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If you open a Roth IRA at the age of 16 and contribute $53.00 per month until age 60 you'll have over $1,000,000.00. Anyone working can find $50.00 / month to invest. And this is a conservative number at 10% interest. At 12% (which could be more likely than 10%) and you'd only need to save $23/month.
Most people that make less than median income believe the only way they can become a millionaire is to win the lottery. I think one of the best things society can do for people is education.
We should have so many more millionaires than we do have. And I would imagine most people on this site have a much better than average income. It's so easy to become a millionaire, assuming you start when time is on your side.
I'm grateful to have an interest that pays well and even though I didn't start at age 16 I'll still be fine. But I am making sure my kids understand the benefits of compounding over time.
I hope all of you take advantage of the fact that you likely earn better than average incomes and prepare for your future.
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Where do you get 10% interest these days? Even a CAGR of 10% is difficult with proper risk management. And if you do get 10% a year, what will inflation have done to that $1M by the time you're retiring? Completely facile.
That's not to say that this shouldn't be done, but it's hardly going to provide some miracle outcome.
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Greg Utas wrote: Where do you get 10% interest these days?
Any good index fund in the US. There are plenty that have 10 year+ of 12-15%.
Greg Utas wrote: what will inflation have done to that $1M by the time you're retiring? Completely facile.
No, not at all. The point is it's easy to become a millionaire. Granted, if you are starting today, like my kids are, I'm telling them to plan on a minimum of $2,000,000 because $1M 45 years from now will clearly not be the same as it is now.
Greg Utas wrote: hardly going to provide some miracle outcome.
Exactly. It's not a miracle to become wealthy. Just a tiny bit of early planning will do it. Anyone can do it.
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Quote: Any good index fund in the US. There are plenty that have 10 year+ of 12-15%.
10 years is within the timeframe of the run-up since 2009, one of the longest bull runs in history. Buy-and-hold works unless you buy at the wrong time. From Jan 1, 2000 to Jan 1, 2020, the S&P500 has a CAGR of about 4% because of two major corrections.
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Greg Utas wrote: 0 years is within the timeframe of the run-up since 2009,
As I pointed out in a different comment, the Magellan Fund with Fidelity has nearly a 16% return for the last 57 years.
Most good index funds also outperform the S&P.
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ZurdoDev wrote: The point is it's easy to become a millionaire
What this means is simply that a million no longer represents what people used to think of it.
ZurdoDev wrote: It's not a miracle to become wealthy.
If you've told your kids to plan for a minimum of $2M, it sounds like you're agreeing $1M isn't exactly "wealthy". Or what is "wealthy" to you?
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dandy72 wrote: What this means is simply that a million no longer represents what people used to think of it.
No, not at all.
dandy72 wrote: $2M, it sounds like you're agreeing $1M isn't exactly "wealthy". Or what is "wealthy" to you?
No, as I've stated elsewhere, 45 years from now $1M won't be what it is today.
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ZurdoDev wrote: No, as I've stated elsewhere, 45 years from now $1M won't be what it is today.
So again, out of curiosity, what is "wealthy" to you?
Personally, I've always taken for granted that government pensions such as old age will be worthless by the time I retire. They're pretty much already on the way there.
I've also taken for granted I need to have enough to live on from retirement onward, without relying on any sort of government handout or employee pension fund (I've always worked for small companies so I have no such benefit). I also don't want to have to work until I'm 65. Is that being "wealthy", or the minimum one should aim for?
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dandy72 wrote: So again, out of curiosity, what is "wealthy" to you?
Financial freedom. Meaning that you don't have to work if you don't want to.
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ZurdoDev wrote: Any good index fund in the US. There are plenty that have 10 year+ of 12-15%.
That ain't interest !
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W∴ Balboos wrote: That ain't interest !
It's growth. Not sure what point you're trying to make. 
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Interest is one-way growth.
What you're depending on is a basket of stocks that you hope will go up but can go down. And can stay down for any length of time. Possibly when you need to withdraw the money.
Surely you must have heard that often announced disclaimer "past performance is no guarantee of future results".
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W∴ Balboos wrote: "past performance is no guarantee of future results".
Of course, but the 12-15% is the average annual amount of growth over the 10+ year span. Some years it may be 20%, others 3%, etc. But I think you already know that which is why I am very confused as to what point you are trying to make, if any.
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The point is that negative "interest" can happen just when you need to withdraw the money for retirement so that the 10K you withdraw is really more like a 15k hit to your account.
But then, I think you understand that so I don't get why you are asking about what point is being made. 
The confusion comes in when you call it interest, when it's really growth.
