The concept of a billion dollars is pretty hard to fathom, which is okay because about 99.999% of us will never really have to deal with it. According to Forbes, the world has 1,011 billionaires out of nearly seven billion people, so it's not exactly an everyday occurrence. Those that do become billionaires seem to do it through a mixture of ingenuity, intelligence and timing, or they just inherit it. For the rest of us - those working average jobs, investing normally and living an average lifestyle - how long would it take to become a billionaire? Is it even possible?
World's Greatest Investors
If you're making around $50,000 per year, it won't take forever to amass a million dollars, and indeed, many people will be able to achieve that in their lifetime. But a billion dollars? That'd be 1,000 lifetimes, kind of. We'll check out a range of jobs in the U.S. and some typical investments to see how long it would take someone to become a billionaire. We'll be using the saving rate of 10% of someone's income for the year, which may be a little bit optimistic, but it gives a good picture of how long it takes to become a billionaire on an average joe's salary. (Are savings accounts your best bet when it comes to returns? Learn more in The 7 Best Places To Put Your Savings.)
Teaching Your Way To a Fortune
World's Greatest Investors
If you're making around $50,000 per year, it won't take forever to amass a million dollars, and indeed, many people will be able to achieve that in their lifetime. But a billion dollars? That'd be 1,000 lifetimes, kind of. We'll check out a range of jobs in the U.S. and some typical investments to see how long it would take someone to become a billionaire. We'll be using the saving rate of 10% of someone's income for the year, which may be a little bit optimistic, but it gives a good picture of how long it takes to become a billionaire on an average joe's salary. (Are savings accounts your best bet when it comes to returns? Learn more in The 7 Best Places To Put Your Savings.)
Teaching Your Way To a Fortune
There are more than one million teachers in the U.S. according to the Bureau of Labor Statistics, and the mean salary for elementary and secondary school teachers is $55,210. If you're a teacher and are able to put aside 10% of your salary every year ($5,521) then it will take around 186 years for you to become a billionaire if you have your money in a long-term savings account paying 5% interest compounded annually. This means, if you start saving when you're fresh out of college and never touch the money, you could be a billionaire when you're 208!
If you invested in a more lucrative vehicle, like the stock market, you can become a billionaire much quicker. Looking at the returns of the Dow Jones over the past 40 years, there is an average return (CAGR) of 6.68% per year. If these returns are similar for the coming years, then the teacher who puts away 10% of his or her salary per month could become a billionaire in just 145 years. If you only wanted to become a millionaire, it would take you between 46 and 47 years in a 5% savings account and around 39 years if you followed the 6.68% returns of the Dow. (To learn more, see Index Investing: The Dow Jones Industrial Average.)
High Earners
If you invested in a more lucrative vehicle, like the stock market, you can become a billionaire much quicker. Looking at the returns of the Dow Jones over the past 40 years, there is an average return (CAGR) of 6.68% per year. If these returns are similar for the coming years, then the teacher who puts away 10% of his or her salary per month could become a billionaire in just 145 years. If you only wanted to become a millionaire, it would take you between 46 and 47 years in a 5% savings account and around 39 years if you followed the 6.68% returns of the Dow. (To learn more, see Index Investing: The Dow Jones Industrial Average.)
High Earners
It seems nearly impossible to become a billionaire making the salary of the average American teacher, but that's not really a surprise. How about if you're in a higher salary range, like a surgeon or another specialized doctor? An average anesthesiologist in the U.S. makes $211,750, according to the BLS, and if that anesthesiologist was able to put away 10% of his or her earnings every year into our savings account it would take around 160 years to become a billionaire.
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And if that anesthesiologist put their savings into an index that tracked the Dow, it would still take more than a lifetime at 124 years. With that kind of salary it seems like you just can't get there on hard work alone.
To give you more perspective, it would take a postal worker (mean salary $48,940) around 188-189 years to become a billionaire using a savings account, and 146-147 years investing in the market. It would take a lawyer (mean salary $129,020) 131-132 years to make a billion in the markets, and 168-169 to make a billion in a savings account. So, when you think of it, whether you're a lawyer, a teacher, a postal worker or a surgeon, the great equalizer is that you'll never be a billionaire.
