Be a Millionaire by Age 50 - KTEN.com - No One Gets You Closer

Be a Millionaire by Age 50

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You do not have to win the lottery to become a millionaire, instead you can make one or two simple investments that can help you get to that 7-digit number.

It doesn't matter if you make minimum wage or if you have a high paying job by investing in your company's 401K plan or on your own through a Roth IRA plan, you can become a millionaire by the time you reach 50 years old. So what's the catch? It takes times and a little savings on your part.

Right now, the average 50-year-old's net worth is around $100,000, that's extremely low. So if you want to retire comfortably, start investing while you are young.

First, let's look at a 401K option plan. This is an investment you can make at work. Ask your employer if they offer a 401K plan and if they match the money you invest. Typically a company will match your money anywhere from 0 to 50%. The max you can donate into your 401K plan is 15% of your total salary.

If you do not have the option of a 401K plan through work you can invest on your own through a ROTH IRA plan. The max donation you can make into this account is $5,000 a year and once you are 50 years of age you can max out by adding $6,000 a year. To allow your money to compound over time you will want to donate all your money at the beginning of the year (so if you want to donate $2,000 a year donate all $2,000 into your account in January).

Now, once you invest in a 401K or a ROTH IRA or both, you will then chose investments within your plan. If you want your money to gain compound interest it's best to invest in diversified mutual funds, stocks or bonds. Each investment comes with a certain risk and they higher the risk the more return you will receive.

For example: A couple who invests $4,000 annually from age 26 to 45 will contribute $80,000 to their IRA account. After age 45, they contribute nothing more to their retirement. If they earn a 10% annual return on their investment, they couple will have over $1 million in their account at age 60.

If you start when you are young, you can invest even less and have the same return. For example: An individual invests $2,000 annually from age 16 to 26 they will contribute $22,000 to their retirement account. If they invest no more money after the age of 26 and have a return of 10% annual return, they will have over $1 million by the time they are 60 years old.

Remember it is best to contribute in lump sums that will help you take the best advantage of your compound interest. Also, if you can, do not stop investing, continue investing and watch your money grow to more than just $1 million.

An easy way to compute your return interest use the Rule of 72. Divide your return into 72 to see the number of years it takes for it to double. For example: $1,000 becomes $2,000 after 9 years if it is earning 8% interest per year.

Always remember, its never to late to start investing!

Christina Lusby, Reports.