Interest is guaranteed, growth or earnings is not and can be negative. So better to call it growth to avoid confusion. But you most likely knew that already.
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You must accept 1 of 2 basic premises: Either we are alone in the universe or we are not alone. Either way, the implications are staggering!-Wernher von Braun
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TheGreatAndPowerfulOz wrote: The point is that negative "interest" can happen just when you need to withdraw the money
TheGreatAndPowerfulOz wrote: But then, I think you understand that
No, I don't understand why you guys are focusing on a single moment in time. Even if it tanks right before you have to withdraw, if you've had your money in for a long time you've still probably gotten a 12-15% return.
Like I said, Magellan, through all the ups and down, has AVERAGED nearly 16%.
You could also argue that it could go up 45% right before you have to withdraw. So? Why are you talking about single point in times?
I suppose you 2 are right, forget investing. It aint worth it because of what might happen at a given second. 
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Just stop calling it interest. It's not. It's average gains. That's the point.
#SupportHeForShe
Government can give you nothing but what it takes from somebody else. A government big enough to give you everything you want is big enough to take everything you've got, including your freedom.-Ezra Taft Benson
You must accept 1 of 2 basic premises: Either we are alone in the universe or we are not alone. Either way, the implications are staggering!-Wernher von Braun
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TheGreatAndPowerfulOz wrote: Just stop calling it interest.
I mentioned interest in one single place, the OP.
And it IS the correct term. In fact in Excel if you use the PMT function to figure out how to get $1,000,000.00 the rate is defined as "The interest rate per period."
So the 2 of you need to get over yourselves and stop arguing a point that doesn't even exist trying to make it look like you're a smarter than average pedantic.
Geez!!!
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Go get a clue.
Bye
#SupportHeForShe
Government can give you nothing but what it takes from somebody else. A government big enough to give you everything you want is big enough to take everything you've got, including your freedom.-Ezra Taft Benson
You must accept 1 of 2 basic premises: Either we are alone in the universe or we are not alone. Either way, the implications are staggering!-Wernher von Braun
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I provided you with factual evidence and even the definition of the word and you provided me with holier than thou juvenile responses. That’s more than enough clue to see what’s going on.
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ZurdoDev wrote: 10% interest
10% !! Where do I subscribe ? Better you can get here is 3.5%.
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Rage wrote: 10% !! Where do I subscribe ? Better you can get here is 3.5%.
Really? Maybe it's just a US thing but there are lots of Index Funds on the stock exchange that have averaged 12-15%+ for 10+ years. The Magellan Fund, for example, at Fidelity has a 15.87% life return and it was opened in 1963.
Not sure if you can get to this link, FMAGX - Fidelity ® Magellan ® Fund | Fidelity Investments[^]
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The gentlemen seems to have confused "unrealized capital gains" and "interest".
Pretty much, assuming a fund to spread the risk, corporate bonds will give you 5%-6% and municipal bond funds may reach 3% with substantial tax exemptions.
I have money in (NY State) municipal bond funds and they're returning just over 3%, and if I remain living in NY State, that's 100% tax free. Once a year they do have a distribution of capital gains - but that's sort of extra (and taxable). However, the value of the funds fluctuates - mostly I've been behind but have caught up with the initial investment (2x, actually). It doesn't matter unless I sell them, but, since the money's there to return the bond interest I don't have any plans to sell them. Meanwhile, I've gotten a pretty nice pile of interest over the years.
10%? That's the long-term increase in something like the S&P 500 - but stocks go down, too.
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W∴ Balboos wrote: The gentlemen seems to have confused "unrealized capital gains" and "interest".
Interesting that you refused to answer my question. 
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Some people can't take a hint. Kinda moronic, if you ask me.
#SupportHeForShe
Government can give you nothing but what it takes from somebody else. A government big enough to give you everything you want is big enough to take everything you've got, including your freedom.-Ezra Taft Benson
You must accept 1 of 2 basic premises: Either we are alone in the universe or we are not alone. Either way, the implications are staggering!-Wernher von Braun
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TheGreatAndPowerfulOz wrote: Some people can't take a hint. Kinda moronic, if you ask me.
Most of the time on the internet when an arrogant person misunderstands something from the OP they respond with assertions that the OP is wrong and "just because" without any explanation or backing it up with evidence. How refreshing that you and baboos were so humble as to explain how I was wrong so that you could set me straight and backed it up with verifiable evidence. It's the only way morons like me can learn. How refreshing you and baboos are not trolls, but genuine adults trying to have a meaningful and uplifting conversation. Thank you so much for this opportunity to learn from 2 such wise people.
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