Today we’re going to talk about how long does it take to make a million dollars.
That’s right! We’re going to take a look at how long will it take you to make that $1,000,000 mark.
I’m going to do this video because a lot of people ask that on my website.
The “How” part is the tricky part. That’s because there’s a lot of different strategies and techniques. It simply depends on a lot of factors.
But “How Long” will it take you to make a million dollars it’s easier once you’ve traded 4-6 months or even a year. That’s because you can calculate your percentage of return or get an idea of it and project it out forward. That’s what we’re going to do in this week’s episode.
Making a Million Dollars in the Stock Market
We’re going to do some number crunching and give a projection of how long could it take you.
These numbers are going to rely on a couple of things:
- your starting balance
- your percentage of return
If you’re starting with $5,000, you’ll need more time to that 1 million dollar mark than if you’re starting with $200,000.
If you have a percentage of return on a per month basis, that’s 1% versus someone with 5% a month return well that is a whole different world and level. You’re speeding things up.
Here’s one big caveat you have to understand. Maybe your starting balance is on the lower end – $5,000, $25,000, $50,000. And you start approaching the $1,000,000 mark. If you have a strategy that is capital sensitive and you’re trading penny stocks that are less than $2, and you’re trading a high share account, this could be not a scalable strategy for you. You have to think about your strategy in mind as you get further along. You won’t be able to trade as large at that time.
Reaching 1 Million-Dollar Mark – Is it Possible?
I’ll show you based on the numbers how long it’s going to take for you to reach a 1 million dollar mark based on your trading and investing.
Quick note: If you’re day trading, you have to take a look and calculate your monthly profits. And then calculate it is looking at your annual profits. And if you are swing trading – the same thing. You want to project on a month-to-month basis and then get a yearly return. Do that first, and after you do that, let’s hop to the screen so this way you get an idea.
There are 4 columns:
- column B (year)
- column C (start age from 20)
- column D (start age from 30)
- column E (balance)
Let’s say your starting balance is $100,000. If you do a typical market return (8%, 9%, 10%) is what they talk about, talking about dividends. Let’s say we’re going to go 8%. I’ll add 1.08 in the table above balance.
Since I’m going to use the calculation, I will take my starting balance, multiply that and add to it. If you’re starting with a $100,000, we’ll do a formula. You’ll add $8,000 to your $100,000 mark.
I’m going to lock that in with some dollar signs. That way, that number doesn’t change, and I will get rid of these decimal points because I don’t need decimal points when we’re talking about large numbers.
Your account keeps growing. This is exponential. If you’re going to fill this down, you keep an eye on and see what happens.
When Do I Reach the 1 Million-Dollar Mark?
If you started with an account balance of $100,000, with an 8% return on investment and started at age 20, it would take me 31 years.
If you’re starting at age 20, you would be 50 years old until you have a million dollars.
If you start at age 30, you’d be 60 years old. If you start at 40, you’d be 70 years old.
It’d take you about 30 years to get to that level of return if you’re thinking about 8% per year. This is what most people don’t like, and that’s why they get into swing trading. They try to do day trading to make more than 8% per year. They’re trying to beat the market.
What if the return on investment is different than 8%?
Here you can see new columns:
- column E (4%)
- column F (8%)
- column G (10%)
- column H (15%)
- column I (20%)
- column J (25%)
You can do this at home if you know how to set up Excel.
Now, I could fill this down, and I got some bigger numbers. All of a sudden, you got some records.
If you’re doing more active trading, option trading, maybe you’re doing 5% a month. That means you might be in that 20% a year bracket.
10% return on investment per year:
When we’re looking at 10% a year, and your starting balance is $100,000, it may only take you 26 years. If you start at age 20, you’d be 45 years old. If you start at age 30, you’d be 55 years old to get to the million-dollar mark.
15% return on investment per year:
You’d make that million-dollar mark by the time you are in you are 37 years old if you start when you’re 20 years old. If you start when you’re 30 years old, you will reach that mark when you are 47 years old. That would take you about 18 years.
20 % return on investment per year:
If you’re making 20% a year all of a sudden, that cuts that to 14 years. And now if you started at age 20, you’d be 33. If you were at age 30, you’d be 43. You can take a look at this table and records, and this is what the numbers allow you to do. This is what they tell you.
You can make your million dollars, but it’s going to depend on your starting balance and your percentage of return.
Let’s Change Your Starting Balance
For example, increase your balance to $250,000. If you’re starting with an account of $250,000, it doesn’t take you that long to make a million dollars. Especially if you’re making 20%. In that case, it only takes you nine years.
You’re there in 9 years. If you’re doing only a 15% return on your investment, then it’ll take you 11 years. Also, that is not too long.
If you’re making 10% a year, it will take you 16 years. That means if you were 20 and you went to 35. Well, it doesn’t take you that long.
All of these factors do play a significant role. The tough part is when your starting balance is low.
What to do if You Have Low Starting Balance?
I’m going to drop it down to $5,000.
All of a sudden, it takes you a long time to make a million dollars. And this is where the trouble lies.
If we started at $5,000 and you’re making a 4% return on your investment, it would take you 137 years.
- Could you get to the million-dollar mark?
Yeah, if you could live that long. If you start at age 20, you’d be 156 years old by the time you hit a million dollars. If you started at age 30, you’d be 166 years old.
That’s a big issue if you only have $5,000, and you’re making 4%. It takes you a lot longer. If you have a little bit higher percentage of return that might be slightly better.
Let’s say you’re making an 8% return on your investment. All of a sudden, look at how quickly this jumps up compared to 4%.
That’s because you’re compounding.
In this case, it takes you 70 years. And you’d be 89 years old if you start at 20. If you’re starting at age 30, you’d be 99 years old by the time you had a million dollars.
If you make 10%, it will take you 57 years, and you’d be 76 years old if you were 20 right now. You’d be 86 if you were 30.
And if we look at a 15% return on investment, it still would take you 39 years, and you’d be 58 years old if you started at age 20.
You can see you can do it with a 15% return per year investment even 20% return on investment it would still take you 31 years you’d be age 50 if you started with age 20.
The thing is you could still get there with a low balance amount, but it’d take you a while, as you can see. That’s the name of the game. Slow and steady wins the race.
For those of you that are interested in looking at the numbers, this is what you have to do. And you need to recognize that if you have a starting balance and capital that’s lower ($5,000. $10,000), it is going to take you a lot of time. Trying to hit a bigger number out in the future a million dollars, two million, five million dollars, it will be a hard and lengthy process.
And it’s going to depend on your percentage of return.
I think if you’re shooting for a higher percentage of return (20%), I think you’re overreaching. Be careful with that because you do have drawdowns, pullbacks, and some things are going to happen in your life. You might have kids, or you might take a break from trading for a year or two or a couple years until they’re 7-8 years old and when they’re a little more independent.
It depends on a lot of factors in life. Understand the numbers, and looking at the numbers, this gives you a linear guideline and a projection. And of course things will go down, you’ll lose a little bit of money, and maybe with 2-3 of these years, you’ll have pullbacks. And then, later on, your strategy or your system will kick back in and work depending on how you go about trading.
Everybody’s strategy system, style, risk tolerances are different. You might be the type of person where you like to trade about $10,000 worth of my account all the time. Even though 5%-10% return on $46,000 is much more than on $10,000. But you might only like to trade $10,000 at a time.
You might only be making $500 every single year from your returns because that’s where you’re comfortable at for now. Understand that all these things play a role that’s even underneath the surface.