Friday, August 27, 2021

1. Set a goal and make a plan
The road to wealthy status starts with you officially setting the goal. Studies have shown that people who set goals reach them more often than those who do not. Your chances are even better if you create a written plan: In a study done by Dominican University, people who wrote their goals down met them 42% more often than those who didn't.

2. Invest your money
You've determined how much you need each year, but how much will your accounts earn? How much your portfolio is allocated to stocks versus bonds could help shorten the amount of time it takes for you to become a millionaire.

For example, if you invested in a portfolio that held 50% stocks and 50% bonds over the last 93 years, you could've earned an average annual return of 8.6%. If you'd invested $10,000 dollars a year at this rate, you would've become a millionaire in 27 years. If instead you owned 80% stocks and 20% bonds, you would've earned 9.7%, and your portfolio would've grown to over $1 million dollars in 25 years. *Returns used as example

3. Don't let emotions control your decisions
How consistently you can meet your goals will play a huge role in how successful you are in becoming a millionaire. If you are someone who has a dramatic reaction any time the stock market drops, leading you to sell out of your investments, you could be making this goal harder to achieve. It may feel like the right choice, but this attempt at market timing could make you miss out on crucial recovery days.

4. Monitor your progress
Reaching your goal of becoming wealthy will require that you monitor your progress. Historical rates of return can differ based on when you're invested and for how long. If the rate of return that you receive is less than you anticipated, you may need larger contributions or a longer time horizon.

An annual portfolio review is a great time to track your progress. If any adjustments are needed, you can make small tweaks and stay on target to meet your goal.

Becoming wealthy can seem out of reach. But doing it incrementally over time can make this goal more attainable. Even then, achieving this goal will take more than just wanting it -- it will require planning and diligently tracking whether you are meeting your goal regularly.

The best plan, is to start today.

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Posted at 10:39 AM