Strategy to Shorten the Time to be a Millionnaire
In the previous section, you have learned that it is possible for you to become a millionnaire. In this section, you will learn how to shorten the time to become a millionaire.
Say, you are willing to invest $20 every month in a stock or a bond that on average the growth is about 1% a month. My question is simple: when are you going to become a millionaire?
In how many months (or years) you will be able to accomplish your goal to become a millionaire?
To see more detail, look at the chart and the spreadsheet on when your investment will be more than a million dollar.
You will be able to pay reach your 1 million goal in 625 months, or 52 years.
That is why you need to start early in your investment. At least, start to educate your children to invest.
But I am too late to become millionaire, you may say. Is it possible to become a millionaire earlier than 52 years?
If you want to reach your goal to become millionaire earlier than 52 years, there are three methods.
- You increase your monthly investment, or
- You find better investment than just 1% interest rate, or
- You put initial investment (rather than zero).
Which of the three methods is the best way to reach the goal of becoming a millionaire in shorter time?
Say, you put initial investment of $1000, double the interest rate into 2% per month and double your monthly investment into $40, how long will you need to invest in order to become a millionaire?
Table below can be obtain from the spreadsheet tool that you have made.
|
Your investment |
How long to become a millionaire? |
|
Base Scenario:
|
52 years (625 months) |
|
Scenario 1:
|
48 years (585 months) |
|
Scenario 2:
|
29 years (349 month ) |
|
Scenario 3:
|
46 years (556 months) |
|
Scenario 4:
|
24 years (294 months) |
Clearly, the combination of the three methods above will produce the best results. You can cut the time to become a millionaire to a half (from 52 years to 24 years).
Among the three methods above, higher percentage of interest rate is the best way to reach your goal in shorter time.
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