You can be rich in many areas of your life, but there’s something about having a million bucks in the bank that is just well, impressive. The title of “millionaire” has a nice ring to it, you know?
And it turns out, even if you don’t have a high income or rich parents you too can become a millionaire. You just need to save and invest.
It makes sense of course – you put a little away each week, invest it in the stock market and eventually, that sum will add up to a million dollars.
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So exactly how much money do you need to save (and invest) each week if you want to have $1,000,000 saved up by the time you reach the retirement age of 67?
We haven’t crunched the numbers – but the people at personal finance website NerdWallet have and they shared the results with CNBC.
Using four starting ages, and going off a conservative return rate of six percent per year compounded annually (meaning nothing is withdrawn and all the returns are reinvested) they’ve come up with how much money you’d need to put away depending on if you start at age 23, 30, 35 or 40.
As with most things, the earlier you start, the easier it is.
Age 23: $415 per month (or $97.77 per week).
Age 30: $651 per month (or $150.23 per week).
Age 35: $912 per month (or $210.46 per week).
Age 40: $1,300 per month (or $300 per week).
NerdWallet’s calculations (which are based on US dollars) show that the earlier you start to build your investment portfolio, the more time your money has to compound and grow.
This accumulative effect means that at 23 you only need to put away $219,535 of your own money over those 44 years, and the remaining $780,955 is all return on your investment. Conversely, if you started at 40, and put away $1,300 each month, $422,500 of that $1 million is your invested money and just over half is the profit.
Either way, it shows it’s better to start investing sooner, no matter how much you manage to put away.
