It's really not that hard to get to a millionaire dollars with some smart investing moves now and some time which is on your side. In this article you'll learn what moves you should take now to ensure you are a millionaire in the future.
I've been interested in investing for as long as I can remember. In my first experience I opened a savings account to earn interest. By the time I was a early teenager I was buying Certificate of Deposits. As I progressed I bought my first mutual fund around 18. At some point in college I bought some stocks and even my first home. By my mid 20's I got into the whole real estate investing scene and I still continue to invest to this day.
A couple events in my life really triggered my interest in investing. I remember sitting down with my grandfather who was the CEO of a credit union and he was telling me that if I started early and managed to get $10,000 invested by my early 20's it could easily turn into over a million dollars by the time I was ready to retire. That really resonated with me. Once I heard that I absolutely wanted to do it.
Many years later, I was probably a senior in high school and I attended a party at this amazing house over looking a river in the woods. It was an absolutely stunning property. I asked my friend how does the guy who owns this house afford it. He said, he's a stock investor. At that point I said to myself, I have to learn more about stocks and make it a huge part of my future.
So here I am many years later, 33 years old. I'm still investing and well on track to hit the million dollar milestone in the future.
Unfortunately many other millennials are not so fortunate. The 2008 'Great Recession' destroyed the hope of so many millennials. It made getting out of their parents house harder. It made finding a decent paying job harder. Worst of all it made them scared of investing. Many millennials don't save. Many even avoid the stock market at all cost. It's very unfortunate.
During the 2008 'Great Recession' I was heavily invested in the stock market and you know what? I survived. I not only quickly recovered but I've enjoyed huge gains since then and they are still growing to this day.
Here is a fact. If you began investing $10,000 a year with a 7% return (which is very reasonable) by the time you leave college at 22 you will earn $4.7 million by the time you retire. Even if you're getting a late start you can still be a millionaire. In fact, even if you were 40 years old and did the same you would still reach $1 million by the time you retire.
Hopefully that is inspiring enough to get you interested in starting, but just getting started is a huge barrier to entry. You may be ready to go, but have no idea where to start. No problem, here's how you get started:
1. Company Retirement Plan
If you work for a company they should have some kind of retirement plan you can enroll in. (If you are self employed you can ignore this step and move onto #2)
The most common one is the 401k. You may already be enrolled in it. If you are that's awesome! Most companies will match what you put in up to a certain percentage. For example a common scenario is:
You put in 6% of your paycheck. Your company puts in 3% of your paycheck from their own money. It's kind of like free money from your employer.
That's a total of 9% of your income being stashed away for you. The best thing about it is that it's an automated process, so you don't even have to think about it or even see the money they're saving for you.
You're goal should be to put about 10% of your income into your company retirement plan.
Now, what should you invest in? The best option for most people is to invest in a market index. The most common one is a S&P 500 Index fund. These funds have very small fees and simply follow the whole stock market which history has shown grows on average 7% per year. 7% is the number we used in the calculation above to determine how you could become a millionaire. There are other options but if you're just starting out a S&P 500 Index fund is your best starting point.
2. Roth IRA
If you work for a company put another 5% of in your income into a Roth IRA that you open on your own outside of work. If you are self employed and don't have the company retirement plan option your better off anyway putting 15% of your income into the Roth IRA.
What's awesome about a Roth IRA is that that grows tax free and you pay no taxes on it when you withdrawal at retirement. It doesn't get much better than that!
Again as far a what to invest in, you're best bet is to begin your investing with a simple S&P 500 Index fund for solid and safe returns.
So, now you're investing 15% of your income. By this point alone you are creating a secure financial future for yourself and it only gets better.
3. Personal Investment Account
Finally the last step is to open you're own personal investment account and make sure you're depositing 5% of your income to it. Luckily for you there are now lot's of apps that allow you to easily and automatically invest in the stock market through diversified funds, such as:
If you're really adventurous you can even try Robinhood which allows you to invest directly in the stock market with no fees at all! Robinhood is absolutely the best way to get started in individual stock investing.
Your personal investment account not only helps secure you future retirement but also gives you a great tool to tap into in the case of emergency instead of that dreaded credit card. It may start out as a $1,000 emergency fund but will quickly grow into 3, 6, or 12 months of living expenses and beyond.
That's all it takes! A little effort and a little sacrifice of income and you will be millionaire at retirement. What's stopping you? Get out there, invest, and join our army of future millenial millionaires!