Here’s how much money 40-year-olds should invest each month to become a millionaire – CNBC

December 19, 2021 by No Comments

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For many people, becoming an millionaire is an appealing milestone. For some, it may be the amount of money they need in order to leave the workforce for good. For others, a million dollars would allow them to support their own lifestyle needs while also passing down some of the money as generational wealth. But unless you were already born into extreme wealth or you win the lottery, earning a million dollars is much easier said than done.

However, investing your money can make that journey a little easier. According to Brian Stivers, a Financial Advisor and Founder of Stivers Financial Services, there are three important elements when it comes to investing: the amount you contribute each month, the rate of return and how long you have to reach your goal. With this in mind, you can actually invest enough money to earn yourself one million dollars.

Below, Select breaks down how much money you need to invest as a 40-year-old to become a millionaire by age 65, the traditional retirement age.

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How much a 40-year-old needs to invest to become a millionaire

When making calculations, Stivers accounted for three different return rates: 3% (a conservative portfolio of mostly bonds), 6% (a combination of stocks and bonds) and 9% (a portfolio that’s stock-heavy or contains index or mutual funds yielding around 9% on average). And, he used a retirement age of 65, which would give 40-year-olds 25 years to save. Here’s how much 40-year-olds would need to invest each month to become a millionaire by the traditional retirement age:

  • If making investments that yield a 3% yearly return, a 40-year-old would have to invest $2,250 per month to reach $1 million by age 65.
  • If they instead contribute to investments that give a 6% yearly return, they would have to invest $1,500 per month for 25 years to end up with $1 million.
  • But if they choose investments that yield a 9% yearly return, which is comparably more aggressive, they would need to invest $950 per month for 25 years to reach $1 million.

Previously, Select worked with Stivers to figure out how much money 35-year-olds should invest each month to become a millionaire by age 65. The same rates of return were considered and we found that — across the board — 40-year-olds would …….

Source: https://www.cnbc.com/select/how-much-money-should-40-year-old-invest-become-millionaire/

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