It seems like a far-fetched dream, but you can truly make $1million in 40 years from saving $5 a day. Becoming a millionaire is a status almost everyone desires to achieve. However, it remains just that- a desire. It might seem impossible, especially if you’re working from hand to mouth, but the power of compound interest is here to give you hope and make you a millionaire. It only requires discipline and time.
How Can You Do It?
A quick look at this table will show you how long you need to save to get to 1 Million, of course considering the amount you save every day and, subsequently, annually.
| Daily savings | 10% Annual returns | 8% Annual returns | 6% Annual returns | 4% Annual returns |
| $100 | 13.2 | 14.5 | 16.2 | 18.5 |
| $50 | 18.7 | 21.0 | 24.3 | 29.0 |
| $20 | 26.9 | 31.0 | 37.0 | 46.7 |
| $10 | 33.5 | 39.1 | 47.6 | 62.0 |
| $5 | 40.2 | 47.5 | 58.7 | 78.3 |
Stocks can be a high-risk investment. However, considering other investment channels such as treasury bonds with a return of 1.5% for 30 years, stocks seem like well-worth the risk in the long haul.
So how do you get there fast?
You can contribute at least $5 pre-tax from your paycheck if you have a 401(k). For many of us, $5 is worth probably 20 minutes of work, and it might seem like a negligible amount, but it could change your life. A significant amount of employers offer company’s money that work on your behalf. Adding this to your new form of investment could ultimately help you double your cash.
What does this mean? It means that you might only need to invest $2.50 from your salary. If you’re stuck on contributing the $5 per day, this will be a total of $10 working for you. If I were you, I would be filling and signing the 401k paperwork now.
As you can see, it’s very easy to get to the millionaire status with determination and discipline. This does not mean that you cannot invest more daily into your 401k, though. The more you contribute, the lesser the years you’ll take in becoming a millionaire.