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How to Become a Millionaire

Published -
March 1, 2024

Becoming a millionaire is more about discipline than investment savvy, rich relatives, or lucky lottery numbers. Reaching this milestone or even twice this amount is much simpler than most people realize. The problem is that “simple” isn’t always easy.

Four simple steps to reach this milestone:

  1. Live Below Your Means (aka Save Money)
  2. Be a Sensible Investor
  3. Keep Investing Regardless of Market Conditions
  4. Be Patient

Live Below Your Means

Living below your means is the first and most critical step. If you learn to live on 80-85% of your income, this is a great start. If you’re older and haven’t been a good saver, you may need to either save more or plan to work and save longer.

The best way to achieve this saving goal is to trick yourself. Consciously making the decision not to spend part of your paycheck week after week would be very difficult. Not seeing 20% of your paycheck makes it much easier. Automate this process as much as possible through a 401(k)/403(b) (or equivalent) plan at work or direct investment program that you set up. The key is to make it automatic!

Be a Sensible Investor

This means investing in low cost, broadly diversified equity funds. This approach is rather boring. You may feel left out of some “fun” cocktail party conversations about the latest and greatest tech stock. And yes, this may be FOMO, as the younger generations say, but you’ll also miss out on the misery that often follows.

On the other side of chasing hot stocks is being too conservative. This can also be a big problem. Investors need a significant allocation of stock funds to stay ahead of inflation and reap the incredible benefits that compounding delivers.

Keep Investing Regardless of Market Conditions

This is also known as maintaining discipline. This step seems to trip up a lot of investors. The thing to remember when you’re investing money each week or month into the stock market is that when prices drop, stocks go on sale, and you can be happy about buying more shares at the same price. This is especially true when you are years away from retirement.

Be Patient

With investing, patience is more than a virtue – it is essential. Those who don’t have patience end up doing bad and costly things with their money. We’re not talking about being patient for a year or two, it usually takes many decades to build wealth.

If you’re lacking patience, the best cure is to save and invest more. You’ll hit your goals sooner.

How Much do I Need to Save to Become a Millionaire?

There are some important variables to consider when doing this analysis:

  • How much you’ll earn from your investments. Historically the stock market has returned just over 10% per year but has had many long periods below that. To be safe, we will assume a 7% annual return. Going back to 1926, 20-year rolling returns of 7% or higher occurred close to 90% of the time. The market returned greater than 7% for 100% of the time over rolling 30-year periods. If we end up being low with our 7% return projection, even better for you. You’ll end up exceeding the million-dollar mark.
  • The time frame. If you’re starting at 45, you’ll need to save much more than if you’re 25. The earlier you get serious about saving and investing, the better. The charts below look at various ages as a starting point.
  • How much you’re starting with. If you already have money invested, you’ve got a head start. For our analysis below, we’re going to assume you’re starting with nothing.

Here are the numbers. This is the power of compound interest!

Other Things to Consider


A million dollars will not go nearly as far 20 years from now as it does today. If you are just starting your quest to be a millionaire, you can start with the contribution numbers above but plan to increase your contribution each year to help keep up with inflation.

This is what it looks like if you increase your contributions by 3% per year:


If you plan to build your fortune in a traditional 401k (or equivalent) account, you will owe taxes on every dollar when you take distributions. Working with a competent advisor can help minimize these taxes, but the point is that $1 million in a traditional 401k or IRA has a lower value than $1 million outside of one of these accounts.

A great strategy for reducing this tax pain is to use a Roth IRA or Roth 401k (if you have one available) for the first half of your career and switch to a traditional 401k later when your income is higher, and the tax deduction is more meaningful.

Shortcuts/Insurance Products/Investment Fads

Our examples above are based on a sensible portfolio of low-cost stock index mutual funds or ETFs. This will give you the highest probability of success. Avoid anything that may sound too good to be true including insurance products (and their “hypothetical” charts), investment fads, hot stocks or sectors (volatile tech stocks are often a trap), cryptocurrency, etc. Slow, boring, and steady wins the race.

Avoid Debt

If you are a successful saver and investor but retire with a mortgage, two car payments, and a boat payment, your $1 million will not go nearly as far as for someone who is debt-free. Debt is a wealth killer. Plan to be 100% debt-free well before retirement. The best way to accomplish this is to avoid it in the first place.

The Bottom Line

Becoming a millionaire can be simple if you don’t try to act like one.

Helpful Links:

Financial Planning 101

How to invest your 401k

Where should you invest your dollars? Five Buckets

Active vs. Passive Investing

Avoid hot stock tips and investment fads

Keep investing—no matter what

Keep a long-term view

Are you ready for retirement?


How can we help you?

We’re happy to answer any questions you may have about financial, retirement or tax planning. We also love to talk about investment management and how our process increases the odds of our clients meeting or exceeding their goals.

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