How to Retire a Millionaire with $100 a Month
Have you ever walked into a Wal-Mart or other big box store and been greeted by an older person who probably should have retired a decade ago? We all have at some time or another, and most of us think that when we’re that age, we want to be taking vacations and spoiling our grand kids, not handing people shopping carts! Heck, none of us really –want- to have to work during retirement. It’s okay if you choose to work during retirement so that you have a reason to get up in the morning, but it should be your choice to do so. Don’t worry, you can retire a millionaire, and all you need is $100 a month.It’s the power of compound interest working in your favor. A little bit of money invested well over a long period of time can equate to a lot of money! It’s really a simple concept, but so many people fail to make use of the amazing power of compound interest. You can be very wealthy at retirement if you just put a relatively small amount of money away for retirement in a solid investment for a long period of time.
Let’s take a look at the example that I mentioned in the title. If you’re under the age of 30, you can retire with a million dollars by age 65 by putting away $100 a month. You’ll need to put it in a solid mutual fund that has averaged 15% over a long period of time, but they are out there, and you can find them. You just have to do the research and find a good mutual fund to invest with. If you’re really young, say age 20, you would only need to deposit $20 a month into a good mutual fund to be a millionaire upon retirement.
You will also want to put this money in some sort of tax sheltered account, such as a 401K plan or a Roth IRA so that you don’t have to pay taxes on any of the money your mutual fund makes. You’ll have to go find a savings calculator to figure out how much a month you need to put away to be a millionaire at retirement, but chances are it’s a lot less money than you might think.
Make use of the power of compound interest in your financial life rather than letting the bank use compound interest against you through credit cards, mortgages and automobile loans. Compound interest is an amazing tool if you let it work for you and not somebody else.
If you put away just a little bit of money each month and invest it well, it’s difficult to not become a millionaire when you retire. If $100 a month can make you a millionaire by starting to invest at age 30, imagine if you put away 15% or 20% of your income away for retirement. When retirement occurs, you could do just about anything that you ever wanted.
Labels: financial plans, money, retirement planning
posted by Matthew Paulson @ 9:37 PM
4 Comments:
I am beginning to think you live in fantasy land.
Sure there are mutual funds which have returned 15% over a specific period of time, but realistically after taxes and inflation 8% would be a above average return to try and make.
15% is something nobody would every say you could realistically achieve long term from a mutual fund.
The information you gave is about achieving those returns year over year is about as likely as winning the lottery.
Do you just make up stuff and post it on your blog because it sounds good?
If you actually took the time to read the article, you would have noticed that I stressed the importance of putting the money in a tax-advantageous account, such as a Roth IRA to avoid such taxes.
The point of this article was to show people how to have one million dollars upon retirement, of course we know that a million dollars won't have the same purchasing power as it does now, but it's still a million dollars, and that's what the goal of the article was.
I can't believe you would honestly say that you're just as likely to get struck by lightning as to earn a 15% average rate of return per year in the stock market. You'll be hit by lightning several times before you win the lottery, and if you actually do some looking around for good mutual funds, rather than just throw your hands in the air and say it can't be done, you will find mutual funds that have earned 15% over a long period of time, you even admitted that they exist.
Enough with your ad hominem attacks, get your facts straight.
Jeremy Siegel says long term average return on stocks (nominal, not real) is in the 8-9% range. None of us has any way of knowing whether the next 35 yrs will be a good period (above that average) or a poor period (below that average). But we do have the ability to look back at the previous 35 yrs (a good period) and see if anyone is in that 15% ballpark.
I think Buffett/Munger have done that (and better), but we won't have them for the next 35 yrs.
I have a question for ggreenblog and readers: what other money managers out there have a 35 yr record of 15% or better?
And I have one comment: politicians are flaky -- we can hope that they won't rewrite the tax laws so that Roth IRA withdrawals are no longer tax-free, but we can never be certain about that.
Regardless of realistic rate of return, I don't think it is crazy to demand/ask/require folks who want to retire in good shape to put away MUCH more than $100/month. Isn't $1200/year seem low? I am shooting for $15000 this year and even I have room for improvement. I amnot making AMAZING money either. I mean it's a start and all to save $100/month, but working individuals should make more than a sacrifice than that.
In 99.9% of the retirement related articles, 8-10% is the norm to "expect".
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