Ideally, all of us want to reach a level of wealth that allows us to live the kind of life we want. Whether that involves having a second home, a nice car, or the ability to travel wherever you want – everyone has a financial dream in mind, and there is a lot you can do to achieve that in your 20’s and 30’s.
But for the people who aren’t willing or able to make business savvy decisions, there’s another easy thing you can do when you’re young to guarantee you’ll retire a millionaire – no matter what.
The secret is using the power of compound interest from age 19 to age 26. Sound too good to be true? Keep reading.
Compound interest is the process that allows your money to grow exponentially when invested properly. Here is what it takes to retire a millionaire using compound interest.
- At age 19, invest just $2000 in a Roth IRA with an average investment rate of 12% (these are pretty easy to find).
- Continue adding $2000 a year to this Roth IRA until age 26.
- At age 26 simply stop investing, and don’t touch it until you’re at retirement age.
That’s it. That’s all it takes. When you reach age 65, the compound interest of that account will have grown that initial investment of $16,000 to $2,288,996.
Sound too good to be true? Here’s a compound interest calculator from the US Government – play around with it a little and see the results for yourself.
It’s never too early, or too late, to start saving for retirement. With the right planning, anyone can retire a millionaire – even if everything else in your life doesn’t work out.