Out of Reach?
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And if that anesthesiologist put their savings into an index that tracked the Dow, it would still take more than a lifetime at 124 years. With that kind of salary it seems like you just can't get there on hard work alone.
To give you more perspective, it would take a postal worker (mean salary $48,940) around 188-189 years to become a billionaire using a savings account, and 146-147 years investing in the market. It would take a lawyer (mean salary $129,020) 131-132 years to make a billion in the markets, and 168-169 to make a billion in a savings account. So, when you think of it, whether you're a lawyer, a teacher, a postal worker or a surgeon, the great equalizer is that you'll never be a billionaire.
Out of Reach?
So, who can become a billionaire? How much would you have to have on hand every year to invest and be a billionaire at a time where you could still spend it? If you could put away $1 million a year, you're still looking at about 80 years of saving or 64-65 years of investing before the big payoff. Even actors and athletes who can make millions a year, rarely have the staying power to make it every year for 80 years. (How much are the top sports pros making? Find out in Top 7 Pro Athlete Contracts.)
So, sorry to come to such a heartbreaking conclusion, but it's hard for anyone to become a billionaire using traditional methods. To see a billion dollars during your lifetime (40 years of saving), you would need to put nearly $5.5 million into a fund that mirrors the Dow's average growth of 6.68%.
Here’s How Long It Will Take For You to Hit the Forbes Billionaire List
The Forbes Rich List is out, and as we slice and dice the billionaires around the world, a few trends have emerged: the number of Chinese billionaires has doubled since last year; Moscow has more billionaires per capita than any other city; and 2010 was good to most really rich people! 648 billionaires saw an increase in wealth while only 160 saw decreases. { LA Times } Guess those gains had to come from somewhere.
What we really wanted to know though, is what gives you the best chance at making a future Forbes billionaire list, how long will it take to get there, and how stiff is the competition? Here are the number of billionaires in each industry tracked by Forbes, and the average age of the billionaires.
It’s worth noting that there is some overlap in categories, and some people who we might place in one category appear in another or more than one. For example, Peter Thiel is listed under investments, though we’d probably put him in the technology category. There’s also not a clean way to account for wealth inherited from family members, or divided among them. There are multiple Benettons who appear in the Fashion and Retail category individually, for example, but Gucci owner Francois Pinault’s family is grouped together even though multiple members of the family are billionaires.
That said, for the non-exact nature of figuring this out, if you don’t want to wait for your fortune it probably comes as no surprise that technology is your best bet and is tied for the lowest average billionaire age (thanks, Facebook billionaires) with metal and mining. So if it’s young money you’re after, pick up a mine or two while you wait for your social network or search engine to catch on. You’ll be making the other billionaires feel like slackers in no time.
That’s not where the biggest money is though. Perhaps surprising to some is that fashion and retail (which includes grocery stores), is the category that accounts for the most cumulative wealth. More than investments, more than finance and more than technology. Selling actual, physical stuff to consumers is still your best bet of making big money. Oh, and for those who noticed Sinaloa Cartel drug trafficking leader Joaquin Guzman Loera on the list? {Forbes} Stick to the legal, actual, physical stuff like fashion or food. Not only is the life expectancy better, in the long run so are the profits. You never know thought, maybe Loera’s diversified byblinging out weapons.
Now what if it’s easy (relatively speaking) wealth you’re after? Gaming has relatively few billionaires, and on average they’re kind of old. The amount of competition is relatively small, most will be retiring in general or retiring to that great casino in the sky, so this is a prime market to go after.
How to go after it? Well, that’s up to you and probably a bit of genetic fortune. If you missed out on being born into a dynasty, your next best bet is to marry into one. If that still doesn’t work, there’s always the do-it-yourself model. We’ll give you a few pointers on that once we appear on the list rather than doing the grunt work of analyzing it. Off to the single billionaires list it is then.
The Bottom Line
So, sorry to come to such a heartbreaking conclusion, but it's hard for anyone to become a billionaire using traditional methods. To see a billion dollars during your lifetime (40 years of saving), you would need to put nearly $5.5 million into a fund that mirrors the Dow's average growth of 6.68%.
