The Simple Way To Become A Millionaire

Everyone wants to be a millionaire, but no one wants to work for it. Here’s the good news: you don’t have to! There’s a simple way to become a millionaire with almost no extra work. It only takes three steps.

Step 1: Save

No matter what income you make, save a portion of it every year. 10% will get the job done, but the more you save, the faster you’ll hit $1 million.

I know that saving can be difficult, but saving a little bit here and there can really add up. You can save at the grocery store, when shopping at Target, or by buying used kids’ clothing.

Keep in mind that savings also includes the money that goes into your 401(k) before you even get to touch it. Your savings rate may already be higher than you think.

Step 2: Invest

Invest your savings in a low-cost index fund. Dollar-cost averaging (investing consistently at monthly or yearly intervals) is generally better than waiting to buy the dip.

Index funds are mutual funds or exchange-traded funds (ETFs) that track a basket of investments instead of trying to beat the market. You may be surprised to find out that index funds actually outperform actively-managed funds most of the time. For instance, the S&P 500 index performed better than 60-75% of large-cap funds over the past 1-5 years. One reason they are able to do this is because they generally have very low expense ratios. That means that your earnings are not eaten up by fees as they often are in actively-managed funds.

There’s also an emotional benefit to investing in index funds. Because index funds track the market or an aspect or sector of it, they are less stressful to hold than individual stocks or actively-managed funds. You don’t have to worry about whether they are underperforming a benchmark or how a change in CEOs or fund managers may affect your investments. As long as you have faith in the market as a whole, you can hold index funds with confidence that they will perform well over the long run.

Two good options for low-cost index funds are VTI, Vanguard’s Total Stock Market Index ETF, and VOO, Vanguard’s S&P 500 ETF. As the names suggest, VTI tracks the total U.S. stock market, while VOO tracks the S&P 500. They both have expense ratios of only 0.03%.

Step 3: Wait

Once you’re saving and investing regularly, all you have to do is wait for a couple decades. No seriously, that’s it. Sit back and let compounding do its job. There’s no need to spend all your time working on side hustles and trying to wring out every last dollar of income. You can relax and enjoy your free time.

Don’t believe me? Here are some examples:

Example 1: Average Family

  • Median household income in the U.S. (2020): $68,400/year
  • Saving and investing 10%: $6,840/year
  • Compounding at 8%/year (which is conservative as the average annual return of the stock market from 1825-2019 was 9.56%): it would take 34 years to reach $1 million
  • Saving and investing 20%, compounded at 8%/year: 25 years to reach $1 million

Example 2: Below-Average Income

  • Household income: $40,000/year (about the 30th percentile)
  • Saving and investing 10%, compounded at 8%/year: 40 years to reach $1 million
    • (Starting at 25, you’d have $1 million by retirement at 65)
Time it would take to reach $1 million in the above scenarios with compounding of 8% per year


To sum up, if you want to be a millionaire, you just need to save, invest, and wait. Before you know it, you’ll reach your goal. It just may take quite a while. This is the simple method, not the quick method. If you want to reach $1 million faster, you’ll need to earn more, save more, and invest more. But this extra work just speeds up the process; it’s not required. It’s easy to lose yourself in the pursuit of money, and it can be hard to let go and truly enjoy your life. But you don’t need to overload yourself with work to grow your nest egg. A balanced approach is generally best for the optimal quality of life.


One thought on “The Simple Way To Become A Millionaire

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s