How to reach $1,000,000 in 15 years of Investing

one million dollars

Everyone want’s a million dollars, for the most part.  Some may even have – making $1,000,000 a goal of theirs on their lifetime to do list.  You haven’t been taught how to get there and your employer doesn’t really help you learn what you need to do to make, earn or generate a stock portfolio that is worth a million dollars.  Every think about what it could take to build $1,000,000 in 15 years of saving and investing?  What if I could show YOU that YOU can be a millionaire by following simple math and having dedication to the process?

Why One Million Dollars?

I know, it just sounds good doesn’t it?  The ultimate goal.  So far, but yet, based on all the news, doesn’t seem that uncommon.  That is, considering the news covers billionaires, versus millionaires.

billionaire

Think about that, 15 new billionaires.  It truly makes millionaires hang out in the shadows.  In fact, as of 2019 (per Credit Suisse), there are over 18.6 million millionaires in the United States. At approximately 330 million people, that’s over 5.5% of people that are millionaires.  Put in another way, 1 in 20 are millionaires here in these 50 states!

millionaires

BUT and this is a big BUT, being a millionaire still means SO much.  The 7 figures, financial independence is usually achieved around this mark.  You still grow up wanting to achieve that million or millionaire status.  I know even in my lower 30’s, that’s still a significant threshold.  Trust me, I’m not there yet, but can definitely taste it as I’m getting closer.

They do say the first $100,000 is the hardest, but I will say going after the first $1,000,000 feels even harder.  This is coming from a dividend investor, with a savings rate of at least 60% and has a dividend portfolio that churns out dividends almost on the daily!  Yes, achieving the first $1,000,000 is a significant milestone.  Attempting to achieve $1,000,000 in 15 years is an even bigger milestone!

Don’t think it is significant or hard to reach?  Let’s say that during the mid-to-late March of 2020, during the early stages of COVID-19, the market dropped over 30%!  Think about this, if you were at $950,000 – staring at that mark, and your valuation dropped 30%, you’re now at $665,000.  Obviously, as dividend investors the valuation doesn’t matter or matter as much as that dividend income stream, but deep down, you want to see that 7-figure mark!

stock market

However, I know why you are here.  You want to know how you can reach the life-long goal of hitting the 7 digits, the million mark.  We will jump into that section next.  I will be keeping it simple on how to reach what the financial freedom writers call – the promised land.  It will be a calculated approach and a very specific plan that can be automated beyond belief.

Warning: You have to have grit, guts, grind and an unemotional mentality.  If that is what you have, then YOU have come to the right place.  Ready to find out how to easily & automatically become a millionaire?

How can anyone get there?

First, you can’t make $5,000 a year and expect to become a millionaire or have $1,000,000 in 15 years.  Remember, this is to put you on the fast track to 7 figures.  Now, the average starting salary is approximately $55,000 in the U.S. out of college and that can vary depending on what part of the country, background and path you take.

Second, not only do you need to make a certain income threshold, but you also need to have a savings rate that is above normal.  Yes, that is above the normal 10% savings rate suggested by a magnitude of “professionals”.  See the quote from Nerdwallet below.

savings rate

Third, you must invest the hard-earned and saved money into assets.  Assets that can generate a return and increase in value, produce cash flow, such as dividends.  Obviously, we tend not to hold as much cash on hand, considering high-yield online savings rates are crumbling slowly, but surely.  We made a video on this exact topic – Cash Is Dead.

Related: Watch – Cash is Dead

For additional support and assumption use, through Investopedia, the S&P 500 has an average rate of return of 10-11%, however, they are also showing 8% returns from 1957-2018.  I’ll go slightly conservative and say the average return is 8.50% in the stock market, over the long-term.

stock market return

Going back to the second step and something can’t do is take the investment advice of putting aside 10% per year!  Doing that, you may as well work forever and that is no fast track to 7 figures.  Further, you are on this blog for a reason and building wealth earlier is probably one of them!  In all honesty – you must do what’s best for you and your family, but I am here to lay out a plan to make you a millionaire in 15 years.

