Can You Become a Millionaire in 10 Years Using Index Funds?
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- เผยแพร่เมื่อ 12 ก.ย. 2023
- To build wealth in index funds, you need discipline, money, and time. It is easy to become a millionaire using index funds with all three ingredients but becoming one in 10 years means you have less time. Is it still possible?
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I love this method. I’m investing $400 a month right now. I can’t wait until I can invest $1,000+
Keep it up. Anything you can cut back on do it. It's worth it to invest it instead
Finally, someone who isn’t saying they invest $5k+ per month.
@cody 😂 You mean people making things up? Investing 5k a month at 25% of your income (which is still very unrealistic for the vast majority of people), means you’re making 240k a year.
Most people don’t even match employer contribution to 401k, much less 25% of their income.
Investing/saving 25% on a 48k gross income is 1k a month. You can’t afford 1k a month on 48k in the USA unless you’re living very frugally, with minimal debt, in a rural-ish area.
@@nwj03a huh? People with high incomes and/or high savings rates are made up? We save $4,600/mo combined, and that's just in retirement/HSA... Add in other long-term savings (new cars, home repairs, saving for a new deck, etc), and we blow past $5k easily.
This is so true....my wife and I have put over $5,000 a month into our retirement accounts and it's amazing how much our net worth grew from 2013 until today....we got lucky with this bull market period....
Congratulations. Keep it up
SCAMMERS!
I can only dream of putting 60 Grand a year in a retirement account
Awesome, I’m doing $6300 per month right now
the key here is 5k of disposable income a month
We're at 2.5k per month for retirement (maxed it for our regulatory region), 3k per month on ETFs that accumulate. With our current net value of 500k, I expect to have 1 million in 4 years. But it will take 14 years to get 1 million in our traditional investment account. But! The second million only 5 years, the third million only 4 years. Now it comes down to discipline and sticking with it!
This is what the Mrs. and me are doing. We are still in our 30’s and if we don’t get 10% returns we luckily still have time to wait for it to build up.
Honestly I think that AI will mean even higher returns than the past decade, but not by investing in AI stocks, but investing in companies that benefit from AI and have the money to deploy it. Which companies are these? The normal boring S&P 500 and MSCI World companies.
I invest about 60% of my income. I am aggressively trying to get to a comfortable retirement.
Good job. I'm doing 35% and need to do more
Fire
I did 40% last year and I'm about 50% this year
Worse case senerio 10 more years to dream goal but hopefully 8ish years to go
I'm putting away 20% because I'm trying to fix up a rental property and keep a bit of liquid assets in case something else becomes available but toward the end of the year I make sure I always max out my tax incentive eyes contributions if I do nothing else. It's kind of a no-brainer so around 20 grand a year right now pushing hard to get to $200,000 so it can really start growing on its own
I’m investing 200% of my income
Living in this world where you can have a side hustle and the barrier to entry is so much lower is great....but the fact that some of us NEED a side hustle to survive when previous generations didn't should be alarming.
@@Joenzinator I know. I literally just said the same thing in my original comment.
Have an third side hustle to invest. That's what i do. My 2 side hustles go entirely to investing. I don't need them to live as my income is enough. Do what you have to do to get by. That's what our ancestors did. They survived on less.
I'm maxing my roth 457b and roth ira which is about 2k. How does one invest 5k? Or is that in brokerage accounts?
Yes, any accounts you use to prepare for retirement.
Good content
Have the money guys done any research into who the “typical” TH-cam viewer is of their content? I’m curious how we compare to the average American that gets brought up often.
We are all financial monsters. A little motivation and research goes a long way.
Average and median values are also different.
2:45 cleanest boiling point of the money guy show
FACT
How would one allocate this in the best way? I feel like if you can invest this dollar amount you would probably go over 401k limits and you’d very likely need to use backdoor Roth and other solutions.
You should have a 401k, roth IRA and individual taxable account to get all the options available to you. Anything more than the 401k and IRA limits go to the individual account
Most important is to have a portion of the portfolio is in bond index funds - not because bonds have such great return, but so you can leverage the bond portion by rebalancing portfolio during any Bear markets (stock market down 20% or more).
Wish you’d like to the full episode in the description
Let's make sure people understand the 3 worst crashes since the depression: December 1974, December 2002, March 2009. Go back 30 years and you get a APY over 10% for the S&P 500. This is why I am not rebalancing. Perhaps new money can get conservative.
It sounds like you are saying to just invest in S&P, but mention rebalance. If you are invested in only one thing there's nothing to rebalance in. If you aren't bothering to rebalance because the S&P is high-performing, then why bother splitting your investments in the first place?
