Nowadays, there are many investment applications that make the process of increasing wealth even easier and more accessible to more people with different needs.
How easy is it for someone to become a… millionaire?
According to Brian Stevers, financial advisor and founder of Stivers Financial Services, the answer is inextricably linked to what we call "investment."
In particular, in order to raise $ 1 million by the age of 65, one must take the following seriously:
- Monthly investment amount
- Yield percentage
- The amount of time one has at one's disposal in order to achieve one's goal
Below, you can see exactly how much money a person, around 40, needs to invest in order to become a millionaire by the age of 65, when he is about to retire. In this case, the person will have 25 years to become a millionaire.
Suppose we take into account 3 different rates of return: 3% (a conservative portfolio mainly of bonds), 6% (combination of stocks and bonds) and 9% (a portfolio that is heavy in stocks or contains indices or a return on equity of about 9% average).
How much money should a 40-year-old invest in a month for 25 years, in each of the above 3 different cases?
If a 40-year-old chooses to invest in investments that yield 3% annual return, he will have to invest $ 2.250 a month to raise $ 1 million by the age of 65. If instead, in case the investments yield 6% annual return, he will have to invest $ 1.500 a month so that, in 25 years, he will be considered a millionaire. But in the case of investments with 9% annual return, a 40-year-old will need to invest $ 950 a month for 25 years in order to finally reach the $ 1 million target.
According to CNBC, it was found that respectively, a 35-year-old to become a millionaire at the age of 65, will have to contribute $ 590 a month for investments with an average annual yield of 9%. This amount is reduced by $ 360, compared to the equivalent that a 40-year-old would have to invest each month. In fact, if you start your journey even earlier to earn $ 1 million, or about $ 25 million, with an average yield of 9%, you will need to invest just $ 240 a month for 40 years.
Nowadays, there are many investment applications and companies, thanks to which the process of increasing wealth becomes even easier and more accessible to more people, with different needs. Acorns, for example, is an American financial technology and services company that specializes in micro-investments and robot investments. Other applications, such as Robinhood, allow you to invest in fractional stocks for as little as $ 1. But the choices do not stop there. Some applications, such as Wealthfront and Betterment, use robotic advisors to help you determine which investments make sense to you based on your income, goals, and retirement date.
SOURCE: newmoney.gr