Here’s the Surest Way to Someday Become a Millionaire

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Lean on automatic investments to help you reach millionaire status. Read on to learn how. 

If you want to become a millionaire, there’s a proven path to do it. If you follow a few simple steps, you will almost assuredly end up with a seven-figure brokerage account balance. Here’s what they are.

1. Calculate the amount you need to invest based on your age when you get started

Investing is the surest path to becoming a millionaire because when you invest you do not have to earn every dollar — or even most of the dollars — of your million. Your money earns money. As you make a profit on your investments, that can be reinvested so your profits grow or compound.

The earlier you start investing, the more compounding works for you and the less you have to personally put aside in your savings account to become a millionaire. But the key is to figure out how much you personally need to invest and your timeline for hitting millionaire status.

You can use the calculator at Investor.gov to figure this out, and the table below also shows the necessary monthly investment for people with different timelines. It assumes you earn a 10% average annual return.

If you have a short timeline, finding the necessary amount of money each month may be really hard. But if you have many years until you want to become a millionaire, it will likely be more affordable to invest the amount you need.

2. Automate your investments

After calculating the amount of money you need to invest based on your age, there’s another crucial step to take. You should arrange to have that money transferred directly into an investment account from your checking account on the days you get paid.

If you make your investing automatic, then saving for your future will be the status quo. You’d have to make an extra effort not to do it. If you instead try to manually invest each month, it may be too tempting to skip a contribution. If you have the money transferred right when it comes into your account, you also won’t be able to spend it on other things.

This will maximize your chances of actually investing the necessary amount, which means you’ll easily be able to stay on track toward millionaire status.

3. Invest wisely

You’ll need to earn the rate of return you projected in order to successfully become a millionaire. That means you need to make wise investments.

If you pick individual stocks, you may be able to earn more than a 10% average annual return if your investments perform well. But this also involves taking on added risk and you need to be sure you have a sound investment strategy.

You can also take the simple approach and invest in an S&P 500 index fund. The S&P 500 is a financial index made up of around 500 of the largest companies in the U.S. and it has historically earned a 10% average annual return for many decades, so there’s not a huge risk of your investments underperforming if you leave your funds invested for the long term.

If you take these three simple steps, it’s an almost surefire recipe for becoming a millionaire. Get started now, because the longer you wait, the more you have to invest monthly to hit your ultimate target.

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