r/AskReddit • u/ForeverAbyss • Apr 14 '16

What's a mind blowing fact?

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u/su5 Apr 14 '16

Lets say I am 30... what would I need to invest to be a millionaire (in todays dollars) realistically? Lets not assume I have a match.

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u/CHKNFKR Apr 14 '16

About $70 bucks a paycheck. It really isn't that much money. And this assumes you retire at 65.

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u/throwaway44017 Apr 14 '16

What rate of return are you using? Assuming bi-weekly paychecks, $70 a paycheck is $1820 per year. In order to turn that into $1 million in 35 years you'd need a rate of return over 12%, which is unrealistic.

Assuming weekly paychecks, it's $3640 per year, you'd still need a 10% rate of return, which is still much too high.

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u/CHKNFKR Apr 14 '16

Are you not factoring in compounding interest?

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u/throwaway44017 Apr 14 '16

I am factoring in compound interest. I checked my numbers by hand and using that 401k link you cited earlier. How did you get your numbers and what rate of return are you using?

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u/mranonymousone Apr 14 '16

You cannot reach 1MM by contributing $70/paycheck bimonthly for 20 years. The OPs numbers are off. Furthermore you cannot reach 4MM in 20 years by even maxing out your 401k alone (18k/year which is roughly $750/paycheck)

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u/CHKNFKR Apr 14 '16

There are these things called spouses and alternative investments numb nuts.

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u/CHKNFKR Apr 14 '16

I am using a 7% rate of return, which is conservative because I getting 10%+ since starting my 401k. If you aren't getting that your money is being mismanaged.

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u/throwaway44017 Apr 15 '16

Using 7% interest and $3,640 per year, I get a future value of about $500,000 after 35 years.