How long would it take you to becoming a millionaire? Well, I used an investment calculator to determine at what age you would become a millionaire if you invested different amounts, from $200 per month to $1000 per month, starting at age 20. Here’s the results:
So if you put $200 per month away ($2400 per year) into stocks and saw another period like the 1980’s and 1990’s, you would become a millionaire somewhere in your early 50’s. If you put away $1,000 per month, or $12,000 per year, you would become a millionaire at age 43 even if you just got modest, average returns from the markets. If you could get a 15% return, you’d be there are age 38, just 18 years later.
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Note that $12,000 per year for 18 years is $216,000, which is what you could easily pay at a private, four-year college. If you then left the money invested, and were able to earn 12% annualized, you would have a cool $12M at retirement with no effort on your part. On the other hand, if you earned $200,000 per year at a job because you went to an elite college from age 20 to age 65, you would earn only $9M over your working lifetime. Just saying….
Be sure to check out this month’s book, The Bogleheads’ Guide to Investing.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.