If you ask someone what rich means, they’ll say, “To be a millionaire.” Anyone can become a millionaire. Invest $1000 per month for 25 years. Get 10% return and you’ll have $1.2 million. You’re a millionaire.
Invest $1000 Per Month
I know a lot of you are saying this is too much and you can’t afford it. You can invest lower amount but it will take you longer. If you want to retire earlier than 25 years, you’ll have to invest more money. Plug in your numbers on bankrate.com compound calculator and come up with the right number for you. My number was $2,000 for 20 years for $1.5 millionaire. What’s yours?
Earn More Than You Spend
The concept is simple but not easy. You can spend whatever you want as long as it is less than what you earn. If you want to spend more, you have to earn more money. Think of ways in which you can earn more money.
Don't Put All Your Eggs in 401k/403b
I saved and invested aggressively in stocks and real estate. I was able to break through $1.5 million in savings in 19 years. There was only one problem. The money was all in my 403b. Consequently, I have to wait until age 59 1/2 to withdraw without incurring a penalty. By spreading your savings into an after tax brokerage firms, such as Fidelity or TD Ameritrade, you can access your money and retire earlier.
Invest Aggressively
The average annual returns are as follows:
- Stocks: 10%
- Bonds: 5%
- Real estate: 10.5% for REITS (real estate investment trusts)
- Business: hard to say due to variation but you’re investing in yourself
- Bitcoin: 93.8% since inception
I’m not suggesting you run and buy bitcoin. However, you can see the different investment vehicles where you can maximize your return.
By investing smart, you can be a millionaire in 25 years or less.
4% Rule
Once you have $1.2 million, you can withdraw 4% without touching the principle. This means, you won’t have to worry about running out of money in your retirement. This also means you can retire while you can still walk and live happily ever after.