Therefore, to remove the suspense, to reach $1,000,000 in 15 years, one must save each and every month, $2,850.  This is based on an average stock market return of 8.50% and investing this month each month for 15 straight years.  $2,850 every month is also $34,200 to save per year.  See the results from an investment calculator below for the proof of the numbers:

millionaire calculator

Lastly, you may also wonder what should you invest in, in order to produce these results that would make anyone drool on their journey to financial freedom.  The answer is – it depends.  There are many ways with the stock market that can allow you be on this plan to financial independence.  You can invest in individual stocks, mutual funds, exchange traded funds (ETFs) or even a combination of these!  Want to learn more on that area?  See our related articles and videos.

Related: Watch – Investing with Vanguard

Related: Read – Top 5 Foundation Dividend Stocks for any Portfolio

Now that you know the number you must set aside and invest, you still may have questions.  Such as – what does your savings rate need to be and/or what can you do to save money, to help reach this target.  We will get into that next section, below.

what does my savings rate need to be?

I built a chart that describes how much you truly need to save every month and as it relates to a percentage of your income.  We will start with the $55,000 example and will work our way up to $145,000.  You will see the savings rate as a % to income that you need to save, pre-tax:

That first line is correct.  If you make $55,000, you will have to save 62% of your income, each month.  You will have to have very low monthly expenditures to keep that savings rate up, but it is still very doable.

Related: Why I am aiming to save 60% each month

Remember this isn’t supposed to be easy.  You want to have $1,000,000 in 15 years!  However, if you are able to increase your income or if you marry with a joint income and have a higher combined income – then obviously your savings rate does not have to be as high.  As you an see the in the chart, the savings rate declines as your income grows, as expected.

how to save $2,850 per month

Now that your wheels are spinning, you should be asking yourself, how do I save $2,850 per month.  Think of your highest costs: Shelter, Auto and Food.  Time to dive in a few tips and tricks to save.

Housing Costs

To start, see if you can lower your housing costs as much as possible.  Whether that is to re-finance your mortgage to be at one of the lowest mortgage rates in all of history (I refinanced mine to 2.875% for a 20-year mortgage, saving me money each month!).  Bert also refinanced his mortgage last year and is saving over $50+ per month!

Related: Refinancing My Mortgage After Two Years and Saving $48 per month

You can also decide to have a roommate or share an apartment.  However, these situations are if you are more than likely single and at the $55,000 mark.  Remember, you can have a higher income or live with someone that may not make housing costs as steep as what it may be.  You end up splitting all costs including your utilities.  I always recommend shopping for your utility provider, so long as your area is deregulated.

Related: Bills to Review Annually

Auto / Vehicle costs

Relating to your vehicle – try not to have a loan on your car.  That was one of my biggest regrets financially, as you are driving a depreciating asset that is taking money out of your pocket with little, to no, tax incentives.  Further, there is nothing worse that making a monthly payment that is losing value each month!  I understand emergencies come up, manage this the best that you can, no doubt.

In addition, the amount you drive plays a significant aspect.  You should try to combine many trips you make during a week/month and consolidate in one large trip.  Further, you should consider having more guests instead of traveling out, as well.  The more you drive, the higher the risk profile you are and the more wear & tear you put on your car.  Do you see where I am heading?

Yes, this means that your replacement costs for tires, oil changes, brake pads, rotors will creep on you.  Further, you will also have higher auto insurance the more you drive, potentially.  One last note on auto insurance – definitely make sure you shop your auto insurance around often and have the “right” amount of insurance for your driving profile – don’t pay for insurance you do not need or for a level of coverage that is does not correlate to your driving profile!

food costs

Ah, the beloved food costs.  Let me tell you – I have seen two sides of this coin and there’s a rarity on the happy medium.  For the going out/restaurant goers (though far slimmer with COVID-19), this can get out of hand if you buy appetizers, rounds of drinks, etc.. to the point where you can walk away with a triple digit bill.  Now, doing this every once in a while is okay for special moments and/or occassions, but if this is a habit, then your savings rate will surely take a hti.

