Every trader dreams about success. And every trader has to go a long way to become a professional. He must learn about markets, financial instruments and trading strategies. He should develop certain skills. But also he must set the goals. Why not aim at $1 million?
Let's calculate together, how much you should save every year to reach seven figures. And when you get to know your annual savings number, you will just have to set a saving plan and start following it.
Three steps to hit $1 million
First step: timing
The first thing you should think through is when you want your $1 million. Would you rather have it in the near future or your dream is to have $1 million for your retirement? In both cases, the math looks the same.
To calculate how many years you ought to save in order to have $1 million by the desired age, you have to take this age and subtract your present age. For example, if you wish to reach $1 million at the typical retirement age of 65 and you are now 30, you get 35 years to make savings.
Second step: investment return
Here you should decide how big investment return you expect. There are a few factors you have to take into consideration. For example, your risk tolerance. You can review how different types of investments performed in the past, although there is no guarantee the situation will repeat.
Oftentimes, the safer investment, the lower return. This is why many investment portfolios consist of a combination of different types of investments. This allows graduating the level of risk and the height of return at the same time.
Third step: your savings number
As I mentioned in the beginning, your annual savings number depends largely on how early you start to save. If, for example, you have 40 years until retirement, with a 4% annual return rate, you will just need to save $10523 per year.
A new IQ Option Wiki feature – Millionaire Calculator
IQ Option Wiki has recently introduced a calculator that will help you to figure out how much you should save in order to have $1 million by the time you retire. It is called a Millionaire Calculator and is really simple to use. You can access it by choosing a million calculator from the menu under Free Trading Tools on our website.
You will have to fill in some details about yourself and your savings. These are your current age in years, the desired retirement age, current net worth in dollars (place here your savings if you already have some), the annual return on investments in percentage per year, and lastly, a target net worth in dollars.
After you write this information in the corresponding fields, you just have to click the Calculate button to receive a result. Let's look at the example below.
A person who is 37 at the moment and wishes to retire with $1 million at the age of 60 will need to save $38,886 in a year (with the annual investment return at 1%).
Play a little bit with the Millionaire Calculator to discover your numbers. Remember that the chances to reach a million at the desired age are higher if you start saving early enough or when you set up a high average annual return.
It is never too late to start saving. Of course, the earlier you begin, the better. But no matter how old you are now or how big your current net worth is, it is always better to do something that brings you closer to your dream goal.
Do not forget about the power of compound interest. Time is on your side. Even a small initial capital can turn into big money in the future.
Use the Millionaire Calculator on the IQ Option Wiki website and find your annual savings number.
Share your numbers or tell us about your dream retirement age. We would be glad to hear from you. Below, you will find the comments section which is a perfect place to write down any observations on the IQ Option calculator you might have.
Enjoy the power of visualization!
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