In your head, you’ve always known you’ll make it to the millionaire club. However, getting to $1 million and beyond has proven more difficult than you thought (despite reading every book related to “The Millionaire Next Door” that ever existed).
Wealthy people often say, “My first $1 million was the hardest to earn.”
Do you feel as if you’ve been hovering in $700,000 territory forever? If so, you may understand this sentiment completely.
If you can’t quite figure out how to turn your $1 million goal into reality, let’s dive into a few reasons why you’re having trouble bridging the gap.
Culprit 1: You Haven’t Planned Well
You need a plan if you want to have $1 million in your accounts. Just like any major goal, you’ll need to plan for it. For example, let’s say you plan to get a degree in college. That involves showing up to classes, making time to study and eventually earning your degree.
When you want to invest to earn $1 million or earn $1 million, it’s the same—but harder, because you may have to think carefully about how you’ll lay out the path yourself. Ask yourself:
- How much have I already invested or saved?
- How much will I need to invest per year?
- What rate of return will I need to achieve?
- How long will I need to invest?
For example, let’s say you’ve already saved $20,000. You commit to saving an additional $1,000. At an 8 percent annual rate of return, it’ll take you 24 years to reach your goals.
If you want to earn $1 million sooner, what will you have to do? Let’s say that you’ve saved that same $20,000. How long will it take you to get to $1 million if you save $2,000 per month at 10 percent annual rate of return? It’ll take 15.75 years.