Link to the video version of $1 Million The Easy Way
Smart investors don’t rely on luck or risky investments to get them to their goals. Setting big savings goals and investing in solid stock market securities has produced scores of millionaires. Now, let’s make you one of them! First, you need to forget fretting about market timing, or luck.
Instead, follow this roadmap that many of today’s millionaires have proven, works!
Hi this is Lynn, and welcome back! Remember that this is not financial advice but for education and entertainment only. Now, let’s go and learn how to get you to that million-dollar goal. But first, if you could give this video a thumbs up, it would be greatly appreciated. And, while you’re at it subscribe.
Step one. Putting aside $40,000 in take-home pay every year and earning a 10% return, will get you to millionaire status in about 15 years. Halve those savings and you’re still only looking at 20 years. This plan is a lot faster than waiting until you’re 51 to reach your $1 Million goal.
I have an investing friend who decided he wanted to dump larger sums into investment accounts, and made the commitment to save $40,000 per year.
But wait you say, I can’t save $40,000 per year off my salary. Stay tuned, we’ll get into strategies to make this work for you!
My Friend, first of all made sure that saving $40,000 per year was even doable after paying his rent, insurance fees, taxes and giving himself a general lump sum each month for necessities and fun money. Fortunately, although he was a sales manager, who also covered a smaller territory himself and could kick it into high gear to close more business and increase his income – very motivating! He’d always found that having a flexible pay structure that can reward you with commissions or bonuses, helps you work harder and more efficiently!
He decided it could be done, but I needed to set some strict rules in order to achieve his $40K per year goal:
He had to save $3,333 per month. That meant maxing out his 401K and IRA accounts, especially taking advantage of pre-tax savings. Additionally, he needed to deposit the remainder into his savings account each month. And, the savings account had to be untouchable! If he ever had to dip into his savings account for emergencies, he made a commitment to pay it back within two months.
All of this was made easier by having:
- His employer take a set amount of money out of his paycheck each month and automatically depositing it into HIS 401k
- His employer also depositing a portion of HIS salary into his savings account, every month, to make up the rest of the $3,333.
- The rest of his income, was deposited into his checking account used to cover basic bills.
- He created a spreadsheet that reflected each of his accounts at:
- Various brokers such as Charles Swab and Fidelity
- Savings and checking accounts for each of HIS banks
- HIS 401K account
- IRA Account
- Roth IRA
What was truly motivating was tracking how much his balances were growing by updating his spreadsheet every month or two.
I learned the benefits of becoming tax savvy. There are great services like TurboTax, which I use, that calculates axes for me, while ensuring that I don’t miss any deductions.
Be aware of the tax pitfalls of frequent trading. The taxes in the US for short term asset trades for stocks you’ve held less than one year is so high, that it wipes out the profits for most people. In 2022 this short-term capital gains tax rate varies from 10% to 37%, depending on your yearly income. I also learned the hard way, that you can’t sell a security then buy it back within a 30-day window without getting hit with the wash rule. This meant that I couldn’t claim the loss from the initial sale. Realize that I’m not a tax advisor, and this rule could change over time, so doublecheck the latest guidelines.
Avoid luxury wheels unless you have spare cash on hand. There’s nothing wrong with purchasing a luxury vehicle. However, if you can’t pay cash for it, the vehicle could ruin your plans to become a millionaire! Just use the rule of 72, and divide this number by the interest you would pay on the car loan, to determine how long it will take for the loan amount to double. This is always scary! Usually, luxury cars take a big bite out of the amount you can save! That $1 million would look much farther away in the future now!
What’s really painful is to calculate how quickly your new super-vehicle could depreciate?
A general rule is that a new car loses 15% to 20% of its value each year. So, a two-year-old car will be worth 80% to 85% of its original price; a three-year-old car will be worth 80% to 85% of the two-year-old value.
My friend does drive a BMW, but bought it at three-years old, and paid cash, from a bonus check received! What’s really scary is that the new car in the U.S. now costs an average of $40,000!
If you do need a new vehicle, figure out how you can purchase an acceptable set of wheels that won’t take a bite out of your savings. The money you’ll have left over can then appreciate, instead of depreciating like a fancy new car!
Remember not to sell yourself short.
Some people are very loyal to employers, despite a lack of positive benefits or regular raises. These employees will stay put for years without seeing their incomes grow! (stagnant)MY Friend found out personally that increasing your income is a great way to boost your rate of saving.
How did he do it? I do know the value of keeping a job for at least three years, and keeping your network going. But he did have a $60K per year jump in base salary when a friend mentioned her employer was looking for an additional sales manager. She asked him to apply. It took about six rounds of lengthy interviews, but finally he was offered the job.
Next, he almost had a seizure, in a good way, over the compensation. What’s really fantastic is the company was based out of California, so paid a much higher base salary than in his state! A 60% jump in pay was almost unbelievable. The overall plan included an employer’s 50% matching for the 401K, and a great healthcare plan! Even if you love your current job, there could be something twice as fantastic seeking your application!
Don’t rely upon Lady Luck to enable you to reach your dreams! Becoming a millionaire takes focus and a plan. Commit your 12-month, 5-year and 10-year plan to paper. Then start cracking on it!
You don’t need to win the lottery to become a millionaire. Today, the average American adult spends over $300 per year on lottery tickets. That’s a useless waste of money! Instead, you can still live well if you set your mind to making a game of building wealth. If you start early, cut-back on spending, build a strategy, and save, save, save, your million-dollar dreams are well within reach.
Most people blow a big percentage of their income on stuff they don’t need. Even indulging in a daily gourmet coffee, can greatly impact the amount of money you can save. Today, a Grande Starbucks Latte with a tip is about $4. You spend this over a year and you’ve blown $1,460. Over 10-years you’ve lost $14,600 you could have invested and grown, by an average of 9 percent, with a solid S&P 500 ETF.
Commit your goals to paper, and review them regularly then dream! Your future will soon be very bright. Remember that when investing the first years, can appear to be building slowly until you’ve built up enough capital for those 10 percent returns to snowball and make you wealthy! I recently made a video about an investing club friend who has built a 5-million-dollar fortune by following these $1 Million the easy way, principals. And a significant portion of that fortune was realized during a huge account growth over the past 10-years. To view exactly how he did it, check out my video linked here, 5 Ways to Double Your Money in the Stock Market. I’d love to hear about your plans to reach that 1 million goal in the comments below. And while you’re there, remember to sign-up for our newsletter so that you can receive more tips to propel you to your goals!