Do you want to guarantee that you will be a millionaire in 25 years or less? Here are two simple ways to achieve this goal and have a comfortable retirement.
First Strategy: Investing to Wealth
The basic concept of the easy wealth method is to achieve your long-term target of $1,000,000 without much effort or work! The first method, Investing to Wealth, is probably the easiest and within this method there are two basic methods you could try.
Consistent Over Time
Higher Now, Less Later (HNLL) is a tactic designed for those of you who want to kick back, relax and let compound interest do all the work. To achieve your million in 25 years with this tactic you need to make consistent monthly investments of $1,056 per month – after taxes. If we assume an 8.0% compounded return each year, your portfolio should net out to approximately One Million Dollars at the end of the 25th year.
Value Progression
The second tactic, Less Now, More Later (LNML) while being the more popular of the two (due to the less now option) is not as easy to achieve as the years go on. Investing $774 per month, and assuming the same 8.0% return, this method works because each year you increase your monthly payment by 3.50% While the first decade results in lower overall monthly payments, starting in year 11 you are increasing the required payment much faster than before. In fact, in year 25, your monthly payment will have grown to $1,768 per month!
If investing $1,056 per month is out of the question right now, then definitely start with the LNML tactic and be diligent in investing the $774 per month. Even if this is out of the question, just make sure you put something away. I would suggest a solid index fund or a combination of multiple indexed funds (different indices of course) for your monthly deposit. If historical values continue, you should be well on your way to $1,000,000 for retirement just when you need it.
Second Strategy: Real Estate to Wealth
Buying real estate can be more of a challenge than simply investing in index funds for the next 25 years; however, it is a great vehicle to get you to your Million Dollar goal. They key element to both tactics is in the mortgage reduction from renters. To make this strategy simple, it is assumed that there is absolutely zero (0) cash flow from the investments; only mortgage principle reduction. How do you make this happen? Buy a rental property; get a good manager and watch the equity flow in.
Annual Purchasing Strategy
The first real estate tactic is to buy $96,405 worth of property each year for the next 5 years. This means that starting today, you need to get organized and pick up that first property in the near future. Next year by this time you should have your second, and so on. After 5 years you will control 5 relatively inexpensive pieces of property but you’ll be well on your way to the million dollars. As your mortgage principle is reduced, the value of your property will increase, thus resulting in a double-whammy of equity build-up in your pocket.
One Time Buy
The second tactic is a little less annual work but requires the ability to borrow more at one time. The second theory is that you simply buy one piece of property at $423,147, hold it for 25 years with the same 3.5% appreciation, and then wait until the mortgage is paid off. All of a sudden, it’s 25 years later and you’re a millionaire!
The best tactic to choose within the Real Estate strategy is based on your ability to either invest your own money (as a down payment) or invest with other people’s money (OPM) and net a value you require for each. The first way – buying smaller properties over a number of years – can have less risk and allow you gradual movement into the market. The second method is for those who have a lot of cash up front and want to dive in and buy a bigger piece right now.
Final Thoughts
Choosing either strategy will result in you obtaining your goal of $1,000,000 in 25 years. The investment section means that you would rather place your money in the stock market and the real estate method means you are willing to put more effort into finding, financing and holding your property. The important thing is that you choose a strategy and go with it. Be it one of the above, a mixture of both or investments not listed here at all, taking responsibility for your financial future can be as easy as these two strategies.
Did you find this article on becoming a Millionaire helpful? Please visit http://www.realestatestarttofinish.com for Real Estate Investing information and http://www.realestatestarttofinish.com Wealth Creation Strategies
Ryan Lewis is an Author and Real Estate expert with years of experience, research and training in Real Estate Investing, Wealth Creation and Goal Setting. Dynamic, intelligent and exciting, Ryan holds a business degree from the Haskayne School of Business and consults in Consultative Sales Practices, Article Marketing Web Development and Business Start-ups.
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