Becoming a millionaire can provide a lot of financial security. And it's not an unreasonable goal for most people, even though it may feel as if it is. The reality is, if you have a long investing timeline and you make smart investments in your brokerage account, you can eventually end up with seven figures.
If you're getting started investing this year and you're hoping to hit your millionaire target in 30 years, here's how much you'd need to invest on a regular basis to end up hitting your goal.
This is what you'd need to invest to become a millionaire in 30 years time
Many people can expect to earn around a 10% average annual return over the long haul if they make reasonable investments.
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In fact, you don't need to be a skilled investor to do that, as you can put your money into a financial index called the S&P 500 that has consistently produced 10% average annual returns for decades. The S&P 500 tracks the performance of around 500 large U.S. companies, and is a pretty safe investment as long as you leave your money alone for the long term.
Assuming that you can earn this 10% average return over your investing career, if you are getting started investing this year and you want to become a millionaire in 30 years, you would need to invest $506.60 per month.
This amount may seem like a lot, but it may actually be pretty doable for many people. The Bureau of Labor Statistics reported that median weekly earnings for full-time workers was $1,118 in the third quarter of 2023. With an annual salary of around $58,136.00, the average American could hit the goal of contributing the required $506.60 per month if they were investing a little over 10% of their income. And since many people get employer matching funds if they invest in a 401(k), they wouldn't even necessarily need to come up with the full $506.60 on their own, as their company could help them out.
Of course, some people earn less than average, and finding $506.60 per month will undoubtedly be harder for them -- or perhaps even impossible. But they should still save what they can while working toward increasing income and investing more later in life.
And those who are starting to invest late will need to put aside a larger sum each month in order to become a millionaire if they don't have 30 years. If you have just 15 years until you want to achieve millionaire status, you'd need to invest $2,622.80 per month. This amount is a lot higher because you aren't benefiting as much from the long window of compound growth that happens when your investments earn returns that are reinvested and earn returns of their own.
How to make sure you hit your target
If you are serious about wanting to become a millionaire in 30 years and you're starting to invest in 2024, the best way to make sure you end up with a seven-figure nest egg is to set up automatic transfers from your checking account to your brokerage firm or to have money taken out of your paychecks and put into your 401(k).
You can sign up for a 401(k) right now by asking your employer how to do it. If you have access to this workplace plan, you may be entitled to matching contributions made from your employer as well as tax breaks. And the money you're contributing can be taken from your pay even before you get a paycheck or direct deposit. If you don't have a 401(k), on the other hand, it's pretty easy to set up automatic contributions to an IRA or other retirement account through your bank or broker.
If you have $506.60 transferred into your account every month, invest your money, and leave it alone for 30 years, you may just find yourself a millionaire at that time. So start investing today -- and dream of what your millionaire lifestyle will look like.
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FAQs
Assuming that you can earn this 10% average return over your investing career, if you are getting started investing this year and you want to become a millionaire in 30 years, you would need to invest $506.60 per month. This amount may seem like a lot, but it may actually be pretty doable for many people.
How to get millionaire in 2024? ›
10 Simple Tips To Achieve Millionaire Status in 2024
- Start By Paying Yourself First. ...
- Automate Your Savings and Investments. ...
- Live Below Your Means. ...
- Increase Your Income Streams. ...
- Maximize Your Retirement Savings. ...
- Have Proper Insurance in Place. ...
- Create a Comprehensive Risk Management Plan for Your Business.
What should you invest in inside your 401(k) and Roth IRA? There are many different types of investments to choose from, but Ramsey says mutual funds are the way to go! Mutual funds let you invest in a lot of companies at once, from the largest and most stable to the newest and fastest growing.
How much do I need to invest to make $1000000? ›
Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate. For a rate of return of 5%, you'd need to save around $14,700 per month.
How much money do I need to invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
Can you get rich just by saving? ›
A savings account won't do much to help you grow your net worth. Investing in tax-advantaged accounts can go a long way toward helping you save the money you need to be wealthy. You should take advantage of 401(k) and IRA accounts and buy assets that will help you earn generous returns.
How to get rich in 30 years? ›
How To Get Rich
- Start saving early.
- Avoid unnecessary spending and debt.
- Save 15% or more of every paycheck.
- Increase the money that you earn.
- Resist the desire to spend more as you make more money.
- Work with a financial professional with the expertise and experience to keep you on track.
There's an 80-20 rule for money Dave Ramsey teaches which says managing your finances is 80 percent behavior and 20 percent knowledge. This 80-20 rule also applies to constructing a healthy life. Personal wellness is 80 percent behavior and 20 percent knowledge.
What is the 7 year rule for investing? ›
According to Standard and Poor's, the average annualized return of the S&P index, which later became the S&P 500, from 1926 to 2020 was 10%. 1 At 10%, you could double your initial investment every seven years (72 divided by 10).
What are the 4 funds Dave Ramsey recommends? ›
That's why we recommend splitting your investments evenly (25% each) between four types of stock mutual funds: growth and income, growth, aggressive growth, and international.
If invested with an average annual return of 7%, it would take around 15 years to turn 500k into $1 million.
How much do I need to invest to have a million dollars in 30 years? ›
To save a million dollars in 30 years, you'll need to deposit around $850 a month. If you make $50k a year, that's roughly 20% of your pre-tax income. If you can't afford that now then you may want to dissect your expenses to see where you can cut, but if that doesn't work then saving something is better than nothing.
Is 35 too late to start investing? ›
No matter your age, there is never a wrong time to start investing. Let's take a look at three hypothetical examples below. For these examples, everyone invests $57.69/week with a 7% growth rate and has an annual salary of $30,000.
Can you make a living off stocks? ›
Yes, you can earn money from stocks and be awarded a lifetime of prosperity, but potential investors walk a gauntlet of economic, structural, and psychological obstacles.
How much do I need to invest to make $1,000 a month? ›
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Can I live off interest on a million dollars? ›
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
What's the fastest way to become a millionaire? ›
Be Consistent, Not Speculative
The simple but boring way to become a millionaire is to invest regularly and consistently over a long period of time. The Ramsey study on millionaires revealed that not a single millionaire reported that single-stock investing was a big factor in their financial success.
Is 28 too late to become a millionaire? ›
The key is to start now, regardless of your age. Every year you delay, you miss out on potential growth, but every year you invest, your money starts working for you. Compounding can still make a significant impact on your financial well-being, even if you're starting late in your 40s, 50s, or beyond.
How to make money with $20,000? ›
10 Best strategies to invest $20K
- Pay off debt. ...
- Build an emergency fund. ...
- Max out your retirement accounts. ...
- Invest in an index fund. ...
- Invest with a brokerage account. ...
- Invest with a robo-advisor. ...
- Invest in fine art. ...
- Invest in real estate.
