How to Become a Millionare Think being a millionaire is out of the question? Guess again. If you avoid consumer debt and start investing when you’re in your twenties or thirties, you can be a millionaire.
How to Become a Millionaire From Home
Let’s assume you have $0 in your investment account right now. You have no debt, but you haven’t saved anything either.
Let’s assume you put your investments into a tax-deferred account, such as a 401(k).
Let’s also assume that your investments, over the long haul, grow at an annualised average rate of 7 percent. (Investing legend (Warren Buffet predicts that the long-term annualised return on the US stock market will be 7% in the early to mid-twentieth century.)
Remember: this is a very, very long-term average (over a span of years or more). In any given year, your investments might be up or down.
Don’t fret about that. One year—or three years, or five years—is small-scale when you’re talking about a lifetime portfolio.
With those three assumptions in mind-you’re starting at $0, you’re investing in a tax-deferred account, and you’ll get a 7 percent return
over the long haul-let’s look at how much you need to invest to create a $1 million portfolio.*
If you save $100 per month,
You’ll be a millionaire in: 58 years and 6 months. If you’re 25 now, you’ll be 83 by the time you’re a millionaire, so I recommend saving more.
If you save $200 per month,
You’ll be a millionaire in: 48 years and 10 months. Notice how simply saving an extra $100 per month ($200/mo instead of $100/mo) shaves a decade off the time it takes you to become a millionaire.
If you save $400 per month,
You’ll be a millionaire in: 39 years and 4 months. That means if you’re 25 now, you’ll be a millionaire at age 64-in time for retirement.
If you save $750 per month,
You’ll Be a Millionaire in: 31 years and 1 month. If you’re 25 now, you’ll be a millionaire at age 56. Did someone say “early retirement?”
If you save $1000 per month,
You’ll be a millionaire. 27 years and 6 months. If you have a baby today, you’ll be a millionaire by the time you dance at your child’s wedding—or maybe by the time your little grandchild is born.
(Based on the rough average age at which Americans get married.)
If you save $1,500 per month,
You’ll be a millionaire. 22 years and 9 months. What a huge improvement over the “58 years” we were quoting at the $100/month savings rate!
If you save $2000 per month,
You’ll be a millionaire. aged 19 years and 7 months. Have a baby today, and you’ll be a millionaire when he or she is a college freshman or sophomore.
If you save $2500 per month,
You’ll be a millionaire. 17 years and 3 months. Have a baby today, and you’ll be a millionaire before your kid is out of the house.
If you’re currently 25 years old, you’ll be a millionaire by age 42.
I’m guessing your next question is something along the lines of “How on earth am I supposed to save $2,500 per month?”
I can boil that answer down to four words: earn more. Spend less.
