The Realistic Way to Become a Millionaire

You must be thinking to yourself that it's impossible for your portfolio to reach 7 figures since you aren't a celebrity or CEO of a company. I had the same mentality until I read this article in Money Magazine: Link

Step 1: Time
This step goes back to my blog post about inflation. Assuming there is roughly 3% inflation per year, the amount we put away per year is worth 3% less than the year before. The article discusses that in some cases, delaying retirement may allow you to reach the 7-figure mark.

Another great point in the article states that the more time you have to invest, the market will eventually smooth itself out over that time span, ultimately boosting returns in the long run. This will allow you take a more aggressive investment approach, since there is a lot of time left until your monetary goal is reached.

Step 2: Amount being saved
Maxing out a 401(k) is the simplest way to boost the amount being saved. The benefits are three-fold:
1) Since it comes directly out of your salary before you pay taxes, your tax bracket is lowered.
2) In most cases the company matches a certain percentage, which allows for even more savings.
3) When your salary goes up, so does your 401 (k) contribution (come on, this one is common sense).

Step 3: How to invest
At a younger age it is better to invest aggressively since retirement is over 3 decades away. Taking risks early on and scoring big on returns in the market (or in some cases, facing consequences and taking a loss) cannot be done closer to retirement. Having a more conservative investment approach closer to retirement is smarter.

To sum it up, the key to becoming a millionaire is a stable job and decades to invest.

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