If you save $58 a week will you have a million dollars by age 65?

Question

I went to a financial seminar and they said that at age 30 if you start to save $58 a week, by age 65 you will have a million dollars. After doing the calculations myself...I cannot figure out how this is possible. I assume it has something to do with the interest or the type of account you put the money into. Anyone know?

Answer 1

You can't "save" a million dollars at $58 a week, it would take too long! But you can get to a million by investing $58/week in popular common stocks and never selling them until you retire:

If you invest $58 each week into a "broad market" common stock mutual fund that reinvests all dividends and capital gains, you can expect that fund to earn the historical average of between 10 and 12% a year on the balance in there at any particular time. (Average stocks grow 7% a year, or 10% including dividends)

What makes it possible to turn $58/week into a million dollars is "compound interest"; if you put the money in a mutual fund that "compounds" (or calculates & adds) your interest on a daily basis, it is very possible to create huge sums from tiny ones, because after a week you are not only earning 7% on your $58, you are earning money on the last weeks growth of your $58! At the beginning, this is just pennies or fractions of pennies, but it soon adds up!



This is why, the younger you can start putting a little money into stocks, the better chance you have of being wealthy "later on".

Good luck!

(Go to http://www.fool.com to learn investment basics without having to pay someone for the privilege.)

Answer 2

The magic of compound interest is the key here.

If you put $250 a month into a tax deferred retirement mutual fund (say an index fund), hold the fund for 35 years, achieve the average rate of return for the stock market (roughly 11% per year), at the end of the 35 years you will have a bit more than 1 million.

This isn't accounting for inflation, so in 35 years your million is only going to be worth 400k in todays terms (if inflation averages 3%).

There are many web sites out there which have savings calculators. Perhaps going to cnnmoney.com or cnbc.com might be helpful.

Answer 3

Yes, if you can earn about 10.5% or more on your savings over that 35 year period. That's about a million you get out for your $105,500 you would have put in. In other words, there are very few people that should not be millionaires be the time they are 65 if they start smart and early. Getting 10.5 % on a selection of mutual funds would not be that difficult if you search for those with 10 year histories of 10-12 %.
Note: This does not include fees, does not allow for taxes, and doesn't take inflation into account.

Answer 4

It's possible...If you assume a 10.5% annual return on your investment. I think that number is pretty aggressive. Certainly you can achieve it if everything works perfectly in the market. But, two small depressions in the last 10 years will kill you. It also doesn't take into consideration inflation (as prior posters have said). Your million will really only be able to buy $400k worth of goods and materials. Which, in turn, equates out to about 16,000 (in todays dollars)that you can take out each year and expect the money to last your entire life. So if you can live on 16k a year it's great.

So, while it sounds nice...you really need to have more than that...it's a good start but I'd shoot for $100/wk. That and no house payment will get you a long ways when you retire.

Answer 5

Saving $58 per week after taxes in a Roth IRA bearing an avg of 10% return when you are 30 will get you $1 million by the time you are 65 without considering inflation. To check it out go to motleyfool.com they have some calculators youc an work it out on. (Keep in mind this only works after taxes in a tax sheltered account. If you were doing a taxed account your time would be alot longer).

Answer 6

If you began saving this at BIRTH it would work. ( see calculations above in others answers )

If you INVEST this amount from age 30 on, you will need a nice amount of interest and no one can predict interest !!! NEVER assume you will make a certain amount of interest or you will could be quite disappointed in the future.

DO, however, save 10 times that amount and make your retirement worth living. Only you can plan for your retirement... do not count on government or your job's pension. Save save save and invest invest invest and you will be fine.

=^,,^=

Answer 7

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Answer 8

It is related to the interest, or rate of return.

go to www.economicinvest.com and see what they offer. The research is sound, and they identify investments that provide a great value, so there are good returns


they also provide investment philosophy and techniques that are advanced and used by institutional money mangers.

Answer 9

You would have to earn 10.5% annually during the 35 years so that would be investing in the stock market , mostly diversified small cap stocks, and still it wouldn't be for sure. Also keep in mind that in 35 years time a million dollars won't be that much.

Answer 10

It all depends on your "Annual Yeild" (Interest Rate), and the "Annual Inflation Rate".

You can do the math yourself on a savings calculator at the link below.

Save now, the younger you are, the more you will have.