough and could help defray college costs, for example. And you could maybe put the money into something a bank offers like Certificates of Deposit that pay more interest to get more, if you don't do an investment thing.

Answer 6

It's not quite that easy. If you do the math, 365 days/year X 18 years, only gives you about 7 grand, However if you invest it or do something else you can get more. The earlier you start saving the better because you will earn more interest on larger principal

Answer 7

Add this up and you will see that I'm telling the truth. If you start out one penny and double it everyday for a month, at the end of the month, you will be a millionaire.

day 1. ! cent
day 2. 2 cent
day 3. 4 cent
day 4. 8 cent
day 5. 16 cent

you have to double that amount everyday. add it up and prove me right.

Answer 8

I just used Quicken to calculate this. $365 @ 8% a year (Stock market returns) = $13,669 in 18 years. You could possibly do this through a standard S&P500 index fund. Make sure the annual expense is below .20. (no load).

Answer 9

I think this is a bit unrealistic. If you compound the interest once a year, you'd need a 45.5% interest rate to get to a million at age 18.

Now at 10%, which is a little bit closer to reality, you could still come up with $183K.

Good luck.

Answer 10

No, that's not true. It's $6570, even if you invest it wisely, there is very little possibility that it would ever even reach $10K, let alone a million. Now that we are on the brink of such turmoil, the stocks will drop and no guarantee when they will recover.