9/65 the Dow reached 9,000. It did not see 9100 again until the 6/95. 6/2000 Dow hit. 18600. Then did not rise above that until 2/13. Beware this is not a one way trip up. We have not had a market that lost 35-50% in 15 years!!
They have videos about that too.
You should consider investing in mutual funds that have a good track record of outperforming the s&p500 for 7-10 years.
Which ones are those?
What index funds??
Big if you can get 10%
Possible but currently not likely because of valuation. Not likely doesn't mean not possible though
You have to get real risky looking at near bankrupt companies to get extreme returns. Deep value investing
S&P 500 has kept up 10% returns for 100 years; regardless of valuation metrics the growth and innovation have been consistent and with tech revolutionizing the world, I bet it continues; I’m 80% S&P 500 10% QQQm (nasdaq etf , tech heavy) and 10% XLK (etf of the tech companies in S&P 500); 36 with 15 ideal years to retirement (I’m an optimist; worst case I will keep working my job that is challenging/rewarding/lucrative after 10 years of development)
@@CarlosMataShow no it hasn't, first the S&P 500 isn't even 100 years old
The stock market returns depend heavily on the exact dates and index you use.
Remind me in 25 years the annual returns
@@Username_CC_ yes but the Video is about 10 years
25 years your more likely to get 10% than 10 years from today
Hopefully we don't hit prolonged stagnation. Making 1 million in 10 years will have to mostly be the hard way.
My wife and I are going to make a push over the next 10 years. She just got her nursing degree, doubling our income.
We are planning to invest all of her new income. 62% including employer matches.
Should be putting in $13500 per month.
Crazy to think about when right now we are investing $2200 a month.
If we were able to make 10% returns we'll be close to 3.5 million, i expect we'll need 10 million in 2050 dollars to equal 1 million in 2020 dollars.
That's really impressive man 👏 You and your wife are doing life the right way!
Am I doing the math wrong or do you expect 8% inflation?
@@k3vin769 I agree. Inflation averages like 3% which means the cost of everything doubles every 25 years ish. So 3.5 mil at 2050 will be similar to 1.75 mil today. if most of that is Roth, they should be good depending on lifestyle.
That's an average rate of inflation that is a smidge over 8.25%. For 30 years! Since WW1 we've only managed to have stretches of 8% inflation or above for a few years at a time: WW1 / flu pandemic, end of WW2, and the late 1970s. Even today's bout of pandemic-related inflation has cooled down to historically normal levels already.
@k3vin769 , given the way our current government is spending out of control...
I'm not making the mistake of using 3% historical inflation.
Heck we've had 30% inflation aggregated over the last few years.
I'm planning for the worst and hoping for the best.
I would rather be ahead at retirement than behind.
Comment
The average RoR for a 10-year window of the S&P 500 has been 9.2%. The median is 8.5%. Since they are only describing one 10 year period, the later seems more appropriate. With that, it is $5290/mo. But thay isnt $1M purchasing power. Looking at where inflation has been historically and where it is now against the fed target, maybe the next 10 years sees 4% annual inflation. That would mean $1.48m after 10years to maintain buying power. That needs $7840/mo. Saving $94k/yr is a lot.
One should assume a 7% rate of return. If higher it’s a nice bonus.
10% is too rosy
25% of our gross income is impossible for European people. We are in an income bracket with 49% tax. How can we make this applicable for Europeans?
Americans aren’t far from that when you factor in sales tax, property tax, fuel tax, social security, Medicare, registration fees, and income tax.
@highbrass3749 we also have 21% VAT on top if that.
@@87vortex87 that sucks. They get us coming and going.
Vote out the corrupt socialists or move?😕
@@highbrass3749, nope. I'm not sure who convinced you of that but it is 100% false!😢
My wife and I have been busting our butts the last decade. She started out cleaning hospital rooms and I was an entry level engineer.
She worked her way up to phlebotomy, then nursing. She just graduated and I just got a promotion.
Our income will be tripling to 300k this next year. Our total income tax liability including medicare etc. will be $68k. 23% we'll clear $231k. Property tax is 1% assessed value of the property. Our 300k house will pay $3k taxes. Sales tax in our area is 6%.
We aren't planning on increasing our standard of living, but investing all our new income. Leveraging employer 401k matches (reduces taxable income) we can invest 63% of out income.
America is the land of opportunity. Socialism is severely oppressive.
We both come from poor families. Paid our own way. Took ownership of our futures.
