How I Plan to Give My Son, Eli, a Million Dollars

“If only … ”

If only. As far as I’m concerned, those two words represent the single most painful realization in all of personal finance and business.

It’s something that came to me when I first started to assemble this Wealth Foundations Series, and it’s something I wanted to touch on in great detail before we really got too far along.

At first, it will seem like a slight detour from the strictly entrepreneurial-sword-sharpening topics we’ve covered so far in the series, but I think succession planning, and instilling the right wealth foundations in our children is just as important, as fixing our own finances.

It starts with learning the value of deferred gratification, of making time work for you, not against you, and not being the guy stuck saying “If only.”

Because the worst thing about this lesson is that it’s so often only learned in hindsight, meaning that your single most valuable asset—time—has already been mostly depleted.

That’s the real cost of “If only,” the price in wasted years.

Well, today’s article is about how I’m attempting to prevent “if only”.

It’s about how you can start your own succession planning by following along, and how doing so can prevent key members in your business and family from having to endure some of life’s most painful lessons.

Basically, we’re talking about imparting the perfect amount of financial wisdom at the perfect time.

How you can start your succession planning by playing along, and prevent loved ones from having to endure those same painful lessons by imparting the right amount of financial wisdom at the right time …

In my case, I’ve chosen to start building my “Family Succession Plan” with our part time Blog Editor, my son Elijah—or Eli for short—and I’ve decided to do it by setting him on course to become a millionaire …

An exciting challenge for Dad—and a crucial life lesson for Son

Now of course I still plan to have Eli inherit a good portion of my estate when Fleur and I shuffle off this mortal coil.

But this is not about giving him some random lump sum in a will. He’s going to be a part of this project—an apprentice, a steward, and eventually a director.

In sharing all this with my son, I’m hoping to engage him in and demonstrate to him how much his time is really worth, financially speaking.

Think about it …

For the first few decades of their lives, most people might receive a few savings bonds from their grandparents. The really lucky ones will receive some sort of inheritance from their grandparents, aunts or uncles, often without the education or instruction on how to best handle it. (I blew mine on my stint in the USA prior to the MCG project.)

These gifts; however fun and tangible they might be at times, still pale in comparison to the idea of growing up alongside your own personal fortune … of always having the capital you need to truly do what you want to do and abstain from the rat race at large.

The power of this idea; the energy, momentum and confidence it could infuse into anyone’s young life—not just my son’s, but anyone’s—it’s almost too much to overlook …

Here’s How To Get Started Today …

First of all, let’s acknowledge the fact that I’m not a financial professional, nor do I play one on television. I’m not trying to dole out personal financial or investing advice here, I’m just trying to share some of the creative solutions I’ve adopted into my own personal life for my family.

I realize now that readers from different parts of the world will likely face different obstacles; from tax rates and investment prospects to currency inflation and monetary stability issues. And I’ll be addressing them at the end of the essay (along with giving you the tools you’ll need to custom-fit this plan to your own needs). But for today’s purposes, I’m going to talk about my plan in its simplest and most straightforward terms.

And before you start applying this plan to your own life, I’ll urge you to consider all the obstacles.

After all, there are plenty of people out there who think this whole idea would be laughable, that getting enough of a cumulative return to hit our goals “in today’s markets” would simply be impossible. Of course, these are likely the same people who thought that housing prices couldn’t fall back in 2007, or that leasing a Mercedes was a sound financial decision, so—as always—it’s worth taking everyone’s advice with a grain of salt.

In short, this plan will not work if I can’t commit to it long-term. And by long-term I mean the long-term. The indefinite term. Personally, I’m expecting these habits to become so ingrained that Eli & I will continue with them on a daily basis—regardless of goals or own personal situations—and that’s the commitment I’m looking to make.

Which leads me to the most important obstacle. Sticking to your commitment.

Yes, it’s essentially the same obstacle. Only this is what it looks like after a decade or two has passed. Remember, we’re not talking get-rich-quick here—we’re talking about working the clock. About investing over a multi-decade horizon for a specific target. You’ll need to be the type that can remain patient when things start moving at a glacial pace.

Which leads us to our final obstacle—keeping things from moving at a glacial pace.

