So you want to be a multi-millionaire? Easy.
It’s all about a disciplined savings plan. Let’s say you are 40 years old and have been in the work force for 15 years. You should have at least $200,000 already saved in your company 401(k) plan.
Under the following assumptions you will reach the elusive $2 million dollar portfolio:
- Work until age 65
- Save $1,000 per month in any combination of accounts (IRAs, taxable accounts, 401K). Make sure to pay yourself first! During my career as an advisor I’ve seen many investors save upwards of $2,000 or even $3,000 per month.
- Earn an average annual return of 7.5%. This is not an easy feat, but achievable IF you invest in a diversified, low cost portfolio of equities and fixed income securities. If you lack the discipline and objectivity to invest prudently, you should “hand over the keys” to a reputable, non-commission based financial advisor.
Albert Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
Richard Siegel, CFP®
Managing Partner, ARQ Wealth Advisors, LLC