If you want to become a millionaire or multimillionaire -- and who doesn't? -- there are many things you can do. For example, Fidelity Investments, which administers millions of 401(k) accounts for companies, has named many wealth-building habits of its account holders who have amassed a million dollars or more -- such as contributing at least 10% to 15% of your salary to your 401(k) regularly. (Note that, for many people, 10% isn't enough.)
Here's a look at many secrets of IRA millionaires -- one kind of obvious one and eight not-so-obvious ones. Lots of them apply if you're working toward a million dollars (or more!) in a 401(k) and/or a regular, taxable brokerage account, too.
Let's start with the kind-of-obvious secret of IRA millionaires. (We'll get to less-obvious ones soon.) To amass a million dollars or more in a fairly reliable manner, you'll want to save and invest meaningful sums regularly. The table below offers great examples, showing how much you might amass over time if you average 8% annually:
With enough time, you can probably reach a million dollars or more -- and you'll get there even faster if you can sock away even larger sums than in the table above -- perhaps in other retirement accounts, or in your IRA as contribution limits increase over time.
With enough time, you can probably reach a million dollars or more -- and you'll get there even faster if you can sock away even larger sums than in the table above.
Meanwhile, you also need to invest that money effectively -- i.e., don't just park it in a savings account (even the best savings account) or load up on penny stocks with it. A good low-fee index fund, such as one that tracks the S&P 500, can be all you need to build a comfortable retirement.
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Over many decades, the S&P 500 has averaged annual returns close to 10%, but it might deliver somewhat more or less over your investing period. Here's what a difference your growth rate makes:
Here's what a difference your growth rate makes, if you're socking away $7,000 annually:
It's clear that those who have amassed a million dollars or more have probably been socking away a lot of money frequently -- for a long time. It should be clear that it's a smart path to greater wealth for you, too. But there's another category of secret to uncover: Just how you get all that money to invest. After all, your income is probably fairly limited, right?
Well, here are some things that many wealthy people have done:
If you can act on some or all of the tips and secrets above, you can greatly improve your financial health and your future financial security.
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