It takes a special kind of person to balance your goals and risk tolerance over such a long horizon of investment. It’s a marathon of marathons, and most amateur financial minds like to think of themselves as sprinters. So after setting the money aside in the first place, it’s going to be crucial for to learn how to invest the money well.

Still interested in how it works? Well, let’s break it down …

Starting Out: Year Zero—$0 in the Bank

Okay, so let’s get down to brass tacks. Here’s how the plan works;

From the day Eli was born, I’ve been and plan to keep investing a dollar a day and an hour a month in his financial future. That’s it, that’s all it takes. Less than ten bucks and 1% of your time each week.

With these simple (but constant) resources, I along with Eli himself will slowly and steadily maneuver his growing fund until it reaches a million—ideally around the age of fifty, so he can possibly enjoy an early retirement for a job well done.

Over the long-term, that means we’re shooting for an average annual return of about 12%. Yes, that does sound a bit high in today’s economy, but it’s quite a common target for long-term growth-oriented portfolios.

As Dave Ramsey has pointed out, the annual average return of the S&P 500 from 1926 through 2012 was 11.96%. Likewise; during the last 30 years—despite America’s “Lost Decade”—Australian stocks have soared an average of 11.1% each year. Especially once inflation is factored in, 12% becomes a very reasonable target.


Anyway, by investing a dollar a day with an annual return of about 12%, this plan will ultimately give Eli a million dollars by age fifty. And by the time he turns eighteen, we’re hoping he’ll have learned enough about long-term savings and investment to be taking over the portfolio and eventually buying his old man out.

Now before we go too much further, I want to quickly address a possibly glaring issue you might have with this idea – A million dollars in 50 years will be worth squat.

Do you know what – you are absolutely right! A million dollar home in 50 years won’t be much, you certainly won’t be able to retire on a million dollar superannuation or 401k, and yes there will also be taxes to pay. But remember what these Wealth Foundations are – Foundations!

All we are trying to do here, and in all the essays, is get those financial foundations right. Building the mind and muscle, that’s all. It’s not the one single plan for Eli’s financial future, just the foundation.

Now, in order to get there, we start with square one. Remember, it’s a marathon, not a sprint. So we just put a dollar away each day, and spend about an hour a month learning and managing our new child’s fund. We likely won’t save more than $500 in the first year, but by getting the building blocks in place—like acquiring the child’s tax file number or setting up cash & brokerage accounts—we can still make critical progress from the very first day.

As the fund starts to exceed $500, we’ll start having new opportunities; such as the chance to invest in Exchange-Traded Funds and Listed Investment Companies. By using just these simple, straightforward and cost-efficient kinds of vehicles and nothing else, one can still do a great job with the portfolio for at least its first decade.


But it’s not until around age seven that the fund reaches its first—and arguably—most critical milestone. In that it starts contributing more to itself than you do. Let me explain …

By about seven years in, you should be looking at $3,000-4,000 in total account value. With our projected rate of return, that means the fund is earning about $400 a year in interest … or more than the dollar a day we’re investing!


This is a tremendous achievement, and one of the clearest ways to demonstrate the massive power of reinvestment. Plus, it’s coming right around Eli’s seventh and eight birthdays, meaning he’ll be starting to reach that age where he can take not only an interest in his financial affairs, but start to grasp some of those key concepts.

I’m thinking young Eli and myself might don our suits and go out for a fancy “business” lunch at this point …

Stage Two: Year 10—$7,000 in the Bank

By now, if we’re doing it right, Eli likely has a palpable sense of excitement when it comes to savings and investment. Having witnessed the power of consistent contributions and simple reinvestment, he’ll be developing an understanding of some of the most consistently profitable fundamentals of finance—the kind of thing he’ll simply never get from schools – even montesorri.

By this beginning of this phase I’ll hopefully have him as an active participants in the fund’s management. I believe the kids should be allowed to make suggestions and express their thoughts, then seriously be taken into consideration. It’s easy even for younger kids to become jaded or cynical about something this unique and important, so I’m going to make sure to share it with him on his own terms.

I can’t wait play stock market games with him (Payday was my favourite as a young kid)… share things like Robert Kiyosaki’s Cash Flow 101 board game, and express the importance of financial literacy and good priorities.

