How much do you need to invest to be a millionaire in 5 years?
Let's say you want to become a millionaire in five years. If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.
| Current Savings | Inflation Rate | Monthly Savings Goal |
|---|---|---|
| $0 | 3% | $12,987 |
| $100,000 | 3% | $12,008 |
| $300,000 | 3% | $8,090 |
| $500,000 | 3% | $4,172 |
The bottom line is that becoming wealthy in five years is an ambitious goal, and it will require hard work, discipline, and dedication.
“The primary levers to accumulate $500,000 in 10 years are investing more, spending less in retirement, or delaying retirement (including part-time work). Ten years allows for compounding to work in your favor. This goal requires careful planning and long-term strategy, not quick fixes.
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
Investing $1,000 per month for 5 years through a systematic investment plan could have you end up with $83,156.62.
Saving $1,500 per month may be a good amount if it's feasible. In general, save as much as you can to reach your goals, whether that's $50 or $1,500. You could speak with a certified financial planner to help develop a plan for your finances if you aren't sure how much money to save regularly.
Nonetheless, not just anyone can be a mini-millionaire. Mini-millionaires, whom Zumburn describes as “upper middle class” rather than rich, typically make between $150,000 and $250,000 per year. That's more income than that of fourth fifths (78.9% to be exact) of U.S. households in 2022.
According to CNN Money, the average net worth in 2022 for the following ages are: $9,000 for ages 25-34, $52,000 for ages 35-44, $100,000 for ages 45-54, $180,000 for ages 55-64, and $232,000+ for 65+. In 2024, the figures are likely 10% higher.
The average age of a first time millionaires is 37, it has been found. In data released by Betway Insider, the average age of a first time billionaire is also revealed: and is a little higher at 51. So, if you're not quite there yet, what can you do to make your first million?
How long will it take to turn 500k into $1 million?
How long will it take to turn 500k into $1 million? The time it takes to invest half turn 500k into $1 million depends on the investment return and the amount of time invested. If invested with an average annual return of 7%, it would take around 15 years to turn 500k into $1 million.
Historically, the stock market has an average annual rate of return between 10–12%. So if your $1 million is invested in good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your one-million-dollar goose.
Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.
Can You Live on 3000 a Month? Whether $3000 a month is good for you depends on the number of family members you have and the quality of living you want to sustain. If you're single and don't have a family to take care of, $3000 is enough to get you through the month comfortably.
If you can invest $200 each and every month and achieve a 10% annual return, in 20 years you'll have more than $150,000 and, after another 20 years, more than $1.2 million. Your actual rate of return may vary, and you'll also be affected by taxes, fees and other influences.
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets.
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
The table below shows the present value (PV) of $5,000 in 20 years for interest rates from 2% to 30%. As you will see, the future value of $5,000 over 20 years can range from $7,429.74 to $950,248.19.
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
Saving $500 a month is an excellent starting point. Yes, it's ambitious, but it's achievable and will set you up financially over time.
How much money do I need to live off interest?
For an interest-only retirement, you'll need to have a large nest egg. How big a nest egg depends on your target income and the interest rate. For example, an annual income of $48,000 would require a nest egg of $1.6 million, assuming a 3% interest rate.
It depends on what you're doing and how much you make: If you're one person making $100K before taxes, it's pretty solid and means you're financially frugal. If you make $350K, even in the Bay Area, saving only $2K/month as a single person would be rather minimal, and would be a sign that you're living “overlarge”.
Liquid assets: According to a report by Credit Suisse in 2021, there were approximately 21.4 million adults in the United States with a net worth of at least $1 million, including both liquid and non-liquid assets.
If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
The new wealth report ranked Austin, Texas, in the top spot for growing its millionaire residents with an increase of 110% since 2013. It was followed by runner up Scottsdale, Arizona, which experienced a 102% increase in millionaires.
