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How To Become A Millionaire by 40 – Nine Strategies That Work

A millionaire by the time you turn 40? It sounds unbelievable, right? But if you are in your early 20s, fresh out of college, starting a new job, and have the will to become a millionaire as soon as possible, you can make that happen before you turn 40. If you’re not in your early 20’s and want a million dollars by 40, you’ll need to save, earn and invest more, than if you started earlier. Becoming a millionaire by 40 is achievable, and here’s how.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

The first step in how to become a millionaire in your 40’s is mental. Set the goal, create a plan, decide the financial tradeoffs you’re willing to make, and you can be a millionaire at 40. You may have to give up certain experiences and possessions that many young people enjoy early in their lives.

You can train yourself to stay the course until you reach the goal.

The steps are clear – minimize your living expenses, maximize your savings, get a side hustle, and invest.

9 Strategies to Help You Make Your First Million by 40

1. Start a 401(k) Early and Make Maximum Annual Contributions

Begin investing in your 401(k) or 403(b) as soon as you land your first job. Contribute as much as possible to your retirement savings account. If your employer offers a matching contribution, make sure to contribute the maximum possible to receive the employer match. For 2023, the 401(k) contribution is $22,500 with an additional $7,500 if you’re older than age 50. In 2024, the contribution ramps up to $23,000 per year.

Let’s see how this strategy works to make you a millionaire by 40:

Sign up for the company 401(k) plan immediately after landing your first job. Max out your annual 401(k) contribution at $22,500. With an employer matching contribution of up to 5%, you can easily achieve $1 million by age 40.

Here’s an example of how to become a millionaire (almost) by age 40 if you start investing a age 24 and contribute the maximum amount every years.

These assumptions don’t include an employer contribution, which would speed up the opportunity to become a millionaire by 40.


  • Contribute $22,500 per year, or $1,875 per month, starting at age 24.
  • Earn an average of 8.0% annual return – by investing in a diversified portfolio of stock and bond funds.
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By age 40, without increasing contributions, or adding in an employer contribution, your 401k account will be worth approximately $740,000. If your employer contributed five percent, of your salary, potentially $360 per month, your retirement investment portfolio would hit roughly $880,000 at 40.

For a sophisticated, free retirement calculator, plus investment management tools, check out Empower. Link or manually input your financial data, test out various scenarios to calculate how to be a millionaire by 40.

2. If You’re Self Employed – Open a Solo 401(k) or SEP IRA

If you are self-employed, you won’t have an employer-sponsored retirement plan, but that should not stop you from being a millionaire by 40.

There are two retirement plans designed for self-employed individuals: Solo 401(k) and SEP IRA.

A solo 401(k) is a 401(k), but it’s designed for a single participant (spouse can be included). In this plan, you are both the employer and the employee, so you can make contributions as an employee and as an employer. Just like the employer-sponsored 401(k) plan, you can make the ’employee’ contribution of up to $23,000 for 2024. And an ’employer’ contribution can be up to 25% of your income. Contributing the maximum can surely propel you become a millionaire by 40. 

The other option for a self-employed individual is SEP IRA. You can contribute up to 25% of your self-employment income to the plan

In most cases, the solo 401(k) is a better option to make a million quickly. You can also add an IRA to increase your total retirement contribution.

3. Buy Real Estate

One of the best ways to become a millionaire is through buying real estate. You can even buy real estate in a self-directed retirement account.

One of the best ways to become a millionaire by age 40 is through making 401(k) real estate investments.  Real estate investing promises a high ROI with little risk.

You generally cannot invest directly in real estate through an employer’s 401(k) plan, unless there’s a real estate investment fund on the plan’s investment offerings. But you can choose to roll over your 401(k) account into Self-Directed 401(k)/Solo 401(k), Roth Solo 401(k), or Self-Directed IRAs and make 401(k) real estate investments.

You can even buy real estate like you purchase a stock through a REIT. A REIT is a type of investment that deploys your money into a wide range of real estate investments. Sample REITs:

  • VGSIX-Vanguard U.S. REIT Index Mutual Fund
  • VNQ-Vanguard U.S. REIT Index ETF
  • RWR-SPDR Dow Jones Index REIT ETF
  • VNQI-Vanguard Global ex-U.S. Global Real Estate ETF
  • FGL-iShares Developed Real Estate (ex-U.S.) ETF International Fund.
  • RWX- SPDR Dow Jones International Real Estate exchange-traded fund

There are also scores of sector REITs that invest in office buildings, storage units, university housing, nursing homes and more.

One of the newest ways to invest in real estate is through real estate crowdfunding. Like the name suggests, you’re able to partner with other investors to invest in large real estate projects of various types.

