If you want to become a millionaire, investing money can help make that happen. If you open a brokerage account and begin buying assets that provide a generous return, the money your investments earn can be reinvested and earn even more for you. This is called compound growth, and it's a powerful wealth-building tool.
But just how quickly can investing make you a millionaire? Here's what you need to know.
Here's how fast you can become rich by investing
The timeline for how fast investing can make you rich is going to depend on two factors: how much you invest and the returns you earn when you do it. The table below shows when you'll end up with $1 million in your brokerage account based on these two factors.
| Annual Investment | 4% Return | 8% Return | 10% Return |
|---|
| $2,000 | 78 years | 49 years | 42 years |
| $5,000 | 57 years | 37 years | 32 years |
| $10,000 | 42 years | 29 years | 26 years |
| $20,000 | 29 years | 21 years | 19 years |
Data source: Author's calculations
As you can see, finding more spare cash to transfer from your bank account to your brokerage account makes a huge difference in your timeline for becoming a millionaire. But so does the return you get on your invested funds.
So if you want to amass a seven-figure nest egg as quickly as you can, you'll need to both invest as much as possible and be smart about what you put your money into.
How to free up more cash to invest and find the right investments
If you want to become a millionaire ASAP, you'll need to work on finding more money to invest. You can often do this by:
- Taking on a side job such as driving for a rideshare company, walking dogs, or babysitting, depending where your strengths are.
- Negotiating for a higher salary. You can ask for more money when you're hired, request a raise at a performance review, or look for a better-paying job.
- Working overtime if your company allows you to do so.
- Making a budget that prioritizes investing and cuts discretionary spending.
- Keeping fixed expenses low, such as by switching to a cheaper used car instead of buying a new one and investing the money saved.
You'll also need to find the right investments. For some people, this means investing in shares of stock in individual companies. This approach can pay off big time if the company happens to perform well, but it requires a lot of specialized knowledge as well as time to research investments. It's also riskier.
Alternatively, you could invest in index funds, such as an S&P 500 index fund. Index funds track the performance of a financial index, with the S&P 500 index tracking the performance of around 500 of the largest companies in the U.S.
Since index funds spread your money around many different investments, there's a reduced risk of loss, and they are much easier to invest in as you don't need to independently evaluate each company. However, the potential returns aren't as high as buying individual stocks because your money is spread among so many businesses.
Ultimately, you'll need to decide how much risk you're willing to take on in search of higher returns. But remember that investing more and investing smartly can go a long way toward making you a millionaire much faster, so sacrificing a little to do these things can be a wise financial move.
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FAQs
If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
How fast can you make a million dollars investing? ›
Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate. For a rate of return of 5%, you'd need to save around $14,700 per month.
Can investing make you a millionaire? ›
With the proper temperament and time horizon, a small investment today could make you a millionaire. But you'll need patience and strong conviction in the face of short-term paper losses. With the risks and rewards in mind, let's dive into the seven specific stocks that can help turn $1,000 into $1 million.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
How long will it take to turn 500k into $1 million? ›
If invested with an average annual return of 7%, it would take around 15 years to turn 500k into $1 million.
How much money do I need to invest to make $3,000 a month? ›
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
How long does it take to turn $100 000 into a million? ›
If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.
How much to invest monthly to become a millionaire? ›
If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.
How fast can stocks make you money? ›
The stock market's average return is a cool 10% annually — better than you can find in a bank account or bonds. But many investors fail to earn that 10% simply because they don't stay invested long enough. They often move in and out of the stock market at the worst possible times, missing out on annual returns.
How much to invest to get $50,000 per month? ›
Assuming the average return on investment from SDI is 14% annually, you will need to invest approximately INR 43,00,000 to get INR 50,000 a month.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
What if I invest $200 a month? ›
Investing as little as $200 a month can, if you do it consistently and invest wisely, turn into more than $150,000 in as soon as 20 years. If you keep contributing the same amount for another 20 years while generating the same average annual return on your investments, you could have more than $1.2 million.
Can I become a millionaire in 5 years by investing? ›
Let's say you want to become a millionaire in five years. If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.
How much do I need to invest to be a millionaire? ›
If you are starting from scratch, you will need to invest about $4,757 at the end of every month for 10 years. Suppose you already have $100,000. Then you will only need $3,390 at the end of every month to become a millionaire in 10 years.
How much do I need to invest to make $1 million in 10 years? ›
In order to hit your goal of $1 million in 10 years, SmartAsset's savings calculator estimates that you would need to save around $7,900 per month. This is if you're just putting your money into a high-yield savings account with an average annual percentage yield (APY) of 1.10%.
How long does it take 100k to turn into 1 million? ›
Let compounding work its magic on its own
At the market's long-run historical return rate of around 10% per year, $100,000 will turn into $1 million all on its own in around 24.2 years.
