One-Step Millionaire Life Hack
This will change your life, I promise. I have conversations about money regularly, which is where I find inspiration for blog posts. Most of the time it is me defending my ideas about money and the “strange” way I do things…to me it makes sense. 🙂
When it comes to being a millionaire we always hear people say, “Save for 40 years and your 401k will compound and you will have all this money in the bank”. Well, I learned a valuable lesson when I read the book The Automatic Millionaire, and it shaped my saving and investing strategy into what I am about to share with you.
I saved for 5 years and if I don’t invest another penny into my 401k I will be a millionaire at the age of 65
Based on the numbers, when I “retire” at 65 I will have a million dollars in my retirement account, if I can achieve an 8% yearly rate of return (compounding interest). My thinking is, at that point in my life, if I get a 6% return on 1 million dollars each year I will have a steady 60k coming in yearly…not a bad life.
How did I do all this by the age of 27?
- While I was paying off debt (student loans) I saved 3% and my employer matched 3%, so I was saving 6% towards my 401k.
- Over the next 2 years (saving for condo) , I increased my 401k amount to 10% + 3% matching.
- Once I was debt free at 25 (no student loans or mortgage) , I maxed out my 401k to 18k per year.
My goal was that by the time I turned 27 I wanted to have 70k in my 401k. The reason is because if I achieve a rate of return of 8% annually, by the time I am 65, I will have over 1 million dollars in the bank.
If you have, know, or are a college student or recent grad this blog post alone will set you up to be financially stable. (Share this post)
One Step Millionaire Life Hack:
I played around with this 401k calculator for about 15 minutes and figured out that I needed 70k by the age of 27 with a rate of return of 8% to reach millionaire at 65. (It is easy to use)
Related Post: Quick Guide: Net Worth
Now is the time to take risks!
The real kicker that I try and explain is that I am 27, essentially I have 40 years to take risks and hit it big...at the end of that I have 1 million dollars waiting for me. Now I can take as much risk as possible and worst case scenario I will have my 401k to fall back on and do not have to put any more money into it.
What did the numbers look like for you? The reason I wrote this post was not to boast about what I have done, but to encourage you that anything is possible. Just because I am on a different path does not mean I am lost. There is a different way to do things and a different perspective then what society portrays sometimes.