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The easiest way to become a millionaire
By doing this one thing you can all but guarantee you will become a millionaire at some point in your life
For a lot of you this is likely pretty basic information and not going to be anything new for you, but I know there are a lot of people out there who may not understand the value of compound interest. This post is for those people.
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” - Albert Einstein, a very smart human
So what is the easiest way to become a millionaire? Utilizing the power of compound interest by setting up a simple investment savings plan. With the power of compound interest, your money will grow exponentially over time. Before you know it you will have reached your goal of becoming a millionaire.
Follow the steps below and you will be well on your way to becoming a millionaire:
Open an investment savings account.
If you are new to investing in savings accounts you can check out a robo advisor like Betterment. They have an easy-to-follow guide for beginners and it’s free to start.
Set up automatic deposits to automate your savings.
Set up your new investment savings account to automatically withdrawal and invest a specific amount of money each week based on your own personal budget.
If you do not have much you can start small by saving the average cost you spend on eating out each week.
Start by saving as much as you can and then re-assess often to see if you could start to save more (or less).
Now sit back and watch your money grow.
Based on the average historical return of the S&P 500 the table below shows how your daily or weekly savings could grow and help you become a millionaire.
If this seems like a lot to you, try tracking your expenses for one week and then review it to see what all you could have cut out. You’ll likely be shocked at the amount of money you waste on a day-to-day basis (I know I am).
What do I recommend to automate our savings?
Currently, I like Betterment for its automated investment savings accounts. I have used Betterment for years and I really like it for all its features, various types of accounts, automated goal tracking, forecasting, and simplicity. It is really easy to get set up and is perfect for the non-finance people that need things explained in simple terms.
If you want to learn more about the different accounts we have set up you can read our article on how to automate your savings.
Check out this funny (and educational) video explaining compound interest from HBO’s Hard Knocks:
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