How to Make One Million Dollars in 20 Years!

Wealthy people do not think of money in the same context that most of us do. They think of every dollar as seeds with the potential to grow. Investment is the key to wealth in any economic system. A single dollar can grow to 1 million in as little as 75 years at 20% interest in the right type of bank account if left untouched.  30 dollars (one dollar a day) can grow to 1 million in 32 years at 20 % if left untouched. If you had invested a dollar a day when you were born you would have 1 billion dollars by the age of 66. So how is this possible? The secret is compound interest.

If you put away 10 dollars a day and placed it in the right mutual fund, stock or real estate and let it sit untouched you would be a millionaire within 20 years. The problem is sustaining a 20% interest rate for 20 years. But it can be done. The more you can afford to put back the faster you can earn your 1 million and the less you have to worry about varying interest rates on your saved earnings. The most important lesson is to change our concept and attitude about money.

Young people today working on even a meager income must retrain themselves to resist the urge to spend on frivolous things. It doesn’t take long to develop the savings/interest bug once you get started. Mutual funds are the best investment tools for long term interest. We really should be teaching our children about them as toddlers and add mutual funds to the core curriculum in elementary school!

We must set realistic financial goals. How much money would you like to accumulate? How many dollars a day can you realistically invest? Have you checked around to find the best interest rate you can get for your savings? When would you like to reach your investment goal? What is your financial purpose? These are perhaps the most important questions we must know before we begin to think about long term investment. We must be sure. Because once we start, we cannot change our minds. Our discipline is that the money we have saved is as gone to us as the money we have spent!

So to have 1 million in 20 years we need to invest $300 monthly at a fixed 20% interest rate. Our lofty financial goal may be to simply live comfortably without a worry. Remember, it takes money to make money and after your 20 years you have it to reinvest.

As mentioned, one of the most vital aspects to savings and investment is to know why you are saving your earnings. This will be your life goal and you must have a plan for emergencies and whatever else may come up. Ideally, once it is invested, it is gone to us for 20 years. That requires discipline.

So why aren’t more of us millionaires if it is this simple. The simple answer is that most of us pack the simple discipline to not spend that money we should be saving. Procrastination is a killer as well. Say you have decided to save $200 a month for 20 years, but wait a year to do so or cannot keep up the pace and spend 12 only 12 months of your earnings in 20 years. You have cost yourself $116,000 dollars. This is about $13 dollars an hour 24 hours a day for 20 years.

As a final note, it is more important to remain consistent than how much you save each month. Once you begin remain consistent. More to come!

Image source:
http://upload.wikimedia.org/wikipedia/commons/f/f0/Money_closeup.jpg