What my wife and I try to do is plan out an experience (again, when restaurants were a little easier to be at) and go maybe once every few weeks to try a new place, a date night or we read a great review somewhere that enticed us.  We usually will split an appetizer and an entree, to keep the price and diet in better shape.

Then there is the extreme me.  Heck, I am known to make banana, peanutbutter, oatmeal on a daily basis for my lunch.  I love it so much that I even wrote about it.  I even estimated that my lunch costs ~$0.18.  Hard to beat that, right?

Related: How Peanutbutter, Bananas and Oats are a Recipe for Financial Success

I believe the point I am driving at is control.  No one is forcing you to spend money on any certain item, certainly food.  Not only are you in control for what food you buy, restaurant you go to or what is on the menu – but you are also in control for what you are putting in your mouth!  Therefore, there is a health component to this as well.

Lastly – I wrote an article about 5 ways you can save $500 starting TODAY if needed.  The 5 ways are potentially switching your cell phone carrier, shopping your auto insurance around, re-financing your student loans and a few other items.  Definitely worth a read in case you are interested in making changes, now!

Related: 5 Ways to Save $500 TODAY

other tips to $1,000,000 in 15 years

Here is a list of other tips and recommendations that you can deploy to reach the amount.  These tips are geared towards how to invest your savings and stay on track to be at $1,000,000 in 15 years.  Check them out:

1.) When you set up a brokerage to make your investments, you can set up automatic investments of $2,850 each and every month.  Automation, as I am sure you already know, takes the emotion and timing the market out of the equation.

Related: Why I Don’t Time or Predict the Market

2.) Don’t react to negative news in the stock market.  We are in unprecedented times, no doubt.  However, try not to impulse sell because that is what the news, media and the herds are doing.  Remember, per Warren Buffett, you always want to be greedy when others are being fearful and vice versa!  In other words, stay the course!

3.) Try to avoid lifestyle inflation.  As your income grows – you can actually increase your savings, speeding up the road to $1,000,000 even faster!  However, you may also be influenced by peers, co-workers, friends to increase your cost of living.  Whether that be a new car, upgraded place to live, new clothing, going out to bars/nicer restaurants.  Remember – refer back to the steps on how to save!

4.) Celebrate wins along the way.  The milestones are REAL as a dividend investor and as an investor in general.  This can be one of the hardest, ultimate goals to accomplish.  Think of the journey to $1,000,000 with certain pedestals.  You can celebrate the mini-victories at these levels: $100,000, $250,000 $500,000 and the final, $1,000,000.

Related: Milestones is part of being a Dividend Investor

5.) Enjoy the process and learn more about yourself.  If there is one thing I could tell you on this journey, since I am on this specific journey (well, I am trying to beat 15 years, with a significantly high savings rate!), I have learned SO much about what I like about life, what is important and what life I can see at the end of these goals.  Further, I have enjoyed every step along the way, due to learning more about myself and feeling in control of my destiny!  I hope you feel the same – but let me know if you need help talking through this area, as well.

As always – share YOUR feedback and other tips/tricks that have worked.  In addition – if you have a success story – please share it and your #1 action that helped YOU achieve this monumental goal!  We would love to read about how you became a millionaire and I bet the readers & community would love to read/learn as well.  Were you able to achieve $1,000,000 in 15 years or did it take you longer or less?

Thank you again for stopping by, we are all on this financial freedom journey together.  As always, good luck and happy investing!