Is it really unreasonable to expect 10% per year? My investments in my work 401k have averaged a little over 14% per year for the last 10 years
If the 100 year average is 10%, and your 10 year sample is 14%, there must be other 10 years samples that bring down the average.
Problem is they dont use real rate of return (- inflation) which is more like 4-5%
A large chunk of the last 10 years was a bull market. Update us in another 10 years.
It’s not unreasonable. But you should be prepared for fluctuations.
@@bobloblaw9362yes it's really unreasonable to expect that from large cap US stocks. They are extremely expensive right now and expecting 14% is setting yourself up for disappointment
@@Anonymous-ld7je I'd say it's 100% unreasonable to expect 14% at this time
Your setting yourself up for a very strong possibility of not being successful in your expectations. I never plan for best case scenario
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
I love your content and watch nearly every video, but the irony is you assume 10% RoR for your money multiplier to get to $1mm with just $100 per month for a 20 year old. The multiplier does not risk reduce assets as you get older. It still assumes the same 10% RoR when you are 60 years old.
No it doesn't. The money multiplier only assumes 10% rate of return until you are 20 and then decreases by 0.1% every year thereafter. At 65 they only give a 5.5% in the wealth multiplier.
How much of your youth are you willing to never get back focusing so much on wealth creation? Work hard but also work smart. Time is a huge leverage to apply to wealth creation. Start young and make a habit of living below your means and investing aggressively but not missing out on life along the way
Good luck, that’s …
Jimmy JJ Walker. Dyn-o-mite. 👍
I don’t even make 4K a month
Sure, saving $4,882 per month is definitely doable lol
See 5:00 where they address this
It is if you apply yourself to your career.
@@edhcb9359 lol ok good advice…I’m talking in general..for the average person…like they said, that’s basically 60k per year and if they’re following their FOO which is to save 25% then their salary would need to be over 240k per year…I don’t care how “focused” you are on your career, that’s simply not doable in MOST instances..for the average person but again, thanks for the advice to apply myself in my career..I’m going to give that a shot lol
That's just under 60k a year, which amounts to maxing out your 401k+Mega backdoor Roth. So....yes, it's doable if you're a high-income household, and is the amount you should be saving (according to the money guys) if you make 240k a year (ie, 25%.)
If it is not doable...just start. I started at $20/week...then $30...etc...until I got to 28% of my income. Over the years, it adds up. Just start.
With that volatile stock market now ..
Well that was predictably unrealistic. Can you do a show for those at the bottom of the barrel? What is your advice for the middle aged janitor or retail worker. Do you only discuss upper middle class scenarios because anything less is hopeless?
I don’t get comments like this. You clicked on a “is it possible” video, so that’s what they showed. Obviously becoming a millionaire in 10 years is unrealistic for most people.
The large majority of their content is around sound financial planning topics for the average person based on your age and circumstances. Look up any of their other deep dive topics to find what fits your situation.
@@kennycrump But they don't. Try to find a video where they even mention someone living below 40k/yr. They only cater this channel to suburban college educated professionals with families, the element of society they clearly want as clients.
The message this sends is that everyone else can enjoy their retirement in a tent on the side of the road. They sell hope for one demographic and hopelessness for another.
Yeah, no one single will be able to do that
Ha, ya, save 100k a year, and they're you go...
These days household incomes are pushing 200-300k for a lot people. Way more I feel than is being reported. And 5k savings a month for those folks should be child’s play.
Only 10% of Household incomes earn >190k, 5% >290k. So certainly a noticeable % of the population but I wouldn't say "a lot" of households are experiencing those incomes. Additionally those incomes are heavily skewed in HCOL/VHCOL cities such as San Fran/Manhattan/LA... Sure they're making 190k but they'd be lucky to have 2-3k left over a month after expenses.
The real life hack is figuring out how to make 200k+ in a MCOL or lower city. Then you can truly live like a king.
Who are these people making $200-300k/household? Not the average american...
No they are not. 100k household income is borderline upper class, depending on where you live.
Remember, people still work at McDonald’s, Walmart, Applebees, gas stations, warehouses, grow corn, fish on boats off of Alaska and Maryland, are cops, join the military, teach kids, babysit kids, fix plumbing, pave streets…
You’ve “lost the plot” if you think 200k is anywhere close to normal.
@@nwj03a maybe not for the service sector but if a household has 2 industry professionals the number is easily 2-300k a year. Pair up a nurse and a teacher ect and your there. Nobody at my place of employment makes under 6 figures and most well over. And a guy who works with me his wife make 105k as a teacher.