Wondering how much to invest to become a millionaire.
That's exactly what we are talking about in today's video.
I know this is a goal for a lot of people, so I'm going to break down
how I was able to do it and the steps you can take to become a
millionaire as well.
So let's dive right in.
All right, we are going to look at the actual math on how much to
invest to become a millionaire, and I'm going to share my tips on how
I was able to do this.
All right, so let's take a look at this math.
We are going to figure out exactly how much we are going to need to be
investing in order to become a millionaire.
And I'm talking about becoming a millionaire in the sense that your
net worth is a million dollars.
So it's not just that you have made a million dollars but only have
$20,000 in your savings account.
It's the actual net worth.
To give you an example, you would take the value of your home, the
value of your car, if you have any really expensive jewelry, how much
is sitting in your checking in, your savings and your investment
accounts, and then you would subtract out any liabilities.
So any debts that you have.
For example, if you have a mortgage or a car loan or student loans or
credit card debt, you would total up the value of all of your assets,
everything that you own, subtract out all of your liabilities.
That would be your net worth.
So we're talking about creating a net worth of a million dollars.
All right, I want to share my screen with you and show you the math on
how to do this.
All right, here is our calculator.
So let's say we don't have anything in our savings or in our checking
or investment accounts.
It's at $0.
So we're going to leave the initial amount at zero, and then we're
going to say we want to contribute $500 per month, and then I have it
at a 10% rate of return.
The average return for the stock market is 10%, and then I have years
of growth at 30 years.
So if we are contributing $500 every single month for 30 years, at a
10% rate of return, we are going to become a millionaire.
We would be at $1,130,244.
So that is pretty impressive.
But let's say we don't have 30 years to become a millionaire.
Let's say we only have 20 years.
So and since we only have 20 years, we probably have a certain amount
already invested.
Let's say we have $50,000 invested.
So you can see we aren't quite at a million dollars by investing $500
a month.
So let's change that to $900 a month.
That would put us at $1,049,836.
So we need to be contributing $900 per month for 20 years and have an
initial amount invested at $50,000.
Now, let's say we only have 10 years to build up to a million dollars,
and since we only have 10 years, let's say we are starting out with a
hundred thousand dollars.
So we would need to change our monthly contributions to $3,600 a
month, and that is going to put us at just over a million dollars,
$1,008,146.
So you can see the longer timeframe that we have to invest, then the
less money we are going to have to put in every single month.
But you can see not all is lost.
If we have a shorter timeframe to invest, we can start right now and
get our money invested, and that way we still will be able to become a
millionaire.
Let's move to the tips on helping you become a millionaire, and these
are some of the tips that I have used to help me become a millionaire.
The first tip, and I mentioned this before, is to invest as early as
possible and as much as possible, honestly, the earlier we get
started, the more money we are going to have because of compound
interest.
I personally wish I would've realized this even sooner than I did
because I know I would've become a millionaire before age 40.
But nonetheless, I still became a millionaire.
I still got started.
I still invested my money and was able to achieve that millionaire
status.
So if you were thinking it's too late for you to start, honestly, it's
not too late for you to start.
You can start today and work toward becoming a millionaire or even
just becoming financially free.
You may not need to become a millionaire in order to do that.
And I'm guessing you've heard the saying, the best time to plant a
tree was five years ago.
The next best time is today.
That goes with investing as well.
The best time to start was five years ago or 10 years ago, but the
next best time is today.
And honestly, if you want help getting started in the stock market, I
have a free masterclass where I go over how I can help you invest in
the stock market.
I will leave a link to that masterclass below in the description.
The next tip that I want to share with you is to diversify your
portfolio.
I was able to become a millionaire because I was investing in the
stock market and in real estate, but you don't need to diversify
necessarily in the stock market and real estate.
You can at least just diversify in the stock market.
So I'm talking about not just buying one single company and investing
in only that company, for example, only investing in McDonald's
because that is going to be super risky for one thing because if
something did happen to McDonald's, then you would lose your
investment and that would be all of your investment.
So we want to make sure that we are diversifying.
I personally like investing in an index fund, and if you want to know
which one that is, I will leave a link to the video above, you can
check it out later on.
And then I invest in about 10 different individual stocks, individual
companies, and that is the main stock market strategy that I use.
I like to keep that very, very simple.
I don't want to be checking on my stock market investments every
single day.
And another tip to give you when investing in the stock market is to
automate your investing.
This is going to be a game changer.
If we can do this, then we don't have to think about investing.
We don't have to log into our account and make the investments.
It's going to happen automatically in the background.
And I do have another video about this, so I will leave a link above.
You can check it out later on.
