Becoming a millionaire is a goal for many, but actually achieving a seven-figure net worth is another game entirely. The good news is that accomplishing the feat is definitely possible with the help of a few simple behaviors over the course of your working career.
Here, we’ll review how you can turn $10,000 into $1,000,000 even before it’s time to collect your first Social Security payment.
Work the financial math
First, let’s assume you’re 25 and plan to work in a formal career until age 65, and you’ve saved up $10,000 from working side hustles throughout your teenage years. Assuming broad markets perform similarly to how they have over the past century, you expect a 10% return on all invested money. Finally, you simply use index funds in your 401(k) and other investment accounts, and you generally stay away from picking any single stocks.
If your end goal is to retire at 65 with a total investment portfolio worth $1,000,000, you’d need to invest only $73 per month to get there. If this sounds impossible, that’s understandable: This is a bit harder to grasp without a working knowledge of compound returns. But the fact remains: staying consistent with your investing behavior — regardless of what’s currently happening in the market — can lead to outsized results for your long-run net worth.
How to change the outcome
If you’re thinking that it’s unrealistic to save consistently or that you don’t find working until 65 all that appealing, there are some choices when it comes to changing the math. The options include:
- Increase your investment amount. If you were to be more aggressive in your savings behavior and increase your monthly investment to $250, you’d reach the million-dollar mark nearly eight years sooner. This works out to a working career length of just over 32 years, as opposed to the full 40.
- Work longer. In the event you don’t mind your job so much, you could make the decision to work for an even longer 45 years but only commit to investing $11…
Read complete post here: