The top 1% of America is rumored as the richest of the rich, but how rich are the top 1%? It turns out the top 1% yearly income threshold is about $361,020.00, while the minimum net worth is about $11,099,166. When I read this statistic, I was shocked. Not because of how high the threshold is, but because of how low it is. I envisioned the elites such as Mark Zuckerberg, Elon Musk, Jeff Bezos, Warren Buffet, Donald Trump, and other billionaires as the 1%. Hilariously, Elizabeth Warren is worth about 12 million dollars, estimated by Forbes, making her a one-percenter. Now, I realize that most students at BC High can also be in the 1%.
While achieving a yearly income of $350,000 seems like much, the net worth statistic of 11 million dollars is somewhat comforting. If one were to set $11,000,000 as their savings goal and a 9% growth rate (The average yearly return of all stocks) over 50 years, the needed monthly contributions to a retirement fund would only be a little over $1,000. Considering that most families of BC High pay over $20,000 to send their son to high school, most families could set aside $1,000 monthly for their son’s retirement; some families pay over $40,000 for two sons or more.
Later on, assuming one has completed college, past students could easily set aside $1,000 monthly considering the average starting salary of a college graduate is $57,964 (National Association of Colleges and Employers). For those who are not fortunate enough to be a part of the top 1%, assuming the same growth rate of 9% and a time period of 50 years, one would need a monthly contribution of $102.23 to become a millionaire.
These feats of financial magic are all because of compound interest. Coincidentally, my Algebra 2 class is currently studying exponential growth, and compound interest. Albert Einstein once said, “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Understanding compound interest is probably the most important factor in becoming rich.