As I was telling my friend about how my primary goal is to be a millionaire, he looked at me as if I was crazy and simply wished me luck. Although being a millionaire is not easy, I sincerely believe it is possible. The purpose of the article is to show how an average Joe like myself or readers of my blog could be a millionaire.
First of all, let me clarify that it is extremely difficult to become a millionaire before 50 by simply saving cash. Assuming that you start working around 20, you would somehow have to manage to save over $30,000 annually. I believe this is not very attainable for most middle-class.
In order become a millionaire before 50 without living with your parents or winning a lottery, you need to invest your savings and get compound returns. It is surprisingly difficult to find a good video about compound interest but here is a clip:
With the help of compound interest in your investment, becoming a millionaire becomes a lot more achievable. You can use online calculators to test out various assumptions to see how you could become a millionaire.
Assuming that I add $500/month to my current 80K investment and earn 10% total return, I should be a millionaire around 50. 10% total return may be somewhat ambitious but considering that historical return (CAGR) of S&P 500 is about 10%, it should be possible. Besides, I’m planning to save more than $500/month as my income increases over time, I should be able to be a millionaire before 50.
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