When it comes to money and wanting more of it, most people want it quickly and don’t know how to save to become a millionaire.
They want the cheats, the easy ways to make money.
Well unfortunately there aren’t really any unless you are relying on luck! Think lottery/premium bonds.
But there is a way we can all become millionaires. It’s not going to be easy and it’s not going to be quick but it gives you the best chance of making it work.
Examples of how to save to become a millionaire
Now you may be thinking saving is boring and will take you ages but will it? Have you ever found out how long you need to save and how much you need to save to become a millionaire?
What follows is a series of examples that will hopefully give you an insight into how to save to become a millionaire.
There are three elements to saving that will affect the overall result:
- How much you are prepared to save.
- How long you are prepared to save.
- What return/interest you receive on your savings.
Saving for 20 years
| Monthly saving amount | Return per year | End Result |
| £3,768 | 1% | £1,000,000 |
| £3,060 | 3% | £1,000,000 |
| £2,206 | 6% | £1,000,000 |
Saving for 30 years
| Monthly saving amount | Return per year | End Result |
| £2,385 | 1% | £1,000,000 |
| £1,728 | 3% | £1,000,000 |
| £1,027 | 6% | £1,000,000 |
Saving for 40 years
| Monthly saving amount | Return per year | End Result |
| £1,697 | 1% | £1,000,000 |
| £1,091 | 3% | £1,000,000 |
| £525 | 6% | £1,000,000 |
You can do your own calculations using the Money Advice Service’s online saving calculator.
Returns are crucial in how to save to become a millionaire
The interesting thing about the results above is how much difference the level of return makes. If you have money sitting in a cash savings account, perhaps earning only 1% per year it is going to take you a lot longer or require far more savings to reach your millionaire status than if you perhaps invested the money.
Now before you think about investing there are a number of things you need to consider like how much risk you want to take and how much you can afford to lose. However over the longer term investments generally outperform cash.
What’s also interesting is if you make your monthly saving into a pension you don’t actually need to contribute the full monthly amount quoted in the tables above. You only actually have to contribute 80% of that figure. That’s because the government give you tax relief on each contribution you make to a pension. This tops up your saving amount. There are rules on how much you can contribute to pensions so please be aware of the pension contribution limit.
So now’s the time to get started. You may not need a million and you may already have savings to start off with. They key really is understanding what you need and then knowing what you need to do to get there. We can help with this so give us a call and download our Simply Investing Guide below.
Risk warning:
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.
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