10 Ways to Turn Yourself Into a Millionaire
1. Start a Business
Experts say some good first steps in starting a business are researching competitors, assessing the legal aspects of your industry, considering your personal and business finances, getting realistic about the risk involved, understanding timing, and hiring help.
2. Save Early and Often
A portfolio worth $1 million is the gold standard for many new retirees. Depending on where you live and how much you can count on from guaranteed sources of income, it’s often enough for a secure retirement.
3. Let Your Boss Help
Some employers provide valuable benefits that can help you reach your $1 million goal. For example, about 18% of private workers and more than 80% of public workers are eligible for a traditional pension. And restricted stock units—shares given to employees after a vesting date—can be lucrative if your company’s stock performs well, as any number of Silicon Valley millionaires can attest. For example, a Google employee with 1,400 restricted stock units would have a nest egg valued at more than $1 million.
4. Don’t Overspend
Even people who live in modest homes, drive used cars and go camping on their vacations can undermine their thriftiness by committing money missteps. Overspending on children, for example, can be a big temptation, and it’s particularly strong when it’s time to send your kids to college. If you reduce or eliminate contributions to your savings plans to pay for college, you’ll be hard-pressed to make up for those lost years of compounding. A better strategy:
Select a college your family can afford without racking up debt—or encourage your children to take out federal student loans (as long as you keep a lid on the amount).
5. Own a Home
Derek and Lauren Ross didn’t buy their home in Oak Park, Calif., because they thought it would make them rich. They bought it because the community of 14,000, about 40 miles from Los Angeles, has some of the best schools in California, plus lots of parks and open space. Nonetheless, their investment has paid off. They bought their two-story home in 2002 for about $542,000. Today it’s worth more than $800,000, Derek estimates.
6. Buy When Stocks Are Cheap
A stock market slide like the one that occurred earlier this year may be nerve-racking if you need to cash out your investments. But stocks still offer the best choice if your long-term goal is to hit the million-dollar mark.
How long it takes you to reach seven figures depends on how much you start with, how much you add to your kitty and how often, and how much you earn on your investments. Over the long haul, U.S. stocks have returned an annualized 10%, including dividends. Building at that rate, it would take a bit less than 32 years to turn $50,000 into $1 million. If you invest $10,000 per year, it would take 24 years to reach the milestone. (The calculations assume that you invest in a tax-deferred account.)
7. Look for Stocks on Steroids
The surest way to make a million bucks in stocks is to go for growth and not worry so much about the price. Your chances of earning spectacular returns improve if you hop aboard companies that are generating equally spectacular sales and profit growth. And you don’t need to take a flier on small technology firms.