National Be a Millionaire Day - Will You Be One?

It's May 20th and it's National Be a Millionaire Day! You may be surprised to learn that most Americans will in fact earn over a million dollars in their lifetime.

According to inContext -"By retirement, graduates with bachelor's and advanced degrees can expect to have earned an average total of $1.8 million while associate's degree graduates only reach $1.1 million—a 61 percent advantage."

But that's probably not what most of us have in mind when we think millionaire. Most of us consider a millionaire as someone who has a million dollars plus saved or on hand. Fair enough. But 99%+ of us are not going to become millionaires by winning the lottery, answering questions on a game show or by finding that high flying stock.

We're going to become millionaire in these 5 easy steps:

1) We're going to save a bunch ourselves.

2) We are going to let the market do some of the work by investing in a risk appropriate portfolio.

3) We are going to take advantage of all opportunities to boost savings, like 401(k) employer match.

4) We are going to diversify our portfolio and periodically rebalance.

5) We are going to use optimal tax strategies.

Real simple example with very simplistic assumptions, but check it out. 30 year time horizon. 6.5% annual interest rate compounded monthly. You invest $280 every two weeks and your employer matches 50% or $140. With those and other simplifying assumptions, viola, the portfolio grows to just over $1,000,000 in 30 years.

$218,400 came from our savings and $109,200 from our employer. If we didn't have an employer match, we would have been on the hook for $327,600. But tax efficiency and a diversified portfolio invested in the market did roughly 2/3 of the work!! And that's the point. There is tremendous power in simply being invested in a diversified and risk appropriate portfolio that you rebalance periodically.

So go ahead and occasionally buy that lottery ticket so that you can dream about your life as a millionaire -- that you earned by hard work and smart investing.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.