-Lanny

20 thoughts on “How to reach $1,000,000 in 15 years of Investing

  1. Lanny, Great Article!! It is all totally doable and I am living proof. After getting divorced at age 28, I was living paycheck to paycheck and starting over at literally zero. At that time I would take $100 out of the bank each week for my groceries, fuel, work lunches and miscellaneous purchases. At the end of the week I would put whatever was left over in an envelope. I would also clip coupons like crazy (but only for stuff that I actually used) and after each trip to the grocery store I would look at my receipt to see how much I had saved and also add that amount to my envelope (because it isn’t an actual savings if you just spend it somewhere else). Whenever my envelope accumulated $50 I would send that money off to a mutual fund company. After a few years of this sort of discipline, it all just became second nature and as my income grew the savings really started to pile up. Basically, I was living the advice from the book “Your Money Or Your Life” without even knowing that it existed. Fast forward to age 51 – I retired with over $3 million and am now a nomad exploring Europe for a few years. It just took discipline to live frugally and to save as much as you can.

    • Ron –

      WOW! I love this. I LOVE that you shared your journey. In 23 years, not only did you surpass $1 million, but you surpassed $3 million. May I ask what mutual fund choice you had?

      How does your life feel? How was the mental/emotional feeling when you reached/saw that is where you were at with over $3M?

      -Lanny

      • Lanny, I can’t remember what mutual fund I was using back then, but since I knew that I had a lot of time to save I do know that I was focussed on value funds in the small- or micro-cap universe. As time went by I began to diversify my mutual fund holdings. But I have to confess that our Investing really hit high gear when my 2nd wife and I moved to Europe under expat contracts.

        Since we are both accountants we religiously track our investments and knew the moment we reached each milestone and we did a little Snoopy dance each time. But the big celebration happened when we finally decided that we had enough to retire. It was at that moment when we both lost interest in our jobs. If we hadn’t left the company on our own we probably both would have been fired for poor performance. It was such a great feeling to be able to walk away on your own terms.

        • Ron –

          Love it. My wife and I are both accountants, as well. Very cool about the expat contracts, I am sure your savings rate was insane when you were doing that.

          Did you keep it fairly systematic/automatic for most/all those 23 years for investing?

          -Lanny

          • Very systematic! We kept a savings account stocked to a fixed level and transferred money from there as needed during the month. ALL income received after that savings account amount was met went directly into investments. At a certain point we got greedy and put some money in an “offshore account” to play with. We got burnt and only were able to get about 25% of it back. After that expensive lesson learned we gave up on advisors and went for the slow and steady approach all on our own. As you well know it is all about your savings rate and keeping an eye on the target.

          • Ron –

            Nice, again – appreciate the detail and transparency. Good to know about “offshore accounts”. Luckily, have kept it fairly simple with dividend stocks and ETFs/Funds.

            Mistakes are always lessons to take. I’m becoming more and more systematic, especially as more uncertainty (in my eyes) arise. Almost to the 7-figure mark and it will be bittersweet when the time comes.

            Since retiring – how fast has your portfolio and income continued to grow?

            -Lanny

          • Well, once you retire, the river runs dry and you are left with a lake. However, once you hit critical mass things keep chugging along on their own. Our annual spending is very low, so we expect the lake to continue to get bigger over time, that is until inflation or smaller market returns force us to begin to eat into the principal.

  2. Hi Lanny
    Very good read!
    USD 1 Mio is such a magic number, no matter where one lives. And it‘s pretty clear, 1 Mio. can churn out 40‘000 in Passive Income just easily, enough to never have to work again. For our family of four, living in Liechtenstein, our annual spendings are quite above that level. Central Europe is massively expensive. But luckily there is always the possibility of geographic arbitrage and there are possibilities to optimize. So again, 1 Mio. is enough and the BEST: it’s absolutely achievable, it just requires consistency and the power of the Compound Effect,
    Cheers

    • My Financial Shape –

      Really cool to see it’s also the same elsewhere. You’re right with the $40,000 at 4% yield + dividend growth to continue the increases on top of that.

      Having that amount reduces the need to work and do something you don’t want. Heck, like I’ve said, it can also make you completely financially free. I cannot wait to get there!

