I want to be a millionaire. But how long is it going to take to reach $1 million in investments?
Of course, the answer to this is subjective-it will look different for everyone! We all have our own money paths to walk.
The single most important part to investing is simply getting started. It’s the act of starting that actually stops a lot of people. They feel intimidated by investing language like “utilize your brokerage account to enhance diversification and hedge risk with broad market funds.”
Like what does that MEAN??? It’s inaccessible and therefore, it’s keeping people from investing and becoming millionaires. Click here for our easy investing 101 guide!
Now, back to stacking this cash and reaching $1 million in investments. Once you’ve opened the accounts and chosen your investments, the magic of investing mostly comes down to increasing the amount you contribute monthly.
Here’s the simple truth: the more you can invest, and the earlier you can get started investing, the better chance you have of becoming a stock market millionaire.
So let’s look at a few different timelines to give you an idea of how much you need to invest each year to reach $1 million in investments.
We’ll assume that you’re starting from 0, and we’ll use a 7% annual rate of return. The S&P 500 returned an average of 10% between 1926 and 2018, but we’ll go a little lower to hedge our bets here. Better to prepare for the worst and hope for the best!
Scenario 1: Investing $10,000 a year.
If you invest $10,000 a year and get 7% returns it will take you 31 years to reach $1 million invested.
That breaks down to $833.33 a month. This is the most common timeline for people who will reach millionaire status: the slow burn over a few decades of work.
Scenario 2: investing $25,000 a year
If you invest $25,000 a year and get 7% returns it will take you 20 years to reach $1 million invested.
$25,000 a year breaks down into $2083.33 a month. If you max out your IRA and your 401k or 403b, you will contribute $25,500 a year. This is totally possibly IF you have access to a workplace retirement plan and open an IRA for yourself ASAP.
Scenario 3: investing $40,000 a year
$40,000 a year invested at 7% returns would mean becoming a millionaire in just 15 years.
$40,000 a year breaks down into $3,333.33 a month. That’s a lot to be investing per month for most Americans. This would mean having a workplace retirement plan, an IRA, and a brokerage account.
Scenario 4: investing $60,000 a year
$60,000 invested a year at 7% returns would mean becoming a millionaire in just under 12 years.
This breaks down to $5,000 a month. For most Americans, this is what they bring home total a month. But if you can afford to invest this every month, you can be a millionaire in just over a decade!
How to get started investing
Remember: everyone’s money journey looks different! You can start or excelerate at any age and with any amount of money. The important things is to harness the power of investing for yourself and get started crafting your plan for $1 million.
Investing can be as easy as:
Picking a brokerage
opening up an account like an IRA or a brokerage account
finding an index fund you like
continue contributing to that each year
You don’t have to copy someone else’s plan or timeline to be successful. That’s why we help people create their own, personalized investing goals, timeline, and strategy with our investing course Talk Money to Me. The course helps you create an investing plan that works with your life and your own goals, not anyone else’s!
How long it takes to reach $1 million in investments will be a personal journey for everyone, but the truth is, you can’t get there if you never start.
Don’t wait to get started investing. If you’re scared, or intimidated, you just need to find the right tools. Everyday you wait is a day longer to become a millionaire.
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