Here's how much money you need to invest from every paycheck to become a self-made millionaire

"Consistency is key when it comes to investing."


Becoming a millionaire can be as simple as following a formula. Saving and investing with discipline, consistency, and patience are some of the most common ways people become self-made millionaires, Tom Corley, who studied the habits of around 230 millionaires over the course of five years, told Grow.

Living within your means and investing consistently is actually the most "widely accessible" way to build wealth, says Corley. In his study, about half of the self-made millionaires used that saver-investor path.

Motivation can help you stick with and eventually achieve that goal, like seeing how much you'll actually need to save and invest each month, says Doug Boneparth, a certified financial planner and the founder of Bone Fide Wealth in New York City. It's less than you might think, especially if you're investing with a long-term mindset.

Boneparth recently tweeted some calculations to show how much money you'd need to save and invest each year in order to reach that million-dollar milestone.

How much money to invest each month to become a millionaire

The investment path to becoming a millionaire depends on a few factors. First, your time horizon, or the length of time you'll leave your money invested in the stock market. The second is how much you'll contribute to your portfolio each month. Lastly, you'll take into account the average annual growth.

Grow's retirement calculator estimates that over time you should see an average annual growth of 5% to 10%, adjusted for inflation. A conservative estimate is 5% to 6%, while some experts say you can safely use 8%, which has been roughly the compound annual growth rate of the S&P 500 since 1980.

Here's how the math to become a millionaire shakes out if you contribute to your investment portfolio with every biweekly paycheck and assume 6% annual growth.

  • To become a millionaire in 40 years, you would have to invest roughly $232 with every paycheck. That works out to a bit more than $6,000 per year.
  • To become a millionaire in 30 years, you would have to invest $460 with every paycheck. That works out to a bit less than $12,000 per year.
  • To become a millionaire in 20 years, you would have to invest about $1,000 with every paycheck. That works out to about $26,000 per year.
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How investing with a 401(k) can help you become a millionaire

If you're contributing to a 401(k), you may not need to come up with all of that money on your own. Employers often offer matches to help increase your contributions.

The most common 401(k) matching formula is a 100% match for the first 3% you contribute, with a 50% match for the next 2%, according to Fidelity. For example, say your annual salary is $50,000. If you were just to contribute enough to get the employer match, the most common matching formula would mean you contribute 5%, or $2,500, in a year, and your company would put in another $2,000.

And in fact, the number of 401(k) and IRA millionaires — or people who have saved more than $1 million in either their 401(k) or IRA — hit an all-time record in the first quarter of 2021, according to data from Fidelity, the country's largest 401(k) provider.

Despite the Covid-19 pandemic's impact on the economy, the total number of retirement millionaires has more than doubled from a year ago, the financial services firm found. In the first quarter of this year, the number of Fidelity 401(k) plans with a balance of $1 million or more hit a high of 365,000, while IRA accounts with the same balance also hit an all-time high of 307,600.

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Investors on a shorter timeline to millionaire status may need to spread their portfolio across different kinds of retirement accounts and/or a brokerage account to navigate annual contribution limits. For 2021, workers younger than 50 can contribute up to $19,500 into a 401(k), and a maximum $6,000 in a traditional or Roth IRA.

Start building your wealth in 4 steps

Doing the calculations can be a useful exercise, but "that doesn't really tell you all that much other than this is what it would take given these variables to reach a million dollars," Boneparth explains. Here are four ways to move closer to that million-dollar goal.

1. Focus on investing

While it's important to both save and invest, it's investing that is going to help you move the needle, Boneparth says. "The best lesson from this is you really need to not only save, you need to invest that money and get a rate of return in order to have your wealth grow," he explains.

When it comes to building wealth, just saving isn't enough. When you park your money in a regular savings account, the lower rate of return means its value can actually diminish over time due to inflation. And you're not taking full advantage of the power of compounding interest.

2. 'Master your cash flow'

To start making meaningful contributions to your investment portfolio, track your spending to see where you can cut back. "Actually take a look at your spending data. You can grab statements for your checking account and your credit cards. You can easily compile that information and take a look at where your money is going," Boneparth says.

Once you "master your cash flow," your ability to save will become more consistent, and "consistency is key when it comes to investing," he says.

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3. Automate your investment contributions

The best way to consistently contribute to your investment portfolio is by automating the process. "If you've got that all sorted out and you're ready to save and you want to be as consistent as possible, then automate everything you can. The more you're able to put this out of sight, out of mind, the better off you're going to be," he says.

You'll only see the returns laid out above by being consistent, Boneparth says: "The point of investing long term is being able to stay invested."

4. 'Remain unemotional'

Staying invested during volatility can be challenging, but your best bet is to leave your emotions at the door, Boneparth says. Instead of focusing on the short-term market movements, keep your long-term investing goals — and the market's proven long-term track record — in mind. 

"Do everything you can to remain unemotional. All of the noise you hear, and the headlines about the markets, this is the noisiest I've ever seen it," Boneparth says. "With bitcoin and NFTs, parabolic tech stocks and inflation, it's easy to make decisions that could hurt you in the end."

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