A: Becoming a millionaire is a goal of many. But getting there takes a plan that requires daily sacrifice.
Measuring how you'll need to save each day to reach the seven-digit club depends on many variables. The biggest what-if is how much of a return you get on your money as you save.
Assume an investor can get an 8% average annual return on their money, compounded monthly. Reaching $1 million in 20 years would require $1,697 to be saved and invested each month, or roughly $56 a day.
This is an oversimplification. There will be taxes to pay along the way on dividends and any capital gains that might be incurred. And due to inflation, being a millionaire in 20 years will be less impressive that if you were one today.
With even with those caveats, getting to a million take a huge amount of sacrifice few could tolerate. The average annual household income is $50,000, so being a millionaire calls for saving about 40% of that.
USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.
TRACK YOUR STOCKS: Get real-time quotes with our free Portfolio Tracker
Follow Matt Krantz on Twitter: @mattkrantz.
No comments:
Post a Comment