How much should I invest at 30 to be a millionaire?
“The most straightforward way to become a millionaire by your 40th birthday is investing about $5,500 monthly starting at age 30,” said Laura Adams, MBA, an award-winning personal finance author and expert with Finder.com. “If your investments receive an average 8% return over the decade, you'll have $1 million.”
If you have $506.60 transferred into your account every month, invest your money, and leave it alone for 30 years, you may just find yourself a millionaire at that time. So start investing today -- and dream of what your millionaire lifestyle will look like.
Rule of thumb: Have 1x your annual income saved by age 30, 3x by 40, and so on. See chart below. The sooner you start saving for retirement, the longer you have to take advantage of the power of compound interest.
If you're looking for a ballpark figure, Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management says, “By age 30, a good rule of thumb is to aim to have saved the equivalent of your annual salary. Let's say you're earning $50,000 a year. By 30, it would be beneficial to have $50,000 saved.
Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.” “The current level of your income makes a big difference in determining if you're on track for retirement,” added Cox.
One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.
All that matters is how patient you are and which S&P 500 stocks you buy. Even if you only have $1 and never invest another penny, you can be a millionaire in 30 years. It's just that you'd need to hit a home run S&P 500 stock — which returns at least 58.5% — each year. That's a tall order, yes.
One widely cited benchmark states that by age 30, you should have saved approximately the same amount as your annual salary. According to the Bureau of Labor Statistics, the average American aged 25 to 34 earned $49,960 in 2021.
If you're naturally frugal and you plan to live a low-key, minimalist lifestyle in retirement then $150,000 might serve you well. On the other hand, if you'd like to enjoy a more lavish lifestyle or you have a serious health issue that results in high out-of-pocket costs, $150,000 may not go that far at all.
Age | Average 401(k) | Median 401(k) |
---|---|---|
30s | $160,517 | $69,718 |
40s | $344,182 | $151,274 |
50s | $558,740 | $247,338 |
60s | $555,621 | $209,382 |
What salary is considered rich for a single person?
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
By your early 30s you should already have some savings stashed away for retirement. It's not too late to get started if you don't. While everyone's situation is different, it may help to see what average retirement savings look like to see where you stand.
![How much should I invest at 30 to be a millionaire? (2024)](https://i.ytimg.com/vi/k29kHBLwlbw/hq720.jpg?sqp=-oaymwEcCNAFEJQDSFXyq4qpAw4IARUAAIhCGAFwAcABBg==&rs=AOn4CLAINilVNKMB16_WIa_5gJbcWEdLaA)
- Solidify a financial plan.
- Get rid of debt.
- Get your employer's retirement plan match.
- Contribute to an IRA.
- Maximize your retirement savings.
- Stick with stocks for long-term goals.
- Potentially build wealth by purchasing a home.
Most American households have at least $1,000 in checking or savings accounts. But only about 12% have more than $100,000 in checking and savings.
By age 30, you should have saved about $52,000, assuming you're earning a relatively average salary. This target number is based on the rule of thumb you should aim to have about one year's salary saved by the time you're entering your fourth decade.
Recent data from Northwestern Mutual shows that the average 30-something has $67,400 saved for retirement. So if you're sitting on a $100,000 savings balance at age 30, it means you're ahead of the game.
However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively. If the rate is lower, say 4%, the upfront investment is $600,000.
Living on $2,000 per month is doable, but you won't be able to live just anywhere. This is important because at the time of writing the average Social Security benefit paid is $1,701 per month.
Yes, it is possible to retire comfortably on $500k. This amount allows for an annual withdrawal of $20,000 from the age of 60 to 85, covering 25 years. If $20,000 a year, or $1,667 a month, meets your lifestyle needs, then $500k is enough for your retirement.
Coinbase, Nvidia, Palantir, and other tech names dominate the list of the year's best stocks. Amid a strong stock market rally in 2023, Coinbase COIN performed best among U.S.-listed stocks covered by Morningstar analysts, as the cryptocurrency exchange platform rebounded from a steep downturn in 2022.
Is investing $1 in stocks worth it?
Once you get your money working for you, it can grow quickly even if you aren't investing a lot. Investing $1 a day can turn into tens of thousands of dollars over a long period of time. You can get started by opening a brokerage account and researching low-cost index funds.
Over the past 20 years, the index has gained a total average annual return of around 10%. If you initially invested $10,000 and added $100 per month, you'd have $136,000 today.
If you have $400,000 in the bank you can retire early at age 62, but it will be tight. The good news is that if you can keep working for just five more years, you are on track for a potentially quite comfortable retirement by full retirement age.
By age 30, Fidelity recommends having the equivalent of one year's salary stashed in your workplace retirement plan. So, if you make $50,000, your 401(k) balance should be $50,000 by the time you hit 30.
It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options.
