Articles: Index
Creating Money: Securing Your Future
Page Three of Four
How to Become a Millionaire
Materialism is not what life by design is all about. Living a life that you can completely enjoy and experience happiness in is what design is about. In order to truly live a life by design you want to plan your finances so the lack of money does not become burdensome.
When you decide to live your life with fewer obligations (some people call this retiring) you will want to have money waiting for you to live comfortably. One million dollars is a reasonable dollar figure to be able to retire on as long as you continue to care for your financial situation in retirement.
You do not have to earn one million dollars each year to be a millionaire. You can attain the millionaire status with a very small amount of money each month and some time. Each month take at least 10% of your gross income and immediately invest it in stock mutual funds.
Over the last 6 decades, stocks, in general, return over 10% per year. There are certainly ups and downs, but nothing matches the performance of investing in corporate America. You can begin to invest in stocks through mutual funds. A mutual fund is a pool of investors that purchases stocks or bonds or both. You can invest in mutual funds with no commission charge. These are called no-load mutual funds. If someone tells you that you need to pay a commission for a mutual fund, simply find a fund that is doing better or as well that you can invest in for free. There are thousands of them. Some well known companies that offer no-load mutual funds include Fidelity, Vanguard, Scudder and Twentieth Century. There are many others. To find out the phone numbers of various mutual funds, buy a copy of Investor's Business Daily at your news stand and look at the listings of mutual funds. The phone numbers are listed by the company names. Call the funds that look interesting and ask for a prospectus. Most of the daily business papers tell you the returns that mutual funds have accomplished up to date.
By investing monthly in mutual funds that are well managed you will eventually build your wealth to the level of a millionaire. It sounds far fetched, but see how easy it is.
Formulas for Becoming a Millionaire
TDR=W That formula is the key to wealth (w). Time (t) multiplied by dollars (d) multiplied by your return on your investment (r) equals wealth.
To be more specific, let us set a goal to have a million dollars invested in mutual funds. Here is how you can become a millionaire. The first chart will reveal how old you will be when you will have $1,000,000 in mutual funds that have historically returned about 10% per year. These are large cap stock funds that invest in larger companies. The second chart will show you when a 12% average yield will turn you into a millionaire. Over the past several decades, small stocks have returned approximately 12%.
As you look at the charts, remember that $2,000 per year is only about $167 per month. It doesn't take much to build a small fortune.
Your specific goals may vary quite a bit. Your specific investment vehicles may return more than 10 or 12 percent. As you can see, it takes very little to develop an investment fund that is going to meet your financial needs in retirement. Remember, this is only one investment vehicle. There is another excellent vehicle that you can begin now if you are buying your home.
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