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How to Become a Millionaire through Investing

The entertainment world is full of shows that are centered on the concept of becoming a millionaire. Just think of the many TV games that give a million to their winner like: "Survivor", "Deal or No Deal", "Who wants to be a Millionaire" and many others. Additionally, many books are provided on the subject, and since supply is determined by the demand, it can be concluded that Americans are obsessed by the idea of becoming rich.

Nevertheless, there are other ways, other than gambling and TV shows, of becoming rich. It is provided by the many financial opportunities in the investment world, which if used wisely may lead to your more secure becoming of a millionaire.

What you need to become a Millionaire?

All you need is patience and common sense and after some time you will become member of the Millionaires club. For instance, if you are currently earning $40,000 per year and you are in your late twenties, by a 10% return investment and a 10% allocation of your income, you will surely become a millionaire in your early sixties.

Income Importance

Income doesn't play such a significant role as most of the investors think. Even if you invest a small amount, but you put it into the right place, you can still become a millionaire. What we are talking about is the investment phenomenon known as compounding interest, which will continuously increase the value of you holdings.

Late Start or Not Enough Money?

Even though you have found out about the great opportunities that the investment world offers at a later point in your life or you don't have too much free resources to spend, the hope for becoming a millionaire is not lost. Starting later when you are already in your thirties, may still make you a millionaire under the right conditions and choices even if you are allocating less than 10%. On the other hand a late start at the age of 40 can be compensated by an allocation of a higher percent per year to lead you the millionaires club at the age of your retirement. Unfortunately, if you postpone your investment another 10 years it may be too late, since the percentage you should allocate from your earnings exceeds the merely impossible 30%.

What One Million is enough for?

If you make a closer consideration you will see that a million today is not much of a worth due to such factors as inflation. So being a millionaire is not such a big accomplishment today since the depreciation of the dollar and the corresponding inflation throughout the years will end you up needing a greater amount in the future to really be a millionaire.

On the other hand, one million is absolutely enough to retire on, if they are invested in something safe that returns less than 10% per year. As a result if the return is 5% you will be able to retrieve $50,000 each year ahead. You can withdraw even greater amounts of money but you risk depleting your resources earlier.

Note: These examples are made without including considerations about taxes, which are compensated to a considerable degree by social securities and higher returns on the investment.

Your Millionaire Potential

In order to increase your chances of becoming a millionaire at some later point in your life you should start investing early and take full advantage of compounding interest rates. Saving a certain amount annually is absolutely under your control. Unfortunately, you are not 100% guaranteed the success of your chosen investments. Here mutual fund investment enters the picture with the diversification opportunities it offers. Since you may lose 15% annually by a certain investment, by participating in a diversified mutual fund this loss will be probably compensated by a winning investment that is part of your portfolio.

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