How To Become A Millionaire Making $40,000 Per Year
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In today’s blog, I am going to show you how to become a millionaire while making $40,000.00 per year.
If you read until the end I am going to share with you a way you can supercharge this so that you can turn that $1 million into over $3 million dollars. Okay, let’s jump right in.
Watch the video or continue the blog post below (video has subtitles so no sound required):
If you follow me on Youtube, then you know I am a huge proponent of the 70/10/10/10 & beyond rule. This rule asserts that you live on 70% of your income, invest10%, save10%, and give 10%. The beyond piece of the rule is the initial goal, not the final goal. As you start investing and making more and more money and keep your living costs the same or relatively the same, then the investing portion grows and grows until you break out of the rat race and you are truly free.
Making a million dollars a year may seem impossible, but it is actually achievable with time on your side. For example, let’s say you never got a raise at your job and for the next 37 years and only made forty thousand dollars per year. During that time you only invested 10% of your salary each year (which is $334 a month at a 9% return on investment). At the end of 37 years you would have $1,093,491.06. So many times we look at these amounts that we invest and think it could never happen, but let’s say you had the exact same amount invested, but you were able to get a 10% return on your investment. It would only take you 34 years to hit the same goal. However, if you kept investing for the full 37 years, you would have $1,404,763.97. That is an extra $311,272.91. What if by applying the 70/10/10/10 and beyond rule you were able to have a full emergency fund and start investing 20%? You would have made over $2,000,000. Here is the crazy part, the likelihood that you will get raises and move up the ladder in your career is almost a given so it is entirely possible to hustle and hit this goal even sooner than expected.
A major takeaway from this is that with some goals and financial discipline you can become a millionaire with time on your side. The other major takeaway is to look at the difference a 1% return made. In the first example, the difference in a 1% rate of return over the same amount of time was $311,272.91. Really pay attention to this because this is why it is so important when looking at fees and taxes. For example, a 1% management fee over time could be the difference of losing hundreds of thousands of dollars, if not millions of dollars, so it’s really important that you pay attention to what you’re paying on your investments with fees and taxes. Slow and steady crush the race! Getting low fees and taking advantage of the most tax-efficient options help as well. Low fees and tax-efficient options are really important when investing in a Roth IRA vs. a Traditional IRA or investing in an ETF vs a mutual fund. If this seems confusing, don’t worry, I have a video for you to check out on my Youtube channel that is called Index Funds vs. Mutual Funds vs. ETFs Which One Is Best For Becoming A Millionaire. I also have another video on my Youtube channel that explains Roth IRA.
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Hi! I’m Lauren Mac
I help people who are sick and tired of the rat race! I help them crush their debt, start investing, and live the life they always wanted!
