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Can you really become a millionaire on an average South African salary?

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October 18, 2024

Can You Really Become a Millionaire on an Average South African Salary?

Moneyweb recently posed the question: Is it possible to become a millionaire on an average South African salary?

The answer, not surprisingly, is of course you can. But you have to start saving. It’s a fun exercise and well worth doing.

The average South African salary, according to Stats SA, is about R27,000 a month. Back in 2018, it was R20,524 a month. If you save 10% of an average SA salary, it’ll take you 13 years to accumulate R1 million.

That’s slow going, but it can be done. There are faster ways of getting there, as explained below. Bear in mind that the faster the route to millionaire status, the higher the risk (or more precisely volatility).

The bottom line is this: You have to start saving, and putting aside 10% a month is a good target. Most South Africans find this challenging, but fund managers explain that once you get the savings habit, it becomes easier. It means cutting back on some needless expenses.

Let’s take January 2018 as our start date. As you can see from the table below, after 6.5 years – saving 10% of your salary each month - your net savings would be close to R200,000. If you had put that into bitcoin at the end of each year, you would be the proud owner of 0.835 BTC (currently worth just over R1 million).

2018 2019 2020 2021 2022 2023 2024
Average salary (monthly) 20 524,0 21 791,0 21 425,0 23 678,0 24 868,0 26 202,0 26 791,0
Average annual salary 246 288,0 261 492,0 257 100,0 284 136,0 298 416,0 314 424,0 321 492,0
10% savings 24 628,8 26 149,2 25 710,0 28 413,6 29 841,6 31 442,4 32 149,2
Cum savings 24 628,8 50 778,0 76 488,0 104 901,6 134 743,2 166 185,6 198 334,8
Cumulative savings in BTC 0,238 0,493 0,641 0,684 0,745 0,805 0,835

So that answers the question: could you become a millionaire on an average South African salary? It took just over six years if you invested your savings in bitcoin. But bitcoin is volatile and maybe not for everyone.

Other Investment Options

What about putting your savings into the JSE? Take a look at the graph below. If you bought the JSE All Share index and reinvested your dividends, your savings would be worth nearly R300,000 after six and a half years. Still nowhere near what bitcoin delivered.

Source: Moneyweb, StatsSA

What about converting your savings into USDT (Tether), which is a US dollar-backed stablecoin? Then your savings translate to $11,273 (worth just shy of R200,000 at current exchange rates).

Crypto Arbitrage

There is another option – crypto arbitrage. You would first have to accumulate R100,000 in savings, which is what most crypto ‘arb’ providers will accept as the minimum amount. If you start saving in 2018, you’ll get the minimum capital you require by 2021. Based on historical returns, you’d be able to generate R1 million from this by 2025.

Hopefully, these are a few ideas to help you on your path to financial success. You should sign up with 80Eight.io and join the “Become a Millionaire Club.”

Ciaran Ryan

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