With the help of compound interest, steady saving, and a bit of patience, you too could join the millionaire club.
Lyn Alden, an investment and finance blogger, has done the hard work of calculating just how much you’ll have to put away each month to reach the millionaire mark in 25 years.
Now, depending on your appetite for risk, and how much the markets smile upon you during your investment period, your rate of return could vary quite a bit. Alden has laid out the monthly savings figures for a range of possibilities.
The chart has already taken inflation into account, so you don’t have to worry about factoring a weaker dollar into account. Alden explains:
“I made the matrix inflation-adjusted, using an assumption of 2.5% annual currency inflation over the period. For context, the US Federal Reserve aims for 2% inflation per year.
“So when you see a million dollars on the table, it means a million dollars in terms of today’s purchasing power rather than like, the less-valuable inflated Monopoly-money of the future.”
If you aspire to make a million by 2042, put down the scratch-off tickets, study this chart, and then devise your investment and savings plan of attack.Lynalden.com
If you’re a very conservative investor, or the markets play hard to get over the next quarter-century, you’ll need to sock away $3,000 a month to accumulate a million, given a 4% annual return. If you’re more aggressive, or have been blessed with hedge fund king’s curious knack for eluding down markets, you’ll only need to save $750 a month, assuming a 14% annual return.
So, if you aspire to make a million by 2042, put down the scratch-off tickets, study the chart above, and then devise your investment and savings plan of attack.
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