Here’s How Long It Will Take For You to Hit the Forbes Billionaire List
The Forbes Rich List is out, and as we slice and dice the billionaires around the world, a few trends have emerged: the number of Chinese billionaires has doubled since last year; Moscow has more billionaires per capita than any other city; and 2010 was good to most really rich people! 648 billionaires saw an increase in wealth while only 160 saw decreases. { LA Times } Guess those gains had to come from somewhere.
What we really wanted to know though, is what gives you the best chance at making a future Forbes billionaire list, how long will it take to get there, and how stiff is the competition? Here are the number of billionaires in each industry tracked by Forbes, and the average age of the billionaires.
Industry
|
Number of Billionaires
|
Total Net Worth
|
Average Age
|
Automotive
|
18
|
$63.7 billion
|
64
|
Construction & Engineering
|
31
|
$76.6 billion
|
58
|
Diversified
|
83
|
$253.1 billion
|
60
|
Energy
|
91
|
$398.2 billion
|
59
|
Fashion and Retail
|
129
|
$628 billion
|
65
|
Finance
|
80
|
$215.8 billion
|
62
|
Food and Beverage
|
66
|
$210.5 billion
|
65
|
Gaming
|
14
|
$57.2 billion
|
67
|
Health care
|
57
|
$105.7 billion
|
61
|
Investments
|
139
|
$525.7 billion
|
62
|
Logistics
|
30
|
$94.4 billion
|
63
|
Manufacturing
|
87
|
$251.3 billion
|
61
|
Media
|
66
|
$244.2 billion
|
67
|
Metals & Mining
|
48
|
$335 billion
|
52
|
Real Estate
|
96
|
$305.1 billion
|
65
|
Service
|
49
|
$110.7 billion
|
67
|
Sports
|
17
|
$26.9 billion
|
66
|
Technology
|
89
|
$405.4 billion
|
52
|
Telecom
|
20
|
$137 billion
|
59
|
It’s worth noting that there is some overlap in categories, and some people who we might place in one category appear in another or more than one. For example, Peter Thiel is listed under investments, though we’d probably put him in the technology category. There’s also not a clean way to account for wealth inherited from family members, or divided among them. There are multiple Benettons who appear in the Fashion and Retail category individually, for example, but Gucci owner Francois Pinault’s family is grouped together even though multiple members of the family are billionaires.
That said, for the non-exact nature of figuring this out, if you don’t want to wait for your fortune it probably comes as no surprise that technology is your best bet and is tied for the lowest average billionaire age (thanks, Facebook billionaires) with metal and mining. So if it’s young money you’re after, pick up a mine or two while you wait for your social network or search engine to catch on. You’ll be making the other billionaires feel like slackers in no time.
That’s not where the biggest money is though. Perhaps surprising to some is that fashion and retail (which includes grocery stores), is the category that accounts for the most cumulative wealth. More than investments, more than finance and more than technology. Selling actual, physical stuff to consumers is still your best bet of making big money. Oh, and for those who noticed Sinaloa Cartel drug trafficking leader Joaquin Guzman Loera on the list? {Forbes} Stick to the legal, actual, physical stuff like fashion or food. Not only is the life expectancy better, in the long run so are the profits. You never know thought, maybe Loera’s diversified byblinging out weapons.
Now what if it’s easy (relatively speaking) wealth you’re after? Gaming has relatively few billionaires, and on average they’re kind of old. The amount of competition is relatively small, most will be retiring in general or retiring to that great casino in the sky, so this is a prime market to go after.
How to go after it? Well, that’s up to you and probably a bit of genetic fortune. If you missed out on being born into a dynasty, your next best bet is to marry into one. If that still doesn’t work, there’s always the do-it-yourself model. We’ll give you a few pointers on that once we appear on the list rather than doing the grunt work of analyzing it. Off to the single billionaires list it is then.
The Bottom Line
Though there are over 1,000 billionaires in the world, it's still an exceptional occurrence, and is owing to momentous business dealings, kick-starting an industry, inventing a much-desired service or concept, and other extraordinary events. For the rest of us, maybe we'll just have to make due with a million. (Depressed? Don't be. Check out our Millionaire Calculator to see how much you need to save to become a millionaire.)
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