How Long Until I’m Wealthy?
“Cash confiscates capital. Long term, after taxes and inflation, the return on cash is negative.” Catherine Keating
Since my mid-20’s, I made financial net worth goals for our family. I’d calculate our current net worth, add additional savings, and punch in an expected rate of return over the period, usually five to ten years. Occasionally, I go back and review prior goals. No matter what the market, over the long term we have met or surpassed the objectives.
Learn how long it takes to meet or surpass your financial goals. When you have an idea of how long it takes until you’re wealthy at certain savings levels, you’ll feel better.
Here’s how certain wealth building parameters will play out.
How Long Until I’m Wealthy – Assumptions:
- Save monthly.
- Divide investments among stock (60%) and bond (40%) mutual or exchange traded funds. The historical average annual return of 60% stock funds and 40% bond funds is 7.4%. To be on the conservative side, I’m going to assume an annual return for this portfolio of 7%.
- Investment returns over the next 20-40 years approximate historical averages; STOCKS 9% BONDS 5%
HOW LONG WILL IT TAKE?
At an annual return of 7% per year, how long until you are wealthy?
|How Long Until I’m Wealthy?|
|20 years||30 years||40 years|
If you save $100 per month, in 40 years you will have $242,481.00. Increase that to $800.00 per month and you’ve got over 2 million dollars after 40 years investing.
Drop your monthly investment to $500.00 and invest for 30 years. You still wind up with a nest egg of over $600,000.00. Not bad.
Empowerment-It’s in your Hands
There are no guarantees in life-but regular savings and investing will definitely make you wealthier than spending!
Finding the balance between spending and saving leads to pleasure now and future security.
Free Investing Blueprint
Download my free microbook- How to Invest and Outperform Most Active Fund Managers. It’s straightforward and will get you started to prosperity.
Barbara Friedberg Personal Finance teaches wealth building skills. Pay attention, be patient, don’t overspend on stuff that doesn’t last; save, invest, and you can become rich. Take action to hit your wealth target.