References
- https://www.fool.com/investing/2023/06/25/if-you-invested-10000-in-the-sp-500-20-years-ago/
- https://finance.yahoo.com/news/retirement-income-paid-60-000-140107260.html
- https://blog.clover.com/most-profitable-small-businesses-to-start-this-year/
- https://www.key.com/personal/financial-wellness/articles/how-much-cash-for-emergencies.html
- https://www.cnbc.com/select/can-you-have-too-much-money-in-checking-account/
- https://www.nerdwallet.com/article/banking/4-ways-to-earn-more-interest-on-savings
- https://www.cnn.com/cnn-underscored/money/average-american-savings
- https://www.nasdaq.com/articles/most-millennials-have-less-than-$100k-in-retirement-savings:-should-you-be-concerned
- https://www.cbsnews.com/news/how-much-is-too-much-money-for-a-high-yield-savings-account/
- https://time.com/personal-finance/article/average-american-savings-account-balance/
- https://finance.yahoo.com/news/500-every-month-passive-income-130041730.html
- https://smartasset.com/checking-account/can-you-cash-a-check-at-any-bank
- https://time.com/personal-finance/article/how-to-plan-for-retirement/
- https://grovegallery.com/top-5-best-ways-to-invest-30k-today/
- https://www.bankrate.com/banking/savings/emergency-savings-report/
- https://www.quora.com/I-want-to-earn-1-000-USD-every-month-from-dividends-How-much-do-I-have-to-invest-and-where
- https://www.quora.com/How-can-I-get-a-house-in-California-if-I-make-30-000-at-year-I-shouldn-t-have-to-work-2-jobs-to-afford-a-house-because-my-predecessors-were-much-lazier-and-able-to-afford-a-house-with-one-income
- https://www.usbank.com/investing/financial-perspectives/investing-insights/percentage-of-cash-in-my-portfolio.html
- https://rethinking65.com/2023/02/09/2-million-in-investable-assets-leads-to-retirement-confidence/
- https://www.experian.com/blogs/ask-experian/how-much-money-to-keep-in-checking-and-savings-accounts/
- https://nypost.com/banking/average-savings-balance/
- https://www.fool.com/the-ascent/buying-stocks/articles/i-have-100000-in-retirement-savings-and-im-30-years-old-am-i-all-set/
- https://www.forbes.com/advisor/banking/checking-vs-savings-accounts/
- https://www.bankrate.com/banking/cds/are-cds-worth-it-right-now/
- https://www.bankrate.com/investing/how-to-invest-in-your-30s/
- https://lendedu.com/blog/how-much-money-do-you-need-to-live-off-interest/
- https://finance.yahoo.com/news/ways-person-30-000-create-213010573.html
- https://www.fool.com/retirement/inheritance/
- https://journeynorth.org/pop/MillionBillion.html
- https://www.usbank.com/wealth-management/financial-perspectives/financial-planning/extra-cash.html
- https://josephhollander.com/news-blog/illegal-large-amounts-cash/
- https://www.unbiased.co.uk/discover/personal-finance/budgeting/is-saving-500-a-month-in-the-uk-a-good-amount
- https://www.honeybricks.com/learn/how-to-invest-30k-in-real-estate
- https://www.cnbc.com/select/tips-for-getting-your-first-100k/
- https://www.fool.com/the-ascent/buying-stocks/articles/starting-to-invest-in-2024-heres-how-much-youll-need-to-become-a-millionaire-in-30-years/
- https://foolwealth.com/insights/are-you-in-the-top-3-of-retirees
- https://www.policybazaar.com/life-insurance/investment-plans/articles/9-ways-to-double-money/
- https://money.usnews.com/money/retirement/articles/heres-how-much-you-need-to-save-each-month-to-earn-50-000-60-000-and-70-000-per-year-in-interest-for-retirement
- https://finance.yahoo.com/news/much-interest-earn-1-million-150000229.html
- https://www.empower.com/the-currency/life/average-401k-balance-age
- https://www.cheggindia.com/earn-online/low-investment-business-ideas-with-high-roi-in-india/
- https://www.quora.com/How-much-house-can-I-afford-if-I-make-30-000-a-year
- https://www.creditdonkey.com/invest-30k.html
- https://www.penfed.org/learn/is-money-safer-in-checking-or-savings
- https://www.wsj.com/podcasts/your-money-matters/how-much-cash-should-you-keep-at-home-in-case-of-an-emergency/237b83c9-f59e-4df2-9937-f08b973d00bc
- https://www.avivaindia.com/insurance-guide/6-best-monthly-income-schemes-india
- https://finance.yahoo.com/news/retire-62-400-000-401-154948217.html
- https://www.fool.com/the-ascent/personal-finance/articles/want-to-retire-on-200000-a-year-heres-how/
- https://finance.yahoo.com/news/5-us-cities-where-retire-144820803.html
- https://www.investopedia.com/articles/personal-finance/040915/how-much-cash-should-i-keep-bank.asp
- https://finance.yahoo.com/news/retirement-savings-compare-average-american-110056149.html
- https://usafacts.org/data-projects/retirement-savings
- https://finance.yahoo.com/news/much-retirement-150-000-buy-130005815.html
