For most people, becoming a millionaire is a lofty goal. Thataverage net worthnationally it amounts to $192,900, according to the latest consumer finance survey. So if you're still a long way from $1 million, you're not alone.
Because this is a big goal, some people also find it unrealistic. That couldn't be further from the truth. If you have yourpersonal financeThroughout your career, it is entirely possible to become a millionaire. And it can happen faster than you think.
How long does it take to become a millionaire
There are two main factors that influence how long it takes to become a millionaire:
- How much you save
- You get a return on your money
The first speaks for itself. All things being equal, if you put aside $1,000 a month, you're more likely to have $1 million, compared to $500.
Even more important is the return you get on your money. This is what will boost your savings. Suppose you can save €1,000 per month. If you don't get any kind of return on your money, it will take a thousand months to save $1 million. That is more than 83 years, longer than the average person lives.
Now suppose you invest your money. Thatthe average return of the stock marketamounts to approximately 10% per year. But you can also put some of your money in more conservative investments. We'll play it safe and assume you get an annual return of 8%.If you invest €1,000 per month, you will have €1 million in 25.5 years.
Depending on your income, you may be able to invest more or less. Here's how long it takes to become a millionaire, based on how much you invest per month:
| Monthly contribution | Time to reach $1 million with an 8% annual return. |
|---|
| 250 USD | 41.6 years |
| 500 USD | 33.3 years |
| $ 1.000 | 25.5 years |
| $ 2.500 | 16.3 years |
| $ 5.000 | 10.6 years |
Data source: author's calculations.
Hit the road for $1 million
As you've seen, it's much easier to save $1 million if you have enough time to do it. If you start at age 25, you can be a millionaire by the time you retire by investing about $250 per month. If you start at age 45, you'll need to invest about $1,500 per month. It's still possible, but the sooner you want to do it, the more money you have to invest.
If you haven't already,start investing right away.Reserve a portion of each paycheck. It can be any amount that works for you. The most important thing is that you make it a habit. Here are some of the best ways to invest your money:
- Put one on 401(k)-planwork:If your employer offers this, it's worth taking advantage of. You can have premiums deducted from your wages and you can invest with your pre-tax income. Also many employersmatch 401(k) contributionsup to a certain amount, which is essentially free money!
- Open one individual retirement account (IRA):You can open this type of account yourself through a brokerage and contribute to it with pre-tax income, just like a 401(k). Another option is aRoth IRA, where you pay normal income tax on contributions, but pension benefits are tax-free.
- Open one brokerage account:Unlike 401(k)s and IRAs, you won't save on taxes with a regular investment account. But there are also no annual contribution limits or early withdrawal penalties for investment accounts like there are for retirement accounts.
Either of these accounts allows you to invest in stocks. They also offer all mutual funds that can save you time by investing your money for you.Meal fundare a popular option because they invest your money based on the retirement year you choose.
Becoming a millionaire is not an overnight process. It takes a lot of discipline to put money aside and invest consistently. If you put the work in, the rewards are worth it. You will be able to build wealth and ultimately have not only security but also financial freedom.
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FAQs
The time it takes to become a millionaire depends on how much you save and the return you get on your money. If you invest $1,000 per month and get an 8% annual return, you'll be a millionaire in 25.5 years. The key to being a millionaire is to start investing right away and to be consistent about it.
Can you become millionaire in a year? ›
“It's very difficult to become a millionaire in one year, even under ideal circ*mstances,” said Jake Hill, finance expert and CEO of DebtHammer. “Building wealth is a time-consuming process that involves careful planning and a solid strategy.”
How hard is it to become a millionaire? ›
Even with a $150,000 starting investment, it would still take you 22 years to reach the $1 million mark. Of course, with the use of the steps already mentioned, plus consistent determination, diligence and perseverance, you can reach your goal of becoming a millionaire even more quickly than the previous example.
What age is the average millionaire? ›
Sometime around age 50, the average American can now expect a household net worth exceeding $1 million. How did so many 50-somethings become millionaires? Household wealth swelled at a record pace during the pandemic.
Can you be a millionaire at 25? ›
Let's be real: becoming a millionaire from scratch by the age of 25 (or ever) doesn't exactly come easy. It takes incredible dedication, relentless work ethic, a keen vision and, more often than not, a healthy side serving of luck. And it takes discipline — not only in your work life but in your life-life.
Is 35 too late to become a millionaire? ›
This may seem daunting, but the truth is, it's never too late to start. For example, if you are 35 years old and just starting to take control of your finances, you can still reach millionaire status by the time you're 62, which is before normal retirement age.
Is it true that 90 of millionaires make over $100 000 a year? ›
Choose the right career
And one crucial detail to note: Millionaire status doesn't equal a sky-high salary. “Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.”
What do 90% of millionaires do? ›
90% Of Millionaires Are Made In Real Estate - 100% Of Billionaires Are Made HERE.
How common is a millionaire? ›
Millionaires comprise about 8.8% of the American population. The average net worth of a millionaire in the U.S. is $2.2 million, according to Charles Schwab's 2022 Modern Wealth Survey. New Jersey boasts the highest rate of millionaires, with nearly 10% of households having a net worth of $1 million or above.
Is being a millionaire still rich? ›
After all, $1 million is a lot of money. If you have that much, it's assumed that you're doing very well. That was true in the past, but not as much any more. While that much money provides financial security, it doesn't have the buying power that it used to.
No matter how much their annual salary may be, most millionaires put their money where it can grow, usually in stocks, bonds and other types of stable investments. Millionaires put their money into places where it can grow, such as mutual funds, stocks and retirement accounts.
How much do I need to invest to make $1,000 a month? ›
Calculate the Investment Needed: To earn $1,000 per month, or $12,000 per year, at a 3% yield, you'd need to invest a total of about $400,000.
How much money do I need to invest to make $500 a month? ›
Some experts recommend withdrawing 4% each year from your retirement accounts. To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.
Do most millionaires make over $100 000 a year? ›
Here are the cold, hard facts: Almost 7 out of 10 millionaires (69%) did not average $100,000 or more in household income per year—and (get this) one-third of millionaires never had a six-figure household income in their careers.
How much money do you need a year to be a millionaire? ›
Putting aside someone's $40,000 in take-home pay every year—and earning that 10% return as described above—will get you to millionaire status in about 15 years. Halve those savings and you're still only looking at 20 years. It will take more work for sure, but it's a lot faster than 51.
How much money a month to become a millionaire? ›
If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
Is 45 too late to become a millionaire? ›
Think it's too late to retire rich if you don't have savings in your 40s? Think again. With focused effort, it's possible to go from financially strapped to millionaire status within a decade or so.
