Most people think they could never become a Millionaire, but think again. If you start young at the age of 25 with a base of $10,000 for example, and save $350 per month or $4,200.00 per year with a 7% interest rate compounded yearly you can retire at age of 65 with $1,046,904.77 in savings. Go to http://www.moneychimp.com/calculator/compound_interest_calculator.htm to use a compound interest calculator.
It is never too late to start to save for your million. Even at age of 40 if you start with $20,000 and save for the next 25 years $1,000 per month compounding yearly at 8% you end up with an amazing amount of $1,084,422.49 to live on.
The truth is the sooner you start to save the better off you will be. The trick is to save money each month and put it to work in an investment that pays 7 or 8% a year. You may ask how in the world I can make 7% on my money. Banks are paying less than 2% on long term CD’s. Even if banks are safe they are out of the question. In the first example of saving $4,200.00 per year for 40 years you would only have $280,842.00 for retirement. This is a far cry from one million.
Playing the stock market is risky and if you owned a stock like GM you would have lost everything. No matter what you invest in there is some risk if you want to make 7% or more return on your money. You need to be involved in your investment and watch it at least once a week. Do not be lazy as it is your money and if you lose it only you are too blame.
So matter how much you save the key to saving a million dollars for the average person is to have a high interest rate that is compounded at least once a year. Now here is something really amazing. What if you could get 10% interest a year or even 14% a year?
If you could obtain 14% a year in the first example of saving $4,200.00 per year starting with $10,000.00 you would have after 40 years a mind blowing $8.3 million for retirement vs. the $1.046 million. Roughly about 8 times more money is saved. Even at 10% it is double the amount at $2.497 million. Just a 3% increase in the interest rate from 7% to 10% makes a large difference over 40 year time period.
To see what type of investments yield 8%, 10% or even 14% see the article High Yield Investments at http://www.associatedcontent.com/article/7811414/high_yield_investments.html?cat=3 . There are many high yield funds and trusts that can give you the boost you need to make our money work hard for you.
DISCLAIMER / WARNING: Use this information at our own risk. The writer is not responsible in any manner for any loss readers may have in the market. This article is meant to be educational information only. Reading this article absolves the writer of any and all legal actions by direct or indirect parties. The writer is not a professional trader or financial advisor.