Believe it or not, even a person earning minimum wage can become a millionaire. However, it does take patience, time and discipline, but the math doesn't lie. It is possible!
Read on and I'll prove it!!
Even if you earn minimum wage (and yes, that can be under $8 per hour in the U.S., depending on the state), you can be a millionaire by the amazing wonder of compound interest.
I’ve prepared the following summary to show you the exact amount needed to invest each month, depending on your age, the return on investment (ROI), and the age at which you plan to become a millionaire.
There is an incredible advantage to Investing Early - An 18 yr old would have to invest only $215 per month compared to a 50 yr old investment of $12,914 per month which is nearly impossible for most people!
But…don’t worry, the amounts are substantially lower if you’re willing to keep investing until age 60 to become a millionaire…
Using a 10% ROI (return on investment), an 18 yr old can invest as little as $129 per month and a 50 yr old can invest $4,882 per month (still high, but substantially less than the $12,914 per month they would need to become a millionaire 5 yrs earlier)
Now, if a person is willing to wait until age 65 (standard retirement age) to become a millionaire, the numbers are even more attainable…
An 18 yr old can invest as little as $78 per month and a 50 yr old can invest a more attainable $2,413 a month to become a millionaire by age 65. It is still obvious that starting younger makes a huge difference in the monthly investment amounts.
If a person is willing to continue contributing and leave their money invested (using a 10% ROI again) until age 70, the monthly contributions are the lowest…
The monthly contributions are so low, everybody should be able to attain a million dollars by aged 70, even if you started investing later in life. An 18 yr old would only need to invest $47 per month and even a 50 yr old would only need to invest $1,317 per month (which is ridiculously lower than the $12,914 required in the first table).
So, now that I’ve shown you the necessary monthly contributions to become a millionaire by aged 55, 60, 65, or 70 , there are a few rules to live by:
1) The most important lesson to learn is START INVESTING EARLY!
2) It’s NEVER too late to start investing!!
3) The power of compounding will do the work for you.
4) Do NOT withdraw any money until your goal is reached, otherwise it’s like partially or fully starting over!
5) Never miss a contribution (make it an expense on your budget and it will become a habit), even if you contribute more some months.
6) Set up automatic monthly contributions with your bank or investment company.
There are a few reasonable assumptions that you have to consider:
1) After you reach the $1 million milestone, and when you begin to withdraw the money, you will have to pay tax (on the money earned, not your contributions, and these are called Capital Gains) on the portions you withdraw, as they are withdrawn.
2) Your desired ROI (say, 10%) can be achieved. This is a pretty reasonable assumption given that the S&P500 index, which is an accepted representation of the Stock Market, has achieved a return over its lifetime of over 10%.
3) You will NOT NEED to withdraw all or part of the money during the entire life of the investments (even for emergencies, that is what your emergency fund is for, and is completely separate).
4) The tables assume no additional contributions above the values stated, if you do contribute more though, it will only accelerate the process and make you a millionaire sooner! That is a plus!
So, can a minimum wage earner become a millionaire? Let’s look at the numbers.
Assuming the lowest minimum wage is $8 per hour, then for a 40 hour work week, the minimum wage earner would make $320 weekly, or approximately $1,376 per month (4.3 weeks per month).
Assuming no paycheck tax deductions (it is below the minimum tax threshold), this is not very much money to live on, however, if the worker is right out of high school (18 yrs old), they would only have to contribute $47 per month to become a millionaire by age 70.
As well, we have to assume that the minimum wage will not stay at $8 per hour for the next 52 years (it will only go up) and that the worker will get raises and change jobs over time which will bring them well above minimum wage.
As a percentage of their net income, $47 is only 3.4% of their monthly take-home pay, which is a very low contribution percentage (some people, granted they earn more, contribute as much as 15%-20% of their net income to investing each month).
The answer is a resounding YES, a person on minimum wage can definitely become a millionaire with a simple $47 contribution each month starting at age 18.
The more amazing thing is, that you can become a millionaire by a minimum monthly investment, and this millionaire milestone does not even include any real estate that you will have paid off, inheritances, pensions, or any other money sources! These things will only make you richer!
Now, GET STARTED!!
“It's not trying to time the market that will make you rich, it's the time you spend in the market that will guarantee to make you rich" - Warren Buffett
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