The easiest way to become a millionaire is to take advantage of capitalization and start saving money as soon as possible. The sooner you save, the more. The sooner you save, the more interest you'll accrue. And you'll earn more money with the interest you earn.
You should aim to earn at least 15% of your income. At younger ages, you have time to take a little more risk with your investments and look for options that have the potential to yield a return of 7% or even more. Saving this amount of money can take a while, so it's important to start investing as soon as possible. For example, suppose that an investor pays a financial advisor 1% per year to manage their investments.
Whether you want to become a millionaire or even save without a specific goal in mind, it's important that you start investing what you can comfortably afford. According to Stivers, the three most important elements of investing are the amount you contribute each month, the rate of return and the time you have to achieve your goal. As you plan your path to achieving millionaire status, remember that there are always risks when you invest. If you want to become a millionaire in five years or less, you'll have to adopt an aggressive investment and savings strategy.
Few know how to increase their income fast enough to accumulate that kind of net worth, but it's not too difficult to do so if you have multiple sources of income, such as salaries, investment dividends, income from rental properties and commercial investments, which is how most millionaires generate wealth. Both SEP and SIMPLE IRAs are popular because they are easy to set up, require little paperwork, and allow investment profits to increase with deferred taxes. According to Investopedia, the S&P 500 has historically achieved an average return of 10 to 11% per year, so a fund that follows this index can be expected to produce similar returns, although past returns do not indicate future success. The best thing about composite returns is that they are investment gains that are obtained without having to add more own money to the investment (although it is important to contribute more money on a regular basis to maximize capitalization).
Most people would need to supplement their income with an additional activity to contribute that amount to their investments. Taxable brokerage accounts offer a way to invest additional funds after your retirement account limits are exhausted. So start investing as soon as you're debt-free (it's okay if you still have a mortgage) and have a fully funded emergency fund. Compared to those who start investing at age 25, people approaching 30 will have to contribute a little more money each month to achieve the same goal before age 65.