A three-point plan to retiring with a million
So you want to know how to retire as a millionaire? It's a lot easier easier than you think. But the chances are, if you want to make it happen, you need to start now. So listen in. Here's a three-point plan to retiring with a million.
Create a millionaire plan
The first step towards millionaire status is creating a plan. As with any big goal in life, you need a plan that will help you get there. Without one, it's too easy to lose focus. Spend a few hours putting together a rock-solid one, and you'll have done 90% of the hard work towards millionaire status already.
What should your plan involve? It should examine factors such as the amount you can save on a monthly basis, your investment time horizon, and the return you can expect on your money.
Create multiple income streams
Struggling to save? Have you ever thought about creating extra income streams to help you build your wealth faster? They say the average millionaire has seven different income streams, so it's probably a wise idea to consider ways in which you could turbo-charge your income.
These days, it's easier than ever to bring in extra cash. For example, if you enjoy writing, you could pick up some freelance writing work though a freelancer site. Interested in a niche hobby? How about starting a blog and making money through ad revenue? If you have spare capital, you could lend it to small businesses through a peer-to-peer lending platform. The options are endless. Some extra income could definitely speed up your journey to millionaire status.
Invest in high-growth assets
Lastly, it's absolutely paramount that you get your hard-earned capital working for you. I can't stress this enough.
Unless you're earning a footballer's salary, it's highly unlikely you'll hit millionaire status by parking your savings in a high street bank account. Do you know how long it would take for £10,000 to grow to a million, while earning 1% in a high street bank account? Approximately 463 years.
This is where the stock market can help you. Analysts at Hargreaves Lansdown recently determined that £10,000 invested in the FTSE 100 index in 1987, with all dividends reinvested, would have grown to £106,000 after 30 years. That's an annualised return of around 8.5% per year, a decent return. However, according to my calculations, had just £50 per week been added to the portfolio, it would have grown to over a million after just 40 years.
The lessons here? Seek out high-growth investments, invest regularly and be patient. Don't jump in and out of the market, because the chances are you'll get the timing wrong and lose out, like so many novice investors do. Instead, invest for the long term, reinvest your dividends, and allow the amazing power of compounding to do the hard work for you.
So what are you waiting for? Why not get started on your millionaire plan today?
I plan to retire earlier than my parents. How about you?
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