And of course there’s the old fashioned way of investing in real estate through buying real property. You can then rent the real estate out or fix it up and resell it.

4. Maximize Your Savings

Most financial experts recommend saving 10% to 15% of your income towards your retirement. But, here we are not talking about retirement. We are talking about becoming a millionaire before turning 40 (25 years before a typical retirement age). We are talking about saving 30%, 40%, or 50% of your income. This can be painful.

Here’s how much you would need to save and invest each year from age 24 to age 40 if you want to get rich and reach a million.

Using the same 8.0% return assumption, you’d need to invest $28,180 per year to become a millionaire within 16 years.

That means, not only would you invest within your retirement account, but you would also need to invest in a traditional brokerage investment account or with a robo-advisor like Wealthfront (sign up bonus) or SoFi Automated investing (fee-free investment management).

t’s easy to set up an investment account at any number of investment companies.

5. Diversify Your Investments

If you want to become a millionaire before 40, you need to keep adding to your savings and investing the money so that it grows. Since the financial markets fluctuate, it is wise not to keep all your eggs in the same basket, so that when one investment stumbles, you’ll have others to boost your returns.

The best way to build wealth while protecting your assets is to build a diversified investment portfolio. Put your money not only in stocks and real estate, consider different asset classes to balance the risk.

There are folks who invest in websites, mobile home parks, collectibles, currency, private equity and more. These might be riskier than typical stock, bond, and real estate investing.

Reinvest your investment dividends and profits back into the market and let the returns compound. This allows your money, to work for you. Actually, reinvesting your dividends is one of the few, truly passive income ideas.

Bonus: 10 Best Alternative Investments

6. Start a Side Hustle

One of the secrets of the wealthy are that they have multiple streams of income. That way, if one source of income dries up, you’ll have others to offset the loss.

There are many creative ways to make extra income. The gig-economy has made it very easy to pick up extra cash, on the side. Driving for Uber, Lyft, Door Dash and other sites is an easy way to make money on your own terms.

Task Rabbit, Etsy, and Fiverr allow you to sell your services on busy websites that match up sellers and buyers.

Then there’s the old fashioned way of selling by setting up a booth at a swap meet to sell baseball cards, crafts or water.

It’s also easy to advertise locally through Craigslist. There was a guy with a truck that picked up junk and transported it to the dump for big bucks.

The key with any side hustle, is to make sure that you save and invest the extra money.

7. Find a Higher Paying Job or Ask for a Raise

So many of you are afraid to ask for a raise. How to get a raise involves tracking your accomplishments and value add to the organization. Use that information, comparative salary statistics, and the promise of added initiative and detailed contribution to advocate for yourself. It’s not useful to claim that “you need a raise,” and best to stress what you bring to the organization that substantiates your value.

If asking for a raise doesn’t work, or if you’re ready for a change, seek out a higher paying job. Be prepared to document your accomplishments and skills. Stress what you can bring to a new employer. Don’t be afraid to negotiate for a higher salary, after an offer is made.

If you don’t ask for more money, it’s rare to receive it. The worst a prospective or current employer can say is “No.”

Don’t be afraid to ask for help. WiserAdvisor vets fee-only financial advisors and matches you with three in your area.


8. Live Modestly

It’s unrealistic to live large and save a lot simultaneously if you want to be a millionaire in your 40s. It doesn’t work.

The Millionaire Next Door details the stories of average men and women who have amassed a million dollars, while living a simple life.

If you want to amass a million dollars fast, you need to live well below your means. That means, making the conscious decision to live simply and forgo many of the luxuries and “perceived necessities” of today.

You may even wish to surround yourself with friends with a similar mindset. It makes it easier to become a millionaire by 40 if you’re in the company of others with similar goals.

9. Track Your Net Worth

Your net worth is the value of your investments, savings accounts, house, and other assets, less your liabilities or what you owe.

Why is it important to track your net worth? It allows you to track your progress. Tracking your net worth is also motivating. When you see that your wealth-creation strategies are working, you’re more likely to continue. Even when the financial markets suffer a periodic decline, you’ll be able to study your overall progress. This will help you stay on track with your goals.

The Empower free investment management tools are an easy way to track your net worth.

Statistically, about a third of 1% of the population are millionaires by age 40. But if you want to be in that group, you have to be ready to commit time, effort and lots of money to reach the million-dollar mark. And it’s not going to be an easy journey.

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.

Empower Advisors Corporation (“PCAC”) compensates Wealth Media, LLC. (“Company”) for new leads. Wealth Media is not an investment client of PCAC.

Author Bio: Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at [email protected].