Are you on track to become a millionaire? If you’re regularly saving and investing, you may already be well on your way to reaching that milestone by age 67.
But if you want to speed up the process, putting away more each month will help you get there sooner.
CNBC Make It used CNN Money’s helpful millionaire calculator to estimate when you would become a millionaire if you’re able to contribute $500 to an investment account each month, assuming that you’re starting from scratch with zero savings.
- With a 4 percent rate of return, you’d become a millionaire in 51 years, by 2069.
- With a 6 percent rate of return, you’d become a millionaire in 40 years, by 2058.
- With an 8 percent rate of return, you’d become a millionaire in 33 years, by 2051.
- With a 10 percent rate of return, you’d become a millionaire in 29 years, by 2047.
Want to get rich sooner? If you can hack it, putting away $2,200 per month would make you a millionaire in 20 years, and $6,000 per month would get you there in 10.
These differences speak to the power of compound interest, in which any interest earned accrues interest on itself, and a little money invested now can end up being a lot of money later. In short: If you want to become a millionaire, the earlier you start investing, the better.
This calculation doesn’t account for the many variables that can affect your wealth over several decades, including windfalls, emergencies and rises or dips in the market. But it can give you a good idea as to whether or not you’re saving enough to retire comfortably.
Of course, saving hundreds or thousands a month is an ambitious goal. Even $2,100 a year is more than most Americans can manage. But getting into the habit of putting away any amount will be great for you in the long run.
To get started, here are a few simple, low-stress ways to start investing:
- Sign up for your employer’s 401(k) plan and take full advantage of any company match, which essentially gives you free money
- Contribute to a Roth IRA or traditional IRA, which are both individual retirement accounts that offer tax breaks
- Use micro-investing apps such as Acorns, which help you begin by investing small amounts of what it calls your “spare change.” The app rounds up your purchases to the nearest dollar and automatically puts your coins to work
- Try other apps that aim to make investing simple
- Consider automated investing services known as robo-advisors that can help you out no matter how much you have in the bank
- Research low-cost index funds, which Warren Buffett recommends