Many people fantasize about achieving financial independence, but the journey to becoming a millionaire often appears daunting. For Dave Ramsey, a renowned personal finance expert, hitting the $3.6 million mark by age 65 is feasible for anyone ready to stick to a consistent plan. Recently, Ramsey shared a practical investment strategy on Twitter that, while straightforward, demands both discipline and patience.
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Ramsey suggests that by investing 15% of a typical U.S. household income, approximately $77,000, into growth-stock mutual funds, you can amass $3.6 million by retirement age. This assumes a 10% annual return rate, starting from the age of 30 and continuing until you’re 65. In Ramsey’s words, “It really is that simple—but not easy. If it was easy, everyone would be millionaires.”
The effectiveness of Ramsey’s guidance hinges on maintaining consistency in your investment strategy. While saving 15% of your income annually might seem substantial amid living expenses and other commitments, the cornerstone of Ramsey’s method is long-term growth—steadily building wealth that culminates in substantial retirement savings. The real power lies in compound interest: the sooner you start, the more your money multiplies.
Regularly investing small amounts in growth-stock mutual funds can yield significant returns over the years. Although this concept isn’t new, many people overlook it, thinking a higher income is necessary for wealth building. The true requirement is a steadfast plan to invest consistently, not necessarily a large paycheck.
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Ramsey reminds us that while the approach is simple, it’s not inherently easy. Many find it challenging to commit to a decades-long plan. Life throws curveballs—emergencies pop up, lifestyle expectations rise, unexpected expenses occur—making the 15% rule tough to maintain without financial discipline, budgeting, and, at times, some hard decisions.
As Ramsey puts it, those prepared to make these sacrifices will likely retire with a substantial nest egg, while others may have to depend on social security and hope for the best.
It’s crucial to understand how money can quietly slip away from you. Imagine your bank account as a sieve; if you’re not vigilant, money trickles out unrestricted. Small, frivolous expenses accumulate over time and can impede your progress toward financial objectives.
By setting a budget and eliminating non-essential spending, you can free up additional funds each month for investment. The goal is to direct your money intentionally rather than letting it scatter without a plan.
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This piece, Here’s How To Reach $3.6 Million By Age 65, According To Dave Ramsey—’It Really Is That Simple,’ originally appeared on Benzinga.com. © 2024 Benzinga.com. Please note, Benzinga does not offer investment advice. All rights reserved.
