Earning your first million dollars sounds like a real celebratory event, and it is likely an appealing milestone for many young and/or middle-aged people looking to settle down at an acceptable age.
Others, however, look at that first million as a way to support their free lifestyle while also leaving something for the next generation to come, but unless one is born into a life of wealth and luxury, attaining this amount of money is much easier said than done.
Clever investing, however, can make this process a lot easier, albeit a bit longer, but when your options are scarce, you go for what you’re able to take.
Brian Stivers, a financial advisor and founder of Stivers Financial Services states that there are 3 important elements to investing, those being the amount contributed each month, the return rates, and exactly how long do you plan on investing for.
Once these calculations are all done, a rough timeframe is provided to show exactly how long it would take to earn the desired amount of money investing a certain amount that fits one’s ability.
Stivers accounts for 3 different return rates, ranging from 3% to 9%, with the former being largely composed of bonds, while the latter presents a much more aggressive investment portfolio comprised largely of stocks, but requiring less of a monthly input than the safer options.
A 40-year-old looking to make their first million would have to invest $2,250 each month if going for the safer option, $1,500 if combining both bonds and stocks with a high return value, and only $950 if they take their chances with the stock market and go on to the races.
The early investor gets the dollar
Naturally, the earlier one starts, the better, with research showing that a 35-year-old looking to invest towards earning a million by 65 would have to invest much less than a 40-year-old.
While this does seem like common sense, a 5-year gap creates a huge impact on just how aggressive one’s investments need to be.
Of course, even with a $240 per month rate if you start investing at 25, everyone has monthly expenses like raising their child or caring for their parents, which are costs that add up significantly over time.
So if you simply can’t afford to set aside that much money, investing apps like Acorns and Robinhood are here to save the day, offering to invest your daily change, while the latter allows for fractional stocks to be invested in, similarly to how cryptocurrencies work.
Other platforms offer Robo-advisors to help you determine which investments are safe based on the set risk tolerance, even adjusting your investment portfolio as you near your goal.
Investing is not a quick way to earn money, but it is a tried and tested one, and once three main factors are considered: rate of return, how much to invest each month, and timeframe, anything is possible if approached carefully and with great attention to detail.
Small steps make a difference, and the sooner one starts working towards their first big milestone, the more time their money will have to grow exponentially