Most people dream of becoming a millionaire in their lifetime. Here’s the thing, unless you have Beyoncé level talent or a Mark Zuckerberg level idea, that amount of money isn’t just going to fall in your lap, it requires a heck of a lot of saving to get there.
Some people reach “millionaire” status in retirement after decades of saving, but what if you want to be a millionaire a lot sooner than your retirement age, say, in ten years?
We used CNN’s Millionaire Calculator to try and figure out how much you would need to be saving, and the figure is pretty daunting. Assuming that you start with zero in your savings, and that your money is bringing you a 6% annual return (the average annualized return of the S&P 500 index over the last 90 years has been 9.8%, so we figured that was pretty safe), and you’ll have to sock away a whopping $6,000 a month. Do that, and you’ll be a millionaire by July 2028.
Now, most people don’t make $6,000 a month, let alone have the ability to save that much, but the takeaway is simple, save as much as you can, and start as early as you can, because despite how it might seem based on popular culture, there is nothing easy about becoming a millionaire.
Here a are a few simple ways to start building up your nest egg immediately:
- Sign-up for an app like Digit which helps you save money without evening thinking about it. The service monitors your checking account and transfers money systematically into savings, so you won’t even miss it.
- Contribute to your company 401(k) plan, and utilize services like Blooom*, a robo-adviser that can help you maximize your returns. There is no minimum investment in Blooom which makes it a great place to start if you are dipping your toes into starting to save for retirement.
- Take advantage of tax breaks that come with contributing to a Roth IRA or a traditional IRA.
- Use micro-investing apps like Stash, which allows you to buy fractional shares of stocks including Amazon and Tesla. You can start with just $5!
*Blooom is limited to the funds available in your employer-sponsored retirement account. There is no guarantee Blooom can or will reduce your fund expenses.