So, you want to be a millionaire…?

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Oh, look!  Your future bank account!  (Photo via Dreamstime.com)

Want to be a millionaire? Here’s the secret: save, invest, repeat. Somewhere around your 50’s to 60’s, the balance will tick over to seven figures.
 
Make sure your investments are broadly diversified… stock funds, bond funds, cash/money markets. If you’re young, invest more heavily in stocks and riskier investments (if your balance drops a lot in a given year, you have lots of time to recover). As you get older, do what most people FORGET to do and rebalance your portfolio, gradually moving funds into more conservative, less volatile investments like bonds and money markets. KEEP SOMETHING IN ALL OF THEM… you always want SOME growth and SOME stability, but how much of each will change over time.  There are mutual funds available (for example, Vanguard’s Target Retirement Funds) that will do this automatically for you… you pick a target year, and the fund rebalances based on the length of time left until that year.
 
Make maximum use of tax-free or -deferred plans, like employer retirement plans, or Traditional or Roth IRAs. At the least, you’ll defer taxes until you take money out (and you’ll hopefully be in a lower bracket by then). At best, such as with a Roth plan, all of the growth will be tax-free! (But you still pay taxes on the income the year it goes in… so Roths work best when you’re in a lower tax bracket and plan to move up!)
 
Also, stay married and employed (divorce or joblessness… not to mention BOTH… will demolish your savings… trust me, I know).  Also, buy a house, stay in it, and DON’T MOVE (let the kids inherit it), and don’t move your investments around to the new hot thing (by the time you see it doing well, you’re too late; you’ve missed the run-up).
 
Oh, and don’t get sick… that’ll clean out your savings faster than anything else. Again, trust me… I know!
 
And there you are… the secret to becoming a millionaire… time, patience, saving, and having your life go just right. PLEASE NOTE: As always, do as I say, not as I do. 🙂

For more, check out the link below… she knows what she’s talking about!

Liz Weston: Secrets of next-door millionaires

(Disclaimer: I worked in the financial industry for over 15 years, and spent almost ten of those years as an investment and retirement professional for The Vanguard Group.  Trust me, I know of where I speak.)

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By wearehugh