Things You Must Know About Becoming a Millionaire
Most Millionaires Are Made, Not Born
You Don’t Need a High-Powered Graduate Degree
Behold the Magic of Compounding
Which savings strategy will get you to $1 million in the bank by age 65, assuming 8% annualized returns: Save $200 a month starting at age 20 or $800 a month starting at 40?
Wealth creation lies in compounding. Each year, your money can earn interest on both the original amount and the interest earned from the year before. More years equals more interest, and more interest means faster asset growth and an easier path to $1 million
You Don’t Need to Be a Stock Market Wizard
When it comes to investing, most millionaires still have a lot to learn.
You don’t have to study finance or memorize stock tables to make a million. In fact, 58% of millionaires say they have a “great deal” to learn about investing, according to Spectrem Group, and 19% admit to knowing little to nothing about investments. This should give some comfort to those of us with index funds and Investing for Dummies books.
Even the Great Recession Couldn’t Knock Millionaires Off Course
There are more households in the U.S. with $1 million in investable assets now than there were in 2006, before the Great Recession hit.
Millionaires have fared well over the past decade-plus since the housing bubble burst and financial markets cratered. Indeed, the ranks of America’s millionaires has increased for 11 years in a row.
You Don’t Need to Have a High-Paying Job to Become a Millionaire
You have a good but not high-paying job. Let’s say, for instance, that you write about millionaires on the Internet. You should forget about ever becoming a millionaire, right?
Actually, you should stick to your savings goals no matter what you do for a living. True, 13% of people with a net worth of $1 million-plus are managers, but 11% work in education, according to Spectrem Group. According to The Millionaire Next Door, about two-thirds of millionaires are self-employed, often in everyday professions ranging from pest control to property management.
The Sooner You Start Saving, the Better
It’s never too late to make a million, but it takes more money as you age. If you’re 45 and have no savings, you would need to put away $1,700 each month in order to retire at 65 with a cool million (assuming 8% average annual returns).
In other words, the longer you wait, the steeper the climb. Compare our 45-year-old, who will need to save $20,400 a year to hit $1 million by age 65, with a 25-year-old, who will need to save $3,445 a year to reach the same mark.
Money Can’t Buy Happiness
The cliches happen to be true. Money can’t buy love, and it can’t buy contentment either.
A 2018 study out of Purdue University found that people generally get happier as they make more money, with an “optimal” range falling between $65,000 to $95,000. After that, at least as far as happiness is concerned, it doesn’t really get better.
Certainly, making more money than that will provide satisfaction and additional security. Instead, the study merely suggests that, say, a nurse making $95,000 a year is likely to feel just as happy as a higher-paid surgeon. (All the more reason why registered nurse ranks high on our list of the best jobs of the future.)