Just as important is the fact that his growing base of knowledge will be backed by practical experience. A level of experience well beyond his current age, along with years of positive reinforcement behind some of the most prudent and productive habits he could possibly have. The fact that you’ve cultivated a hobby with your now teenage-child is just a fringe benefit …

Keeping them engaged at such a turbulent age might be less complicated than you’d think. After all, if you’ve been investing your time and money as diligently as planned, then this is the age where their fund finally starts to break free and go “exponential.” In other words, they’ve earned and reinvested so much at this point that the charts start getting really exciting …


Perhaps best of all, the loftiness of their goal … the amazing level of commitment you’ve displayed; these kinds of ideas will keep things from getting boring for them. They’re making a deliberate effort to become a millionaire—with their parents’ help—and they’re quite likely to succeed. What kid wouldn’t find that message to be energizing?

Stage Three: Year Twenty—Going Independent with $28,000 in the Bank

Twenty years old may be seeming younger and younger these days, but if you’ve done your job so far then you can rest assured that your child is ready to take the reins.

Because week in and week out over the last twenty years, Eli will have watched and participated and learned from the careful management of his finances. Maybe it’s only an hour each month; but that’s an hour a month for years upon years upon years.

Perhaps most importantly, he will have witnessed the already small size of my own contributions. Because at a dollar a day, as their parent, you’ve only contributed about $7,400—that’s just a quarter of the fund’s already ballooning size!


Empowered with this knowledge—and what is by now a decade of experience in managing his own finances—the plan is that Eli will be better-suited than most retirement-aged adults to maintain a long-term investment portfolio. Which is good, because in another ten years he’s going to be repaying his loan!

That’s right. You thought the dollar a day was a gift? Oh hell no, that’s my hard earned, and was just a loan. That was seed money, and we’re going to be asking for it back—interest-free, of course—once he reaches age 30. If everything is on track as planned, then paying me back will cost them less than 10% of his total account at this point. As planned … a drop in the bucket.

See at age thirty, by investing $1 per day, compounded monthly at a 12% per annum return, his portfolio will be worth $108,344 … 

So if he repays the $11,160 I’ve contributed, dropping his portfolio back to $97,184, but starts to contribute the $1 himself now, he’s on track for a portfolio (pre-tax) of $1,089,249.00 by the age of 50.

Goal Achieved – and it hasn’t cost me a cent!

But why ask for it back at age thirty specifically? Well, I’m going to ask for it back at some point, and because that’s when studies show that most people start having children of their own. Which means I’ll have a whole new account to start for the grandchildren, right?

The Possibilities are Endless—
and putting them to work can be deceptively simple …

Succession—be it in business or in family, or anywhere in life for that matter—is only ever about the future. It’s about knowing the future … not because you predicted it, but because you made it that way. Because you had vision and determination, and when they desired someone to follow, you were there to lead.


As such, I feel like succession is also about simplicity. About making a simple plan and a simple pledge, and then sticking to it through whatever may come your way. With such a simple plan and such a minor commitment as the one we’ve covered today; just loaning a dollar a day and an hour a week, people can feel almost liberated by it. And then their gears start turning … they start thinking about putting it to use …

Well, what happens if I invest 2 (two) dollars a week instead of one? He’ll reach the magic million dollar mark 7 years earlier at 43, or have a portfolio of $2,421,617 at age Fifty.

What happens if you get all the grandparents involved and it’s $6 per day invested? They have $1,059,436 at age 34, and $7,264,851 at 50 if they continue the contributions.

What if…

  • We invested a $1 per day, but $150 was also contributed per year in birthday and Chirstmas gifts from family etc
  • The $1 per day from us, was added to by 10% of his pocket money from 5yrs old
  • We made him contribute 10% of pocket money from 5yrs old, and 10% of any dollar he earns from a teenage job.

When that happens, you’ve successfully shared your vision.

So—with that in mind—I’ve had the team whip up this simple calculator to help you boil it all down and get an immediate snapshot of what your results may be. Trust me, even if you think you understand long-term investing, it’s still an eye-opening experience that’s definitely worth a moment or two …

As long as you follow all the specifications for this plan—making regular contributions of a dollar a day, focusing your investments on growth assets, and never letting up on renivestment—then you’re setting yourself and your family up for massive long-term success.

