If becoming a millionaire in 20 years is one of your goals, here are some guidelines regarding how much you’ll need to save to accomplish that goal.
First things first, try using CNN’s Millionaire Calculator to estimate how much money you’d need to put away every month in order to become a millionaire. This calculator plugs in your age, the year you’d like to achieve your goal and the estimated monthly amount you’ll likely need to stash.
Without using this calculator, let’s assume you’re…
Starting from scratch without any savings at all. It’s estimated you’ll have to save $2,200/month to become a millionaire by February 2038.
Starting with $10,000 in savings, you’ll have to save $2,100/month to reach your goal by April 2038.
If you have $50,000 in savings, you’ll need to put aside $1,800/month to become a millionaire by May 2038.
Looking at this from a vantage point of your current age and an assumption of a 6% ROI, the estimate of needed monthly savings to achieve your goal by age 67 years looks like
In 20’s – $415/month
In 30’s – $651/month
In 40’s $1,300/month
The differences in these dollar amounts reflect the power of compound interest, or interest earned that accrues interest on itself. You see that the earlier you begin saving, the better it is because as a small amount of money invested now can end up earning more for you than if you were to invest a large amount of money later.
Please remember that saving hundreds or thousands of dollars monthly is quite ambitious. Most people cannot and do not save $2,100/year! According to a 2017 GoBankingRate survey, more than half, 57%, of all Americans have less than $1,000 in a savings account.!!!
Here are some low stress ways to begin investing now:
- Sign up for your employer’s 401(k) plan and take full advantage of ANY company match.
- As a real estate agent and independent contractor, you don’t have an employer so contribute to a Roth IRA or traditional IRA. Both offer tax breaks.
- Use micro-investing apps such as Acorns that help you invest small amounts of what Acorns calls “small change.” Acorns rounds up your purchases to the nearest dollar and automatically puts those coins to work.
- Consider automated investing services known as robo-advisors that help you save regardless of how much you have in a savings account.
- Research low-cost index funds as suggested by Warren Buffett.
Know that none of these calculations/suggestions account for variables such as rises and dips in the stock market, emergencies you might have, windfalls, etc.