If I Gave You €1M Today, What Would You Really Do With It?
A Reality Check on Financial Literacy and Why Most People Lose Their Fortune
Imagine getting €1M dropped into your account tomorrow. Exciting, right? But here's a sobering question: How long would it last?
I recently received a thought-provoking comment on my last article about dividend investing.
The Ultimate Guide to €5000 Monthly Investment Income: From High Risk to Royal Returns
The reader pointed out that hardly anyone has €1.5M available for investing. He'd worked for 30 years and had almost nothing saved.
The Truth About Building Wealth
Let me share something that might surprise you: If this reader had invested just €300 monthly for those 30 years (assuming a 10% average return in index funds), he would have accumulated approximately €592,000 today.
Let's break this down:
Monthly investment: €300
Time period: 30 years
Total invested: €108,000
End result: €592,000
or if he just add €200 more monthly and he could build a million-euro fortune
"But 30 years is such a long time!" I hear you say.
You're right. It is. And this brings us to a crucial point about financial literacy.
The Million Euro Test
Here's a simple test of financial literacy: If I gave you €1M right now, what would you do?
Common answers I hear:
"Buy a fancy house and car"
"Travel the world"
"Put it in the bank"
"Start a business"
But here's the problem with these answers - they all lead to the same place: zero.
Why? Because without financial literacy, even €1M will eventually disappear. Let me explain:
The Bank Account Trap With current inflation at 4%, your €1M loses €40,000 in purchasing power every year. Just sitting there, doing nothing.
The Lifestyle Trap Spending €10,000 monthly might feel modest with €1M in the bank. But that burns through your fortune in just 8.3 years.
The Business Trap Starting a business without experience? 90% fail within five years.
Don't get me wrong - I'm all for entrepreneurship. But here's a smarter approach: First, build your dividend portfolio. Why? Because having €3,000-€5,000 flowing in monthly gives you a safety net. Then you can pursue your business dreams without the pressure of needing immediate profits. Think of dividends as your business backup plan - they keep paying you while you build your empire.
The Royal Solution
Remember our dividend strategy from the last post? Here's why it works:
€1M invested in dividend stocks yielding 4%
Annual income: €40,000 (€3,333 monthly)
Your capital stays intact
Dividends typically grow 5-10% annually
You're protected against inflation
"But €3,333 monthly isn't much for €1M!"
True. You could get more by gambling it all on risky investments. But remember:
The goal isn't to get rich quick
The goal is to stay rich forever
Breaking the 15-Year Barrier
"15 or more years is too long to wait!" I hear this often. But here's what people miss
Start Small, Start Now
Even €100 monthly is better than nothing
Increase investments as your income grows
Every €1 invested is a step toward freedom
Use the Three-Path Strategy (from our last post):
Index Funds for foundation
Undervalued stocks for growth
Transition to dividends for security
Smart Investing: Finding Balance Between Index Funds and Individual Stocks
The Real Difference Two people, same salary:
Person A: "I'll invest when I earn more"
Person B: "I'll invest what I can now"
After 15 years:
Person A: Still waiting to start
Person B: Building generational wealth
The Bottom Line
Financial literacy isn't about knowing how to make money - it's about knowing how to keep it. The difference between building wealth and staying poor often comes down to one simple choice: what you do with the money you have right now.
You might also like:
The Four Power Sectors Shaping the Next Decade: Your Guide to Future-Proof Investing
Smart Investing: Finding Balance Between Index Funds and Individual Stocks
The Ultimate Guide to €5000 Monthly Investment Income: From High Risk to Royal Returns
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see ya, next time
Marjan