Saving R1 million may seem like an unattainable goal for many, especially on a modest salary. However, David Parker, author of Income and Wealth, offers a blueprint to achieve this milestone, even on the salary of a teacher. His inspiring story of financial discipline and strategic saving has sparked conversations about how the average South African can achieve similar success.
Parker’s journey proves that with the right mindset and determination, anyone can reach their financial goals—even those living paycheck to paycheck.
The Challenge of Saving
In South Africa, saving is notoriously difficult. National Treasury estimates that only 6% of the population will retire comfortably, while the remaining 94% will need to either lower their living standards or continue working into their retirement years. This reality underscores the importance of strategic financial planning and disciplined saving.
“Making the first million is hard; making the next 100 million is easy,” British retail entrepreneur Theo Paphitis once said, emphasizing that building wealth becomes easier after reaching the first million. The key lies in the power of compounding, where savings begin to multiply once a certain threshold is reached.
Parker’s Path to a Million
In his book, Parker lays out a clear, albeit radical, plan for those looking to build wealth. His strategy? Save as much as 50% of your income, even if it means living with parents or cutting back on expenses. By doing so, Parker was able to save enough for a down payment on a property, which became the foundation of his wealth-building journey.
“It takes about 10 years to get there, but the next 10 years are when your property portfolio, using bank loans and savings, starts to build,” Parker explains. His disciplined approach paid off, allowing him to grow his wealth significantly, despite his modest teacher’s salary.
Testing the Theory in South Africa
To see how Parker’s approach might apply to the average South African, we conducted an exercise assuming that 10% of the average salary is saved and invested annually. According to Stats SA, the average monthly salary in the country is just under R27,000 in 2024, with an annual growth rate of 6%. Based on these figures, if 10% of this salary were saved every year, it would take approximately 13 years to accumulate R1 million, assuming no tax is deducted.
If that 10% were invested in the Johannesburg Stock Exchange (JSE) with an annual return of 6.5% and dividends reinvested, the R1 million mark could be reached by 2031. And if the JSE maintains its current growth rate of nearly 10%, that target could be reached even sooner—by 2030.
The Fast Track with Bitcoin
For those willing to take on more risk, the volatile cryptocurrency market offers another route. If the same 10% of income were invested in Bitcoin, Parker’s R1 million goal could potentially be reached within seven years, given Bitcoin’s recent growth trajectory. However, experts caution against this approach due to the market’s unpredictability.
Harry Scherzer, CEO of Future Forex, offers another option: crypto arbitrage. This lower-risk strategy involves buying cryptocurrencies on overseas exchanges and selling them locally for a profit. “Arbitrage achieves roughly the same result as a direct investment in Bitcoin but without its volatility,” Scherzer explains. This method could also accelerate the path to R1 million, provided one has a minimum of R100,000 to invest.
The Millionaire Mindset
While Parker’s story is extraordinary, it highlights the importance of adopting a disciplined and forward-thinking approach to saving. Whether through conservative investments in the JSE or riskier bets on cryptocurrency, the path to wealth requires a commitment to saving and financial planning.
For South Africans looking to break the cycle of living paycheck to paycheck, Parker’s story serves as an inspiration. With determination, strategic planning, and a millionaire mindset, achieving financial success is within reach—no matter the salary.
