How do you become a millionaire in 10 years?
High-income earners stand a better chance of becoming a millionaire in 10 years. Earning a high-income combined with frugal living provides a surplus of extra cash. Investing the surplus of extra cash will allow you to become a millionaire in 10 years.
Imagine, having a million dollars in a matter of 10 years because of smart choices you made. Making $1,000,000 is a very simple formula, but few follow it.
Don’t be discouraged if you don’t have a high income. The same principles apply for building wealth, even if you don’t reach $1,000,000.
Luckily for you, I’m going to show you the exact steps to becoming a millionaire in only 10 years. I’ll even show you how much money you need to invest to make it happen. Even if you don’t hit a million dollars, you are going to be far better off than most of your peers.
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Can you become a millionaire in 10 years?
It is possible to become a millionaire in 10 years. It is more likely for you to become a millionaire if you have a high savings rate and are frugal. High-income earners have an advantage, but high-income earners often spend more money than necessary.
Having a high savings rate is one of the most important factors to becoming a millionaire. Savings rate is the ratio of your income to money spent. Your goal is to have as much income as possible without spending any of it.
People who are naturally frugal do better with savings and stand a better chance of building wealth. Too many high-income earners fall into the trap of buying things simply because they can afford it.
For example, a high-income earner might earn $100,000, but only save $10,000 of it. However, a $50,000 earner might save $25,000.
The high-income earner is too busy spending their money to build wealth. A person saving $25,000 on a $50k salary is already investing 2.5 times as much.
So yes, high-income helps, but only if you are smart with your money. The easiest way to become a millionaire is to have a high-income and be frugal.Click to Tweet! Please Share!Click To Tweet
How much money would it take to be a millionaire in 10 years?
At a 10% return on investment, investing $5,000 per month would make you a millionaire in 10 years. Your total contribution would be $600,000 with an estimated growth of $400,000. However, you can find higher return on investments and invest less money or invest more money with less return on investment.
Finding $5,000 per month to invest can be very difficult. The most likely scenario is having a couple who both have high-income jobs. For example, having a couple engineers who both make $100k per year.
Alternatively, you can start a side hustle to help make up the difference. Some side hustles are easier to start than others, but some have the potential to make 5K per month.
Regardless, you will somehow need to find the cash if you want to become a millionaire in 10 years.
How can I become a millionaire in 10 years?
To become a millionaire in 10 years, you must have a high savings rate or income to spending. Find a way to keep your expenses low while increasing your income through whatever means possible. Invest as much money as possible at the highest rate of return you can find.
Focus on reducing expenses and living frugal
The first step of becoming a millionaire is to take control of your expenses. You need every single penny to go towards investments, not stuff.
You should have a method of budgeting or tracking your expenses. There are many different ways of managing finances, but it’s simply important that you start. The goal is to identify areas where you are spending unnecessarily.
Most people have certain areas where they overspend. It’s really easy to overspend when you aren’t tracking your finances. Usually, it’s the small expenses that add up over time which keeps you poor.
Increase your income
You are also going to need to find a way to increase your income. The idea is that we are making enough money to invest. Once your money is invested, it keeps on growing without your assistance.
The more money you can make, the more money you can invest. The more money invested, the more money that is gained passively.
Look, life is hard. There is no doubt about that. Life is going to take money.
You are going to earn an income. The IRS is going to want a portion of that income. You are also going to need a place to stay, food to eat, hot water, and electricity.
Everyone is going to get a portion of your money. The only way to keep more of that money is to make more of it.
Therefore, you need to find a way to increase your income at work and outside of work. You should always be looking around for better job opportunities. Ideally, you are trying to create an income source outside of your 9 to 5 job.
The best thing you can do is find a way to make money based on results and not time. Your time is limited, but your results are not. For example, you could make more money selling 10 houses as a realtor than you might working a desk job for a year.
Invest $5k per month (10% ROI)
As we previously discussed, you can hit one million dollars in 10 years by investing $5,000 per month at 10% ROI. However, that is just one of the many examples of how to save $1,000,000. Investing simply relies on how much money you invest and what your rate of return will be.
For example, let’s assume you are able to get a 20% return on investment. In this case, you would only have to invest $2,700 every month.For most people, investing $2,700 it’s much easier than $5,000.
The question is, where are you going to find a 20% ROI?
Alternatively, you can find a way to invest more money at a lower rate of return. At a 6% return on investment, you would have to invest $6,200 per month.
What you need to do is find an investment strategy that works for you. You need to come up with a plan which specifies the amount of money you are going to invest at what percent ROI.
Consider leveraged investments
One of the more risky strategies is to consider a leveraged investment. A leveraged investment borrows money in order to make more money. So technically, you are taking on debt by choosing a leveraged investment.
As you’ve seen, it is very difficult to find $5,000 per month to invest. A leveraged investment makes it easier because you are borrowing the money to invest.
Real estate is an example of a leveraged investment. You come up with a down payment and borrow the rest of the money from a bank. Tenants pay you back in the form of rent which is then used to pay back your mortgage.
You are taking on the liability of borrowing the money. You are still responsible should a tenant not pay the monthly rent. However, you can build wealth really quickly by borrowing money.Click to Tweet! Please Share!Click To Tweet
Summary: How to become a millionaire in 10 years
As you can see, it is completely possible to become a millionaire in only 10 years. However, it can be difficult to find the amount of money needed to invest to become a millionaire. Investing is all about how much money you invest for a certain time frame.
The sooner you want results, the more money you need to invest. Someone wanting to invest in a simple S&P 500 Index Fund would need to invest about $5,000 per month. Assuming a 10% return on investment, you would hit $1,000,000 in 10 years.
Focus on creating a gap between income and expenses. You need to invest as much money as possible if you are wanting to become a millionaire.
If you cannot come up with $5,000 per month then you may consider leveraged investments. Leverage investments are considered riskier because you are taking on debt. However, you are borrowing money which gives you money to invest.