If I Wanted to Become a Millionaire In 2025, I'd Do This

here's exactly what I would do if I was trying to make my first million step by step now this video assumes that you are starting from scratch and at the very minimum you have some sort of earned income so if you literally follow these steps to a te there is no doubt in my mind you will become a millionaire so let's not waste any time and get into step number one which is that first you must invest aggressively as early as you can now I don't mean that you have to invest in aggressive Holdings with let's say high risk but what I mean is that you need to be contributing to your Investments as early as possible and as much as possible let's illustrate what that looks like with the following graph so assuming you invest $3,000 per year and you get 8% return on your money which can be easily done by investing in the S&P 500 you can see that the varying amounts you will have by the age of 65 if you're able to start at age 18 investing $3,000 per year by the time you're 65 your ending balance is going to be $1. 35 eight million if you start at age 25 the value at 65 is now $777,000 at age 35 it's 339,000 and at 45 and 55 as you can see here it's $137,400 respectively so I hope this illustrates already that the cost of not starting earlier is actually quite large and while not every 18-year-old is going to have $3,000 to invest every single year let's actually just do a more realistic comparison let's actually compare the ages of 25 and 35 at age 25 if you're able to invest $3,000 per year which comes out to about $250 a month you're ending balance is going to be that $777,000 number but if you wait 10 years later and start at age 35 your ending balance is now $339,000 that's a difference of $437,000 because you started 10 years later so time is a huge component here and that's why as soon as you're done watching this video you should make sure that your Investments are set up now let me show you that same graph at $5,000 per year and then $7,000 per year so at $5,000 per year here are those same ages so starting at age 18 if you were able to invest $5,000 per year you would have $2. 2 64 Million by the time you're 65 at age 25 that becomes 1.

29 5 million and at age 35 it's $566,000 respectively is what you can expect if we compare the age of 25 versus 35 again in this scenario you can see that the difference is even more exaggerated because of the additional amount of money invested at age 25 you would have 1. 29 5 million by the time you're 65 and if you start 10 years later that's 566k by the time you're 65 that difference now is $28,800 so you can see that as you increase the amount you invest every single year that difference makes a huge difference and just to drive this point home a little bit further what about $7,000 per year at 8% you can see now that the difference between starting at age 25 and 35 now is over a million dollar by the time you hit 65 5 so not only do we have to save as early as possible we also have to invest as aggressively as possible in terms of our contributions so the larger points I want to make about step one here is that number one often times people don't think that their small contributions will make a big difference but even in the first chart we saw that an extra $250 a month can make a large difference in your balance later on in life and number two which is that while investing can grow your portfolio passively in the background if you follow an indexing approach the faster way to make your first million in my opinion is to just really ensure that you're focusing on your career increasing your income and making the Right Moves there in order to hit your first million as soon as possible and that brings me to step number two today which is that you should be looking to capitalize on any tax advantage retirement accounts like your 401k or your IRAs a huge perk about the 401K in America is that often times employers will match your contribution up to a certain percentage of your salary if that's available you want to take advantage of that so just to make this a really simple example let's say you make $100,000 per year and your employer might match up to 3% of your salary or $3,000 of your contributions into your 401k every year by contributing enough to get the full employer match you are effectively doubling that portion of your retirement savings so in this example instead of only having your own $3,000 contribution you would have $6,000 in your 401k that year thanks to the employer match if that's an option for you please take it because that is literally a 100% return on your money and it's one of the best financial decisions to make on your way to your first million do another account is the Roth IRA this is the individual retirement account that can be held separately from the 401K so you can have both and we do talk about this on the channel a lot so I won't go into too much detail on the Roth IRA just know that on a high level you can contribute up to $7,000 per year into this account as of this year and the main advantage is that when you do retire any earnings or returns that you get on your Investments within this account are completely taxfree and that can help you a lot in the future because we know that $1 at the age of 25 is going to be worth so much more at age 65 especially if it's invested another benefit I think of tax advantage accounts like the 401K in particular is that it's a great way to automatically keep you disciplined and saving every pay period since the contribution of your 401k gets deducted from your paycheck before it even hits your own checking account I think that's really nice because you aren't even ever tempted to spend it this is going to lead to a much more successful financial future because the majority of people in the United States Well they suck at saving I believe that the latest reported number is that the personal savings rate according to Fred in the United States is 4.