- https://www.forbes.com/sites/melissahouston/2023/11/04/the-best-passive-income-ideas-that-you-can-start-today/
- https://www.unbiased.com/discover/retirement-investing/can-you-retire-on-500k
- https://www.northwesternmutual.com/life-and-money/how-much-does-the-average-70-year-old-have-in-savings/
- https://www.tiaa.org/public/learn/personal-finance-101/how-much-of-my-income-should-i-save-every-month
- https://finance.yahoo.com/news/retire-comfortably-65-1-million-130047104.html
- https://www.fool.com/the-ascent/buying-stocks/articles/im-40-with-40000-in-retirement-savings-am-i-doing-all-right/
- https://finance.yahoo.com/news/5-steps-now-rich-5-140025032.html
- https://www.fool.com/the-ascent/buying-stocks/articles/how-much-money-will-you-end-up-with-if-you-invest-1-a-day/
- https://www.hrblock.com/tax-center/irs/audits-and-tax-notices/can-the-irs-get-my-financial-information/
- https://www.moneygeek.com/financial-planning/analysis/average-american-savings-balance/
- https://www.wikihow.com/Live-Off-Interest
- https://finance.yahoo.com/news/retire-comfortably-45-10-million-130014074.html
- https://www.usnews.com/banking/articles/if-you-deposit-a-lot-of-cash-does-your-bank-report-it-to-the-government
- https://ca.finance.yahoo.com/news/much-invest-2-000-monthly-160000919.html
- https://www.quora.com/If-I-deposit-3k-every-month-cash-into-my-bank-account-will-I-get-audited-reported-to-the-IRS
- https://finance.yahoo.com/news/income-level-considered-rich-140003986.html
- https://www.bankrate.com/retirement/how-much-do-you-need-in-savings-retirement-emergency-fund/
- https://www.forbes.com/advisor/banking/savings/how-much-should-i-have-saved-by-30/
- https://moneywise.com/investing/how-to-invest-30k
- https://www.fool.com/the-ascent/banks/articles/the-average-american-keeps-this-much-in-their-checking-account-how-do-you-compare/
- https://smartasset.com/retirement/retire-at-45-with-10-million
- https://www.westernsouthern.com/personal-finance/how-much-money-should-you-have-saved-by-25
- https://www.ellevest.com/magazine/personal-finance/how-much-keep-cash
- https://smartasset.com/retirement/how-to-build-wealth-in-your-30s
- https://www.quora.com/Can-millionaires-live-off-interest
- https://www.investopedia.com/articles/personal-finance/010616/whats-average-401k-balance-age.asp
- https://www.legalzoom.com/articles/8-most-profitable-small-business-ideas
- https://www.cnbc.com/2023/12/11/why-even-americans-making-more-than-100000-live-paycheck-to-paycheck.html
- https://www.forbes.com/advisor/banking/how-to-save-1000-a-month/
- https://www.cnbc.com/select/how-much-money-should-people-in-their-20s-save-for-emergencies/
- https://www.thebalancemoney.com/how-much-cash-can-you-deposit-5192344
- https://lendedu.com/blog/how-much-interest-would-you-earn-on-a-million-dollars
- https://www.fool.com/the-ascent/research/average-checking-account-balance/
- https://www.investopedia.com/how-to-retire-with-no-money-7505220
- https://www.lendingclub.com/resource-center/personal-savings/understanding-average-americans-savings-by-age
- https://www.fool.com/retirement/how-much-saved-by-30/
- https://www.morningstar.com/stocks/top-performing-stocks-2023
- https://www.investors.com/etfs-and-funds/sectors/sp500-how-to-be-a-millionaire-with-stocks-no-matter-what-you-have-now/
- https://finance.yahoo.com/news/retire-60-just-300-000-130017584.html
- https://www.fool.com/the-ascent/banks/articles/heres-what-happens-if-you-deposit-more-than-10000-in-cash-into-your-bank-account/
- https://www.skynova.com/learn/taxes/cash-deposits
- https://www.fool.com/the-ascent/banks/articles/this-is-how-much-money-you-can-make-with-30k-in-a-high-yield-savings-account/
- https://www.ally.com/stories/save/savings-by-age-how-much-to-save-in-your-20s-30s-40s-and-beyond/
- https://millennialmoney.com/how-to-invest-30k/
- https://www.wallstreetzen.com/blog/how-to-invest-30k/
- https://finance.yahoo.com/news/30-most-profitable-businesses-low-231821563.html
- https://smartasset.com/checking-account/checking-account-average-balance
- https://www.bankrate.com/retirement/average-401k-balance-by-age/
- https://finance.yahoo.com/news/much-cash-keep-home-times-180337690.html
- https://www.bankrate.com/retirement/average-monthly-social-security-check/
- https://www.cnbc.com/select/savings-by-age/
- https://www.cbsnews.com/news/ways-to-double-your-money-according-to-finance-experts/
- https://smartasset.com/retirement/how-much-should-i-have-in-my-401k-at-30
- https://www.approachfp.com/retire-on-500k/
- https://slavic401k.com/boost-retirement-savings-with-the-1000-a-month-rule/
- https://www.investopedia.com/ask/answers/175.asp
- https://www.wsj.com/articles/credit-card-salary-income-money-112c089a