How to Give P1 Billion to Your Child

I can do something in the next five years, and nothing after that, which will then give my two kids close to P1 Billion each by the time my son turns 57 and my daughter turns 52.They can then retire and just do whatever they want with that money.

Unbelievable? Bo Sanchez has taught me something mind-blowing today.

I did my own calculations on MS Excel. What I found was I can put P5,000 every month, consistently for the next five years, into stocks that grow 20% per year on average. I then leave the money there until they grow to P1.8 billion 45 years after.

That's something my wife and I can do in secret, and then write them under our wills.Oh, how lucky our children will be by the time they retire!

You can do your own calculations in MS Excel. Just follow these steps:

First, find out how much P2,500 per month will be worth at the end of five years, if it is used to buy stocks that grow 20% per year, on average.

1. To do that in MS Excel, type this in one of the cells: -FV(0.2/12,60,2500). 
2. "FV" means "Future Value." The parameter "0.2/12" refers to the monthly equivalent of 20% per year. The parameter "60" refers to the number of months in five years. The parameter "2500" refers to the amount you invest monthly. 
3. If you Excel is doing fine, the result would be P254,395. The face value of P2,500 multiplied by 60 months is P150,000; so the resulting figure means your money has already grown by P104,395. Clear so far?

Next, find out how much P254,395 will be if it grows 20% per year in the next 45 years.

1. Type this in another cell in MS Excel: =254395*1.2^45
2. The value "254395" is the value of your money as calculated earlier.
3. The value "1.2" is the multiplier, which adds 20% of the value of the money every year.
4. The value "^45" is an exponent that means the calculation earlier will be repeated for 45 years.
5. What you should get is P930,391,068 or close to P1 Billion.

Amazing, isn't it?

The keys to make this a reality are the following:

1. Know which stocks to buy (mentors are available, but start by going to www.citiseconline.com)
2. Follow through with commitment and discipline

They say legacies come in books or the tree you planted. It looks like there's one more way to leave a legacy: buy stocks for your children.

Have a blessed week ahead!


ADDENDUM:
I need to make a disclaimer: I am not an expert in stock trading. Nope! Not even close. Someone reacted to this post and asked me to "prove" that a company has grown at 20% a year for 45 years. How can I prove anything? I'm just a simple guy listening to Bo Sanchez last Sunday, and now I'm asked to prove something that I'm not an expert of. A lesser guy would crumple and lose his excitement. As to me, my resolve is to study the mechanics of how to invest wisely in stocks; and if indeed I find out that a company has grown 20% on average for 45 years, I'll buy stocks from that company first, and then make the announcement later. You can bet I'll do that.