Many people dream of having a million dollar portfolio when they retire. If you have just started your career, owning million dollars worth of assets when you retire may seem like an unbelievable feat. However, you can easily make this dream come true just by making simple changes in the way you handle your monetary resources.
You don't need a Masters degree or certificate in finance to know how to retire a millionaire. All that is needed is a million-dollar mindset to make your dream come true. The following are the 3 basic principles of saving money that will go a long way in helping you reach your goal of building a million dollar retirement nest egg.
1. Set a Long and Short Term Plan
Benjamin Franklin once quoted that if "you fail to plan, you are planning to fail." This tried and tested quote is especially applicable to building your wealth. Planning is the most common positive trait of successful people including athletes, business elites, and millionaires. You have to make a plan to retire as a millionaire. Without planning, you won't know what steps you must take today to achieve your long term financial goal. You need to determine how much you need to save out of your disposable income every month to have a million dollars in your account by the time you retire. Once that goal is set, you should determine how you can cut your expenses - or boost your income - to save that amount every month.
2. Start Saving Early
If you regularly read our blogs, you probably know how much emphasis we place on saving early. The fact is that the earlier you save, the more savings you will have in your account upon retirement. The amazing power of compounding will further allow you to build your wealth at an accelerated pace. To really benefit from the power of compounding, you must invest a certain sum of money every month and avoid withdrawing from your savings account until retirement. For example, suppose you invest $600 every month starting at the age of 25 in a portfolio of funds that provides an average annual return of 7%. If you do not withdraw any amount from the account and reinvest the principal along with the returns, it can grow to about $1 million after a period of 35 years. And if you increase the monthly contributions, you will be able to retire even earlier with a million dollars in your account.
3. Spend Less, Save More
The final advice to retire as a millionaire is to implement the 'spend less, save more' mantra in your life. Think about it: is the monthly bill of watching cable TV or dining out every other day worth more than retiring as a millionaire? The answer is most probably a NO. So, it's time you take a closer look at all your expenses and reduce the ones that you can live without. Note that you don't need to read hundreds of books on 'how to retire a millionaire' to achieve your dream of retiring rich. You also don't need to become the next Bill Gates or Warren Buffet to achieve that dream. You just need to believe in yourself and take the first step to plan for your financial future and follow the advice given above to reach your financial goal of retiring rich, one step at a time.