Make $1,000,000 in Ten Years By Investing This Much Each Month

hey guys it's Iman and Christina from the our Rich Journey podcast where we answer your questions about making saving and investing money for financial Independence and retiring early today we have a question from a 23 year old that is planning on retiring by the time they are 33. I'm excited about this question I mean it doesn't matter if you're 23 33 43 53 when you start pursuing fire your whole life changes but for someone to get intentional about this at 23 oh my goodness I get so excited hearing about that yes I mean we love hearing about people's stories when they started the fire Journey where they are on the fire Journey but there's something about this caller specifically because at 23 we didn't even have anything in our minds associated with what even fire is we had no concept of it we weren't doing all these steps that got us to actually reach Financial Independence and retire early so the fact that she is 23 and she already is setting these goals for herself I think is so exciting so this caller her name is Leandra like we said she's 23 she is planning on retiring 10 years from now at 33. so she wants to know how she can achieve this goal of retiring in 10 years so there's a lot more specific information in her call so let's listen to her question and then we will get to the answer hi guys my name is Leandra I'm 23 years old and I'm planning on achieving fire in 10 years time and I like to have a million pounds by then and my question is how do I calculate how much money do I need to invest every month to achieve my fire number that's my question so thank you very much for everything that you do you really inspire me my goodness so Leandra is walking around the UK right because she's talking about getting a million dollars worth of pounds she's walking around the UK telling everybody I'm planning on retiring by the time I'm 33.

I mean a 23 year old when I was 23 I couldn't plan past next week right so she has set this long-term goal of achieving Financial Independence and when you have your fire number in mind the challenge is figuring out how to get there right you learn almost as you go in a way at least we had to but she has the benefit that so many people have right now that are pursuing this goal she has resources information all of these things that she can put together to put together an actionable plan because right now she just knows I want to retire in 10 years and I want a million pounds the challenge is what does she have to do in between that to achieve that goal yes so let's help her fill in those holes and figure out what she needs to do now I will say if you guys are listening we have an episode where we talk about this concept of figuring out how much money you need in order to retire and we relate that back to whether or not you're investing in the stock market and whether you're investing in real estate so we talk about this being your fire number it's the amount of money that you would need in a stock portfolio in order to reach Financial Independence and retire early Leandra said that her fire number is one million pounds now if you want to figure out how to calculate that please go to episode two of this podcast and you can learn more about that now what's really great about landra's question is that she's very specific about her goal and her timeline so the only other missing factor is what she plans on investing in in order to achieve the goal over this period of time and so assuming that her plan is to invest in the stock market and retire off of a stock portfolio we're going to do a little bit of homework for her right we're gonna make the assumption that she's planning on investing in the U. S stock market and getting the returns from the U. S stock market now even though she's in the UK there are ways for people that live in foreign countries to still invest in the U.

