How much do you need to invest to be a Millionaire if you start at 25-years-old? (2024)

FAQs

How much should a 25 year old have invested? ›

By age 25, you should have saved about $20,000. Looking at data from the Bureau of Labor Statistics (BLS) for the fourth quarter of 2023, the median salaries for full-time workers were as follows: $712 per week, or $37,024 each year for workers ages 20 to 24.

Let's be real: becoming a millionaire from scratch by the age of 25 (or ever) doesn't exactly come easy. It takes incredible dedication, relentless work ethic, a keen vision and, more often than not, a healthy side serving of luck. And it takes discipline — not only in your work life but in your life-life.

Starting early is a major advantage.

In your 20s, and even your 30s, your biggest asset is time. Even when you're just investing in retirement savings, nothing can make up for the effect of compound interest. Also, if you lose money in the market, you'll have more time to make it back before you need it.

From age 18-24, only 1% of earners (7% altogether) earn $100k per year or more. This makes these age groups by far the lowest earners in the US. Americans make the most income gains between 25 and 35. Only 2% of 25-year-olds make over $100k per year, but this jumps to a considerable 12% by 35.

By age 25, you should ideally have enough money to cover three months of essential bills. You should also have between one-third and half of a year's salary in a retirement plan. If you're nowhere close, you may want to turn to the gig economy for an income boost.

If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.

Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.

“Beyond entrepreneurship, no conventional career path — even medicine, law, or engineering — generates a million-dollar income for a newcomer in only a year.” So, aside from a lucky crypto investment or a windfall of some sort, Kellzi said becoming a millionaire is highly improbable.

Sometime around age 50, the average American can now expect a household net worth exceeding $1 million. How did so many 50-somethings become millionaires? Household wealth swelled at a record pace during the pandemic.

How to become rich at 25? ›

Self discipline (i.e., regular investing and living below one's means) are key factors. The average age of millionaires is 57, indicating that, for most people, it takes three or four decades of hard work to accumulate substantial wealth. Research was conducted by the authors, Thomas Stanley, Ph. D., and William D.

According to Ramsey's tweet, investing $100 per month for 40 years gives you an account value of $1,176,000. Ramsey's assumptions include a 12% annual rate of return, which some critics have labeled as optimistic given that the long-term average annual return of the S&P 500 index is closer to 10%.

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.