Retiring a millionaire is realistic on any income. In this video, I give the education and plan on how to do it!
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00:00 Start Here
00:50 Step 1: Understand Compound Interest
02:57 Step 2: Invest In Index Funds
04:30 Step 3: The Sequence of Investing
06:56 Step 4: How Much You Need To Invest A Month To Retire A Millionaire
08:16 Step 5: Find Ways To Increase Your Investment Rate
09:17 Step 6: Be More Aggressive When You’re Young (aka now)
11:15 Step 7: Stop Putting It Off And Start Today
Retiring a millionaire is actually a realistic thing to do on any income is you understand the basics of investing, compound interest, and the importance of taking action now. In this video, I give a step by step guide on how to retire a millionaire, or at least retire with some money.
Step 1: Understand Compound Interest
It is important to understand that the majority of every day people who are millionaires don't reach a million dollars by working hard, but they make it through something called, "Compound Interest," which is getting interest on your investment and the interest you gained off the investment. If you are going to retire a millionaire, you need to start getting your money to work for you by investing it in the stock market and allowing it to compound over time.
Step 2: Invest In Index Funds
The surest path to reaching a million dollars by retirement is investing in index finds over stocks. Stocks are when you buy a single company and index funds are a basket of hundreds of companies. The benefit of index funds over stocks is that you are not depending on a single company's performance, but have hundreds of companies, which historically averages out to a 10% return a year. Investing money in the market through index funds and allowing it to compound over time will help you reach a million dollars by retirement.
Step 3: The Sequence of Investing
In order to get the biggest bang for you buck, there is a certain sequence you should consider following when putting money in various retirement accounts. The first place to put your money is in a 401k or 403b up to the employer match because this is like "free money" from your employer. The second place is a Roth IRA and try to max it out because this is the most tax advantaged account. The third place is back to the 401k or 403b and try to max that out because this is a pretax investment so you can contribute money to it tax free. The final place is a normal brokerage account so your money will continue to grow in the market.
Step 4: How Much You Need To Invest A Month To Retire A Millionaire
In order to retire a millionaire, you need to invest a certain amount of money depending on your age and these are the numbers:
0-24: $120-$175
25-29: $190-$280
30-34: $310-$460
35-39: $510-$770
40-44: $850-$1315
45-49: $1500-$2350
50-54: $2700-$4500
55-59: $5500-$11000
If you invest that much money in an index fund with an annual return of 10% a year, you should reach a million dollars by the age of 65.
Compound Interest Calculator: www.investor.gov/financial-to...
Step 5: Find Ways To Increase Your Investment Rate
Depending on your income and age, contributing that amount of money above might seem unrealistic; however, I believe that there are areas of everybody's budget that can be lowered or completely cut out. If you are savvy you can find ways to save money and contribute that to your retirement.
Step 6: Be More Aggressive When You’re Young (aka now)
Compound interest is more exponential when you give it more time, so it is important to be more aggressive when you're young because the more time it has to grow, the less money you will need to invest. If you choose to invest more when you're young, then you won't have to invest as much in the future.
Step 7: Stop Putting It Off And Start Today
As I explained in this video, the average person can reach a million dollars by simply investing their money in the market and allowing it to grow over time through compound interest. This is the most realistic way to reach a million dollars by the time of retirement, but it requires you to take action immediately because each day you put off is a one day less your money has time to grow. It is important to take action and stop putting it off so you have the maximum time for your money to grow.
**I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You are responsible for the financial decisions that you make. Links above are affiliate links where if you click and order, I will receive a commission at no cost to you. **