![]() ![]() You might think a relatively small inheritance - e.g., $25,000 to $75,000 - won’t go too far, but you can really cash in by allocating the funds wisely. “You don’t need to be the next Richard Branson to make your first million,” said Grant Bledsoe, founder of Three Oaks Capital Management and blogger at Above the Canopy. Invest less or earn a lower return, and it will take longer to make your first million. In practical terms, if you contribute $19,500 annually to your 401(k), and earn 7% by investing in an average stock mutual fund, you will be a millionaire in 23 years. ![]() As long as the money remains in the account, it grows and compounds tax-free.So if your income is $60,000, and you contribute $19,500, you’re only taxed on $40,500. You gain an immediate reduction in your taxable income for any contribution to the 401(k).Enroll in your employer’s program and invest the maximum amount allowable by law - that’s $20,5, and an additional $6,500 catch-up contribution for those over age 50.Here’s how you can use it to make your first $1 million: The government gives you a wealth-building gift: the 401(k) account. If Henry chooses lower-return investments, such as money market funds or certificates of deposit (CD), he’ll have to save thousands of dollars more to compensate for those investments’ lower annual rates of return. If he starts later, he’ll need to save and invest more. If Henry starts at age 25, by age 61, he’ll be a millionaire. For example, you can calculate that if you invest $500 per month in a diversified stock market index fund - such as the Fidelity Total Market Index Fund - and earn an average 7 percent return - assuming a 2 percent inflation rate - you will be a millionaire in 36 years. Todd Tresidder, former hedge fund manager and owner of wealth-building website Financial Mentor, developed a calculator to help with this. You can find out how much you need to invest, for how long and at what return with a simple calculator. But it’s also a matter of knowing how much to invest, in what types of mutual funds and for how long. It’s well documented that investing in the stock market over many years, reinvesting your dividends and letting that money grow and compound can make you a millionaire. Getting rich can be a matter of mathematics. Craft a solid game plan by incorporating some - or all - of these 12 tips into your lifestyle and get on your way to making your first $1 million. If you’re serious about becoming a millionaire, it’s time to start making some major moves. When properly planned, a solid work ethic, responsible spending habits and savvy investing can grow your fortune to $1 million - and far beyond.Īchieving this goal will require you to make some sacrifices, but the feeling of financial security is priceless. Your annual income certainly plays a role, but the way you allocate your funds actually matters more than your salary. Student Loan Forgiveness: Biden’s ‘Fresh Start’ Plan Deemed $34 Billion Success - How It Benefits Borrowersįind: With a Recession Looming, Make These 3 Retirement Moves To Stay On Track ![]() In fact, you don’t even need a winning lottery ticket or a trust fund to join this exclusive club. At first glance, building a net worth of $1 million might seem unattainable, but it’s more realistic than you think. ![]()
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