The road to $5 million

Several weeks ago I described a conversation I had with a college junior who wanted to learn about how to get started in investing for his future. I challenged him to figure out what kind of investment plan he would need to accumulate $5 million for retirement over the next 43 years.

Here’s the masterpiece he came up with.

Introducing Tyler Calder

In the original post I called him Jim, but he’s okayed me to use his real name, Tyler Calder. Tyler put together a great spreadsheet that should motivate him to invest part of his income each year, through his entire career. Download fully functional spreadsheet.

(Click on image for larger version)

His spreadsheet is beautiful in its simplicity. He boiled the challenge down to five key variables (highlighted in yellow above):

Starting salary:              $50,000

Annual raise:                  10% for the first 15 years, then no more raises

Annual savings:              10% of salary

Return on investment:  10% annual return

Inflation rate:                   2%

With these data elements, the ending portfolio value is $5,039,594 in today’s dollars, even after losing $1.2 million to inflation. It’s interesting and encouraging to note that investing only 10 percent of projected career salary, a total of $885,000, yields such a handsome retirement next egg.

Of course we can’t be sure what inflation, salaries and the investment markets will do in coming years.  But the math is clear: compounding is a relentless and wondrous force, one that should be respected and fully utilized. If you download the spreadsheet you can play with the assumptions yourself.

Discipline is rewarded

Like most new investors, I think Tyler was most concerned about what specific stocks or funds to buy.  But looking at this spreadsheet it becomes clear that just as important as choosing investments is the long term discipline to put money away every year over one’s entire career.

Feel free to contact Tyler if you have any questions about his template!  His email is

I sincerely thank Tyler for his diligence on this project and willingness to share it. And I wish him great success in his chosen career and as an investor.


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