      -Lanny

    • No doubt about this! Still plenty of stocks that will crush the S&P 500 over the next decade laying out there in plain sight….of course, no guarantees, but some examples outside of FAANG are:

      SE, BABA, LVGO, CRWD, OKTA, MDB, ADBE, SQ,ROKU, FSLY, MELI, TTD, DDOG, AYX.

      Growth, growth, GROWTH! That is how you’ll get to a Million much faster…

      • Nate –

        That is one way, but similar to others – some will survive, most will die. Not my strategy but one that others can consider. I am more of a boring – either acquiring the entire S&P 500 market or individual, undervalued, dividend growth stocks. Thanks for stopping by Nate!

        -Lanny

  3. Lanny,
    Solid post as usual! $1 million in investments in 15 years is an ambitious, but certainly doable goal. You and Bert are well on your way to accomplishing this incredible feat!

  4. Lanny,

    Nice examples and very methodical layout on how to approach a million with the breakdowns. It’s funny how I personally started out with a target of “50%” savings and slowly over time I’ve shifted towards increasing that savings rate. I am now able to hit the 70%+ mark for savings rate and it actually feels good! During the pandemic and for the remainder of the year I’ve had and will have 90%+ months simply due to being able to do a little strategy with my finances by being able to pay with a credit card on my rent in advance (got some cashback to boot), so the budget for rent is at a fat zero for a few months as it has been prepaid. Don’t worry I am not paying interest on that. The difference is my savings rate is calculated on a post-tax basis so that seems to make my rate technically higher, right?

    At the end of the day, our targets to a million dollars are a bit on the more aggressive side, the key for all is to start and to be consistent. And no matter what, whether you hit a million or not, you’ll find success over the long run.

  5. I love this article Lanny. This is the blunt truth – it takes SERIOUS dedication, INCREDIBLE patience, and MANIACAL restraint to do this. And many of us know this is the bottom line to make this goal. It’s a smack upside the head.
    Can I? With just income and savings for the next 15, I honestly question it at my age.
    If I were in my late 20s and starting fresh, oh hell yeah! This would be printed and put on my fridge.
    But I’m 51. I have over $300K in the market working for me. My home is free and clear. And have a second home that will sell in a few years that will add enough to hit that 7 digit number in the portfolio instantly.
    So in a sense, I hit my goal to get where I am at to make that threshold. My goal is to just replace my job income with div income.
    So I plug away, but also our household cuts loose a bit since we only live once. The older I get, the more of a reality this becomes. Especially when I see my mom live like a crazy miser and never got the chance to live a life beyond worry and stress over penny pinching. Actually, I will be writing about this in the next day or so on my page.
    Keep it up Lanny. Get richer than me!
    – John

  6. This is an amazing article Lanny! Fantastic job of explaining and laying out the course to reach $1 million! Right now, my mini-mark on the path to a $1 million portfolio is breaking the $250K milestone. More importantly, I want to hit the $12K mark in dividends by the end of next year. Enjoying the journey so far! Thanks for the article! 🙂

  7. Lanny,

    Great to see this post on here as I think you reach an audience that’ll find that savings rate principal valuable. You’re veering into financial independence (and FIRE) territory! 🙂

    We certainly cracked the millionaire level by having a very high savings rate for several years. It took a long time to get there, though. I still remember when we were $107K in DEBT, and really, it wasn’t that long ago! Fortunately, a strong income from Jenni after pharmacy school and my longterm business investments finally paid out and we crawled out from under that debt burden.

    All the while, we had a (sometimes poorly planned) portfolio paying out healthy dividends. Eventually, they were all DRIPs as we didn’t need the income on hand. It’s slow and steady, consistent saving & investing over time that gets you to that dos commas club.

    Thanks for sharing this one Lanny.

  8. Such a well written and timely post for me guys. I’m trying to come up with my 13 year plan to retirement and this helped. Reaching a million dollars is my dream. It’s pretty tough to save that amount on a monthly basis right now, but I’m about $9000 a year short of that figure. My savings and investments took a hit this year, so it feels like I’m starting over, but it is what it is.

    By the way, I like the YouTube channel. I just subscribed.

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