How to be a Millionaire
You could start at age 25 by investing $175 every month in your account. If your investment choices turned out to return, on average, 10% per year, at age 65 you would have 1 million dollars in your 401k account.
Let’s say that you are starting at 35 years old. You would have to add $466 a month until you are 65 years old in order to hit that 1 million dollar mark. (at an average annual 10% return).
And at 45 years old you would have to sock away $1,333 a month to start investing, in order to accumulate 1 million by age 65, with a 10% return,
Rule of 72: You can use what is known as the Rule of 72 to help show how compounding works. It helps you figure how long it will take to double your money if you're investing at a fixed rate of return. It works like this: take 72 and divide it by the interest rate you're getting. If the rate is 10%, it will take 7.2 years to double your money. If the rate is 20%, your money will double in 3.6 years.