Without any controversy, it doesn’t make any sense to live in poverty at your old age. How would you feel if you were to have a million dollars in your bank account when you retire from your day job? Do you know that you only need about $100 per month to retire rich in life? Here, you would find effective ideas on how to retire a millionaire so that you can save yourself from financial regrets and lack when you can no longer work.
The first thing you need to discover is that money can work for you, provided that you empower it to do so. That’s what differentiates the rich from the poor today. Well, you don’t need to be another Bill Gates or Warren Buffets, but you can adopt a simple technique that would help you to reach your financial goal. Would you like to discover how to retire a millionaire with minimal investments that anyone should be able to afford? Let’s take a look at the following:
The Power of the Money in the Bank
If you have the habit of spending all your earnings, you must first conquer it before you can avail yourself of the wonders of maintaining a personal saving culture. The worst evil that can befall any income earner is to ‘spend’ and not ‘save’ as much as possible.
- Leverage the Dollar-Cost Averaging Principle
Having a consistent savings plan, that is, Dollar-Cost Averaging principle, is a simple technique of investing a small sum of money on a monthly basis. For instance, you can save $100 per month in an investment package like mutual funds that come with an average annual return of 8% – 10%. You could save another $100 per month on a retirement insurance package at an interest rate. Just look for one or two ways you can invest little cash for years to come.
- Leverage the Power of Compounding Principle
Here, you would discover the secret that makes Dollar-Cost Averaging principle works like magic. It’s the power of compounding. Assuming that you invest $100/month in mutual funds at 10% annual returns, you would have $1320 in the first year. After 10years, the money would increase to $21,037. After 30 years and 40 years, it would reach the sum of $217,132 and $584,222 respectively.
If you give it another six years, the total sum of money you would earn from your savings plan would be $1,045,170. It shows that the last six years would generate $460,948! What do you think you would earn if you leave the investment for another 6 years?
It’s worth stating that this secret would only work for you if you give it a long saving period, you don’t withdraw from the money, and you save regularly so that your account might be active. If you want to retire at an early age, you need to start early, and you need to save more than $100 per month. The years it would take $100 to reach the million dollars mark is not the same year it would take a savings plan of $1,000 per month. Think about that.
Important Money-Saving Tips
Still looking at how to retire a millionaire, I would like to bring some other important issues to your attention. In life, many things don’t work in isolation; one part must fit into another part to work effectively. Here are some other things you should consider:
- Individual Retirement Account (IRA)
If you’re a beginner, open an Individual Retirement Account (IRA) at a tender age as soon as you finish from High School.
- 401k Retirement Plan
After having had an IRA account, it’s advisable to set up a 401k retirement plan as a way to invest some of your weekly wages. 10% is the maximum portion of your income that you can use for a 401k retirement plan. Remember what it would yield in 20 years time through the compounding technique.
- Debt Reduction
As much as possible, minimize your credit card debt. This is one of the major hindrances to a personal saving culture. If your credit card balances amount to over $5,000 through multiple cards, seek for a debt consolidation loan; but then, you need expert advice before you sign up with any agency.
- Mortgage
Although it is not an easy task to buy a housing property, try to save up to the down payment required to own a house. Renting a house takes away money from you.
You don’t need to own a big corporation to become a millionaire. Little things matter in life. If you follow the above ideas of investing your little cash, you will reach your personal goal. That’s how to retire a millionaire in this world of frequent recession. You already know the way to prepare for the old age; go for the goal today.