But honestly, this tip is really key because if we have to rely on
ourselves to make sure we are investing every single month, then we
may forget some months and then our money is not going to grow as fast
as we would like.
Another tip that I want to share is that I was risky with my
investments in the sense that I took calculated risks.
Not that I was being crazy risky, not knowing what I was investing in,
but I wanted to invest in stocks only.
I didn't want to invest in bonds, and I didn't realize this in the
very beginning.
So I had some investments in bonds, but once I realized that investing
in stocks is going to grow my wealth, investing in bonds is going to
preserve my wealth, I wanted to grow my wealth.
So I put all of my money into stocks, at least the money that I was
investing in the stock market.
So I got rid of my bond investments and switched over to stocks.
I wanted to have more risk and get that higher return.
And honestly, I feel like a lot of people don't really think about
this.
They just think, oh, I can just select a target date fund, for
example, and have some money in bonds and some money in stocks.
And then as I get closer to that retirement date, that fund is
automatically going to start to put more in bonds and less in stocks.
But if we aren't actually going to retire when that target date fund
is thinking, we are going to retire, we're going to have too much in
bonds, and we aren't going to have enough growth from the smaller
amount we have in stocks.
So just be aware of what you are investing in.
Another tip to share is that I now only invest in things that I
understand.
I made this mistake quite a few years ago.
I was talking to my old 401k rep and he recommended me setting up a
whole life insurance policy, and I thought, all right, he knows what
he's talking about.
And so I set up the policy and ended up doing more research later on
and deciding that was not the best route for me to invest my money.
So I ended up canceling that policy and losing thousands of dollars
because I invested in something I didn't fully understand.
So I no longer do that.
I fully understand what I am investing in or I don't make the
investment.
Another thing that I did was to look at my investments, especially my
stock market investments, and see what the fee was with those
investments, the expense ratio.
I wanted to keep my fees as low as possible so I could keep as much of
my own money as possible.
And again, when I was first investing, when I set up that very first
401k at my old job, I didn't understand what the fees were, what that
really meant.
But now that I've done more research, I understand that it's super
important to keep those fees as low as possible.
And we're not talking about 1%.
1% is actually a very high fee.
We're talking about 0.04%
or 0.08%.
That's a really low fee.
And something else that I did was focus on what I was already good at.
So of course, I wasn't instantly good at real estate or good at the
stock market, but I continued to do more research and become better
and better at those types of investments.
I didn't decide to switch what I was investing in or switch up my
strategy.
I continued with what I knew, what I was getting better and better at,
and that actually helped me become a millionaire as soon as I did.
If I would've switched my investment strategy and changed things up, I
would be learning a lot of new things and not having that quicker
success.
For example, I invest in buy and hold real estate properties.
So when I decided to do that, I was kind of tempted to look at fix and
flips.
I had seen some success with some of my other friends and I thought,
oh, could I make some quick money?
But I decided, you know what?
That's not what I want to be doing.
I know how to do buy and hold real estate.
I'm going to continue with that.
And then the same with the stock market.
I was tempted to look at day trading.
I had talked to one of my friends who was successful with day trading
for a while until he told me that he lost big at one point and decided
to get out of that because it was way too stressful.
But I can see that there is a temptation there to make a quick win.
In the end, I decided to put the majority of my effort, the majority
of my money into what I knew was already successful with my buy and
hold real estate properties.
And with the long-term stock market investing strategy that I had, it
can become very, very tempting to switch up our strategies or to hear
a story from someone else that is successful very quickly and made a
lot of money in a very short timeframe.
But honestly, I'm glad I did not spend a lot of time or a lot of money
on those things because by doing what I knew already worked, I was
able to become a millionaire.
And it's not that we can't ever switch our strategies or our
investments, but I think it's important that we get really good at
something first, create that first million, and then we can switch and
change our strategies if we want to.
It's just going to become more difficult for us to reach that million
dollar net worth as early as we could if we just stayed focused on
what we knew was working.
And then one other tip I want to share with you is to keep that
long-term mindset and to delay the instant gratification.
If we are so focused on the quick win or getting rich overnight, we
are going to actually lose a lot of money and probably waste a lot of
our time.
But if we can keep that long-term perspective and realize, okay, I'm
not looking to get rich overnight, but I'm going to invest in things
that I know are going to build my wealth over time and help me get to
that millionaire status, and that's where my focus is, then I know for
sure I'm going to get there.
These short-term, instant gratification things are not a guarantee.
They are high risk and can be very, very stressful.
So why not stick with what we know is actually going to work?
All right.
Comment below and tell me if you are going to become a millionaire.
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Thanks so much for watching.
I'll see you in the next video.