While being a millionaire may not be as exclusive as it once was, it’s still nothing to sneeze at (or even hiccup at). Also, while I sometimes discuss in my classes the habits and behaviors of millionaires (trying to correct many common misconceptions), I try each time to get the point across that financial success is not tied to our net worth, our annual income, or our lifestyle. It is more of a direction than a destination. Are we progressing toward the financial goals we’ve set for ourselves? If the answer is yes, than we’re exhibiting financially successful behavior.
I repeat that last point before proceeding:
Financial success is not tied to our net worth, our annual income, or our lifestyle but, instead, our financial direction.
I make that point (emphatically) before sharing the following link.
If you’ve ever wondered what you’d need to do to become a millionaire, check out the Bankrate.com “Save a Million” online calculator at www.bankrate.com/calculators/savings/save-million-calculator.aspx. It will give you the answer to how much money you would need to invest each month in order to achieve millionaire status by a certain age.
If you’re unsure about what to use for the “Expected Rate of Return,” look at the S&P 500 average Annual Rate of Return (MoneyChimp’s historical data is easily accessible at www.moneychimp.com/features/market_cagr.htm) and go with its average. Don’t adjust for inflation if you are just interested in reaching the $1M mark. If you want to see what will be the equivalent of $1M in today’s dollars, click the “Adjust for inflation” box and use the resulting rate.
If you’re young, you may be surprised to see how little it takes over time to earn your million dollars.
Regardless of what you decide to do with this information (play around with it, share it, dream about it, plan for it), I hope you at least have made the commitment to invest something every month. If you can’t get to your monthly “millionaire” investment amount right now, invest something… anything. Your success in the long run is much more about your commitment today than it is about your budget tomorrow.
Good luck, have fun, and Happy Saving and Investing!