S stock market it all depends on the brokerage that you're with but you should also be able to find a way to access the U. S stock market and get those returns so you know we like to invest in the total stock market or the S P 500 we're going to use the total stock market as the investment and assuming she gets the historical returns of the total stock market which is 10 it's easy to calculate how much money she would have to invest every single month in order to reach this one million pound goal and so we looked at it right she would need to in invest five thousand five hundred pounds per month with a ten percent return in order to achieve Financial Independence in 10 years so a 5 500 pounds is gonna sound like a lot of money especially for a 23 year old who is assuming that she's going to have to be investing that much every single month for 10 years now for people in the states that are listening to this 5 500 pounds is the equivalent right now to about sixty two hundred dollars every single month so now that she knows this number this range of how much she should be investing the next question is how does she get her income to a level where she can be investing at that rate of 5 500 pounds every single month so even though it sounds like a lot of money I would not let that discourage her because really everyone that calculates their fire number and they're starting this journey they're going to be in a very similar situation you see when you pursue Financial Independence the idea is that you're moving up your timeline to retirement right so in order to do that you have to save and invest more money in order to get there quicker right so what she has to do and she's very fortunate that she's recognizing this early on in her journey she has to start to get very intentional about saving making and investing money first let's talk about the saving piece if you don't have a budget develop a budget and identify all of the money that you can save because that means more money that you can invest now we're talking about making money of course at your job I'm guessing a 23 year old is still kind of starting out on the income ladder right they just have more room to grow at work they're going to make more money at work so looking for opportunities to start to make more money at work but like we always said our nine to fives were not going to get us to financial Independence we also have to figure out ways to make money outside of work you see that to me is The X Factor in this whole financial Independence Journey you could get there a lot sooner if you're able to make more money outside of work you have a side hustle that generates all types of income you could get there in a matter of months I don't want to say months but I mean the right side hustle you never know but you can definitely move that data up I mean for us it was real estate right real estate definitely expedited our journey what was supposed to be a 10-year Journey became an eight-year Journey so once she does all that you can see how someone can start to invest fifty five hundred pounds a month and it may be one of those things where initially she's not putting away that much right maybe she's only able to do a thousand pounds a month but as she starts to grow her income and save more money and maybe she gets to 10 000 pounds a month you see there are different ways that she can achieve this goal of putting away 5 500 pounds a month yes I mean I definitely think that the focus Leandra if you're thinking about this goal of retiring in 10 years the focus really has to be outside of that nine to five job because for most people there's a ceiling in terms of how much you can make with your normal nine to five but if you have a side hustle if you start your own business if you're doing things outside of only getting that income from your normal nine to five employer you can grow your money so much more and there's less of a ceiling when you have your own side hustle and you have more control over the profits that you could potentially take in so I would definitely say you're at the beginning stages of your journey right now you should really be focused on ways to create additional income so that when you're bringing in this additional income you have even more money to to invest so there is one other thing that I really want to hit upon because we're talking about 5500 pounds a month in order to get to this goal based off of this 10 percent annual return now we said this 10 annual return that we're using is based off of the historical returns of the total stock market over it's actually over the past 100 years but past returns are not going to predict future returns so just because you invest a certain amount each month and you anticipate 10 a 10 return over 10 years that may not necessarily be what the return is maybe you end up actually getting a higher return or maybe you end up getting a lower return but there's no guarantee to figure out what your return could be so that's really the best estimate that you can have is just thinking about a Baseline and start working towards that goal it's always a Guiding Light yes I mean you have to use some sort of guesstimate in order to pursue this journey because without that Guiding Light you don't know whether or not you should be investing a thousand dollars a month or thirty thousand dollars a month it's just there to help you develop a better plan right okay so we have the numbers we have The Guiding Light we talked about increasing the income but there's something that you think is really important I think is really important too but I know if we don't hit upon this you're gonna be like oh we should have talked about this and it's mindset it's definitely mindset you know when she first started her question it sounded like she had a really good mindset in place she said I'm planning on doing this and she must always continue to have that type of can do mindset and surround yourself with other people that believe that you can do this you know you're 23 years old a lot of people are going to throw that into question they're gonna say oh you're too young you haven't experienced life all the all these different things that older people that have failed at something try to put on you what you are doing is going to be unique but you have to own this journey yeah and I think when we're talking about owning it you have to be positive you have to understand that you can achieve it and for everyone that is listening to this podcast I would love for you to go back to the question the beginning of the question when Leander starts talking she says I'm planning on retiring in 10 years something to that effect but I know the language was I'm planning on it wasn't I'm going to try to or I really hope that I can do this I'm not sure but I'll see these were definitive words I am planning on doing this right and that's the type of mindset that will get you somewhere because you've already adopted this goal that you're going to achieve you've already adopted this positive mindset that you're going to do it I'm planning on doing this I'm going to do this you know it's the difference between someone hoping they can do it and someone's saying okay can you help me decide how much I need to invest each month because I'm planning on getting there I just need the road map for how to do that that's right and it all goes to that mindset of really accepting the challenge and understanding that you can do that and the sooner that you can get into that mindset on your fire journey I think the more successful that you can be definitely so we threw a lot of stuff in there it wasn't just a number there's so many different elements to that but I'm glad that we got to answer this question to really give some concrete numbers to the journey so people that are out there if you're trying to figure out how much you need to invest to reach a certain goal hopefully this episode helped you if you're also interested in investing in real estate and you want to know how that plays a role go to episode two of this podcast because that can give you some further insight and if you still have questions after that why don't you consider leaving us a question so we can use it for a future episode you can go to outreachjourney.