Guess what? Anyone can become a millionaire. Yes, I said it and it’s true! You don’t have to come from money to take your money situation to the next level. You just have to save. As long as you have money coming in on a consistent basis, you have the ability to save. Sure, you may have to stop spending on things you want or don’t need, but it’s a small price to pay.
If you knew what it would take to save each month so that you could become a millionaire in the future, would save? If you answered yes, let’s put it to the test! I’m sharing what you need to save to reach the $1 million-dollar mark at some point in your life. Remember, the earlier you start and the more you save, the faster you will reach millionaire status.
If you can save $300/month….
If you are 25 years old (or younger) and contribute $300/month into your retirement plan until you retire, you will reach millionaire status by age 65. That $300 is comprised of your employer contribution too, so you may not even need to save that full amount! This is assuming the historical 8% rate of return.
If you can save $500/month…
If you can muster putting away $500/month into some form of investment, you can reach millionaire status. Here’s a breakdown of when you will reach the million-dollar mark depending on your rate of return:
- With a 4% rate of return, you'll become a millionaire in 51 years.
- With a 6% rate of return, you'll become a millionaire in 40 years.
- With an 8% rate of return, you'll become a millionaire in 33 years.
- With a 10% rate of return, you'll become a millionaire in 29 years.
If you can save $2200/month…
According to CNBC, you can reach millionaire status in 20 years if you put away $2200/month into an investment that yields a 6% rate of return. That may seem like a stretch, but you'd be surprised at what you can earn in a month's time.
As you can see above, to reach the million-dollar mark, all of your savings must go into some form of investment that yields a minimum 4% rate of return. Play with CNN Money’s Millionaire Calculator to get an idea of what you need to save to reach your goal. This could be stocks, mutual funds, blended asset portfolios and more. There are plenty of companies out there that can help you find the best investment vehicle for your situation. I highly recommend Betterment (which is currently yielding 15% for me).
If you can’t seem to save any of the amounts listed above, take a good look at your situation. What costs can you get rid of? Unless you hit the lottery, it takes discipline to become a millionaire. If you need assistance, don’t hesitate to get it. The longer you prolong saving, the harder it will be for you to hit your million-dollar mark.
Happy saving to all of the future millionaires out there!
The CGS Team