How To Become A Millionaire – Follow One Simple Rule
Feb 21, 1999. It’s easy. All you have to do is save $200 a month in a growth mutual fund for
the next 40 years and you’ll have one million dollars by the time you retire.
Oh, you can’t save $200 a month. Well, that is what it takes. I’m sure that if you put away $50
a week and at the end of the month put it into a mutual fund at an average rate of 8% you’ll have that windfall.
I’m not saying that will be enough for your retirement, but it will help. Who knows what the next 40 years will
bring! At least you won’t be in a bind, and of course you’ll have Social Security to bring up the rear.
Between 1926 and 1996, the stock market as measured by the Standard & Poor 500 index returned
10.7% a year on average, including income from dividends. By investing the same number of dollars at regular intervals
over time you buy more shares when stock prices are low and fewer shares when stock prices are high, virtually
assuring a satisfactory average purchase.
You may ask, “How much do I keep in stocks and cash?” The rule of thumb is you subtract
your age from 100. Say you’re twenty five years old, subtract that from 100 and you have 75. So invest 75% in stock
funds. The rest may go into bonds or bond funds. I always like straight bonds like U.S. Treasuries. Put Treasuries
in five and ten year intervals.
Always remember that the higher the percentage of stocks in your portfolio, the more you will
receive in return, but the risk is greater. The big advantage you have at a young age is time. All you have to
do is save $200 a month, every month!! It feels good to be a millionaire!