I've heard that if when your in your twenty's you start putting $160 a month into saving you can?

Question

have about a million dollars in savings when you retire. Is this true and if so how does the math on that work out?

Answer 1

That's correct!. It's what I have been telling young folks for years: don't make a car payment (buy a very cheap used car for cash, or take the bus for 3 years) and put the same money you would make as a car payment (about $160 to $200) into short-term investments until it is enough to buy into mutual funds. Then keep putting that 'car payment' religiously into those mutual funds.

There are mutual funds that have averaged 12 and 13% over the past 10 years or more. At 13%, the rule of 72 says your money will double every 72/13 = 5.5 years.

Let's say by 25 you have saved up $10,000. and continue to put away $160/month (about 10 grand every 5 years)
By 30.5 it will be 30,000.
By 36 it will be 70,000.
By 41.5 it will be 150,000.
By 47 it will be 310,000.
By 52.5 it will be 630,000
By 58 it will be 1.3 million and you can retire a few years early.
By 63 it will be 2.6 million and you can retire, well.

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Answer 2

Yes, it is possible. Interest on your investment works in your favor.

If you can't put that much a month away, start with what you can afford. Even $20.00 a month at a young age would be very helpful in 50 years. You can up the monthly amount as you get raises and better jobs.

Put it into a savings account to begin with. When you get a couple thousand, look for a money market account. A few more thousand, maybe move some into an IRA. Get some professional financial planning help once you have 10 or 20 thousand put aside.

You can do it and you will be very thankful you did in another 20 years.

Answer 3

yes it is true. well lets say realistically you can invest at 6% for sure every from the time you are 20-65 thats 45 years

So you invest 160 every month for 10 years.

well that's an annuity..so at the end of 10 years, when you are 30, you have $26,220. If this lump was invested annually at 6% for the next 35 years, it would be worth just over 200,000 at age 65. Keep in mind this is never saving another dime again after the age of 30...just investing your lump sum.

If you were fortunate to be able to invest at 10% for the whole period, you would have 32,775 and if that was invested at 10% for the next 35 years at 10%....that would be worth
just over 900,000!!!!

Once again, that's putting money away until you are 30 and never saving another dime after that....


So yes it is possible to have a million dollars for retirement just starting early in life.

Answer 4

Yes its possible. Other people have explained that part. You are missing the inflation or cost of living part though. Ask your grandparents how much they paid for a car when they were 20. Everything gets more expensive as time goes on. Being a millionaire in your future is likely to be middle class and not rich. So save much more than $160/mo if you plan on being wealthy.

Answer 5

Depends on the interest rates and when you'll retire. If you start putting away $160 a month at 25 and then retire at 65, you're actual contributions will be a bit over $100,000. But over time your early contributions will have grown quite large by continued interest compounding.

Answer 6

You can make a lot more money by investing in 401k plans and even savings accounts if you start early because of interest.

Answer 7

Actually yes it is true and when you start earlier you get more , I started at 10 and at 12 got 1500

Answer 8

check with your bank usually you would need to put 333 dollars a month or 4000 dollars a year to do this, takes about 30 years to get up to about 650,000 dollars.

Answer 9

Yes, as long as you don't use credit cards, take out loans, get financed for a car, or any other debt... which is virtually impossible in this era

Answer 10

It depends on the interest.

Try using those savings calculators.