Sure, there’s going to be a degree of luck involved, as there is with all investments and almost everything in life. But as Albert Einstein once said, “chance favors the prepared mind,” and this kind of strategy could give yourself and your children a massive leg-up in preparing for an increasingly competitive world.

Like everyone else who decides to act out this plan on their own, Eli and I are certain to face our own unique set of obstacles …

What’s inflation going to look like over the next thirty years … and what’s it going to do to the savings? How much of the million do we stand to lose to taxes, and should I be doubling down on my “dollar-a-day” commitment to guarantee my child sees his full million after taxes?

Our calcualtor can give you some broad answers, but these are complicated questions that don’t always have simple answers. More resources are available online (like this helpful calculator from bankrate) to help you predict the effect of taxes and inflation on your savings over the long-term, but you shouldn’t be afraid to consult your Financial Adviser for any specific help you might need.

But the most common answer to these daunting questions is simply to save something. And to do so diligently over the long-term, then paying enough attention to be sure that your money is working for you and not the other way around.

Because this isn’t just about you or me … it’s about the ones we love. That makes it more tolerable and more bearable, but it also makes for a satisfying way to affirm your own love and vigilance. It’s a uniquely satisfying feeling.

  • TriSpecific

    This is great as I have been doing this from day one. A little over 3 years in now BUT haven’t done anything like invest in Exchange-Traded Funds and Listed Investment Companies … it’s in an ING account but I now need to look into these.

  • Greg

    Great post Pete.

    Here is a little cheat sheet for people in Australia. I am 10 times lazier than Pete so this is my no-brainer idiot proof implementation plan.

    This can be setup in about 2 weeks and takes about 4 hours per year. It minimises tax, includes asset protection and everything can be recorded on a single page of paper each year, so it is easy for your accountant to complete the tax return. Our accountant actually does the return for free as it is so simple for him.

    – Get your child a tax file number from the ATO (free)
    – Setup a family trust
    – Open a CDIA account with CBA (free)
    – Start an account with $1000. Source this from Grandparents, Uncles/Aunts, your sofa, sell stuff on eBay etc.
    – Add $1 per day (or $30 monthly) to the account.
    – When the balance of the bank account is high enough purchase index funds that track the ASX. Examples STW (ASX 200 Fund) and SFY (ASX 50 Fund).

    Buying index fund you have no decisions to make and receive no paperwork regarding stock splits, dividend reinvestment plans, mergers, takeovers which is seriously a pain for most stock owners. You just get 4 dividend cheques per year and a statement every 6 months. Unlike managed funds they have no fees.

    When you receive the dividend cheques deposit them in the CDIA bank account and purchase more of the index funds.

    If you only purchase Australian stocks as an Australian tax resident you’ll receive a franking credit on any dividends paid which means in the beginning you’ll get a tax refund from the tax office too.

    If you are just placing the money in a interest bearing account like ING then you are possibly earning 2.9% (before tax) while you could be earnings gains plus dividends which annually average closer to 12% over the long term.

    Note: The benefit of a family trust means that the money is clearly quarantined from your own. It is protected from hiccups like divorce settlements, bankrupts, lawsuits etc. (I am talking about hiccups for both yourself and your child – when they become an adult).

    Hope that makes sense 🙂

    • TriSpecific

      Thanks Greg. Done.

Pete Williams is an entrepreneur, author, and marketer from Melbourne, Australia.

Before being honored “Australia’s Richard Branson” in media publications all over the continent, Pete was just 21 years old when he sold Australia’s version of Yankee Stadium, The Melbourne Cricket Ground For Under $500! Don’t believe it? You will! Check out the story in the FAQ section (it really is our most asked question).

Since then, he’s done some cool stuff like write the international smash hit ‘How to Turn Your Million-Dollar Idea Into a Reality’ (+ the upcoming ‘It’s Not About the Product‘) and he’s created a bunch of companies including Infiniti Telecommunications, On Hold Advertising, Simply Headsets and Preneur Group.

Lots of other people think he’s pretty good too! He’s been announced as the Global Runner-Up in the JCI Creative Young Entrepreneur Awards for 2009, the Southern Region Finalist in the Ernst & Young 2010 Entrepreneur of the Year, and a member of SmartCompany’s Top 30 Under 30.

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