As a mother of three, I find it incredibly liberating to work for myself as a financial consultant. I recognize the need to save and invest money for the long-term.
This was especially cemented after reading about the Tim Sykes millionaire challenge. Ensuring my family lives comfortably is a priority of mine. And, I want them to see me as an example of financial success. Here are a few of my tips for financial independence.
Buy Stocks at Good Prices
If you want to become a millionaire, stocks are your best option. Now, how long it takes you to get there depends on how much you start investing. It also depends on how much you add to your investments, how often you invest and how much you earn.
The average annual rate of return for U.S. stocks is 10 percent--including dividends. If you invest $10,000 per year in a tax-deferred account, you could reach $1 million in 24 years. Although, if stocks return an average of 6.5 percent annually--then, it may take you 31 years to get to $1 million.
This is why you should take advantage of declines in stock prices. You can't time the next upward move. If the stock price falls by 10 percent, then you can invest. If it falls another 10 percent, then invest more. You should never pull money out of stocks when things fall.
You should invest for the long term.
Look for Growth Stocks
Search for companies that are exhibiting fast sales and profit growth. Just look at the top 30 stocks over the past 15 years. If you find a stock on steroids, you could reach that $1 million mark much more quickly.
Check out stocks that are improving sales at over 10 percent annually. Growth stocks are the way to wealth.
Save Enough
You want to invest in a retirement plan such as a Roth IRA or 401(k) plan. Then, you want to save between 10 percent and 15 percent of your earnings. Don't hesitate to start saving. If you need to make more money, then it is really important to find a part-time job.
You only have a certain number of working years. There is nothing you can do when you can no longer work consistently. And, social security is no longer guaranteed.
So, the more you save, and the sooner you start--the better off you'll be.
Reach the Target
A good target to hit by retirement is 10 to 12 times your salary. If you make $50,000 annually, then you should have around $500,000 in savings when you retire. But, if you want a more comfortable retirement, then aim for a million or more.
With a well-designed portfolio, you can get there without question. You will not make enough in raises to reach that amount without investing.
You just need to figure out when you want to retire and how much you need to save to get there.
Final Thought
The only consistent way to achieve your million-dollar dreams is through investing. It is not about luck, it is about historical evidence.