Millionaire Calculator

How long would it take to make $1 million? Enter your savings and annual rate of return into this calculator to find out.

So, does having a million bucks mean you're rich?

While $1 million isn't quite what it used to be, it's still a lot of money and a substantial achievement.

You don't need a six-figure income to become a millionaire. It just takes time and planning to get to this benchmark. Below, find out how close you are to having $1M, plus strategies for earning more.

Am I a millionaire?

The calculator gives you an overall measure of how close you are to being a millionaire. Check in every once in a while to keep your financial health in check.

Here's how the calculator works:

1. Enter Initial investment - The total value of all of your current investments. Even if you own a home, car and other personal property - it's more accurate to just include your savings, retirement accounts and investments.

2. Monthly contribution - Your savings per month that you will contribute to investments.

3. Expected inflation rate - The expected average long-term inflation rate. You can measure inflation in the US with the Consumer Price Index (CPI). From 1925 - 2016, the CPI had a long-term average of 2.9% annually.

4. Expected rate of return - The annually compounded rate of return you expect from your investments.

The tool will calculate:

• How many years your savings will take to reach $1 million
  
• How much that future $1 million would be in today's dollars

Does having 1 million dollars make you a millionaire?

In the U.S., a millionaire has a net wealth valued at 1 million USD or more.

Net wealth is liquid assets such as mutual funds, stock funds, and cash. Some people don't factor in retirement accounts, houses, cars, and other personal items for millionaire status.

So, if someone's liquid assets is 1 million USD or more, they are definitively millionaires.

How much interest does 1 million dollars earn per year?

Your interest on that $1 million depends on your savings or investment vehicle. Each will yield different risks and returns.

• With a savings account
  If you have a savings account with 0.050% APY, you'll earn $5,000 in interest over the course of a year.

  To do this by hand, just divide the APY by 100 and multiply the result

  (.50/100) x $1,000,000 = $5,000

  You should choose a savings account with a high interest rate to make the most out of your savings. High yield savings accounts offer APYs 10 times more than a traditional bank account.

  Higher APYs make a huge difference in interest for large balances. With compounding, the longer you invest, the more you'll earn.

• With the stock market
  Investing in the stock market can offer good returns. In fact, the stock market's average rate of return is about 10% per year. But it's also a lot riskier than other investment options.

  To minimize your risk, you can:
  

  • Invest in various long-running companies with stable profits
    
  • Try index funds or mutual funds - these options compile different stocks and invest them as a group

• With real estate
  Real estate investing usually offers a high return. Plus, it's a tangible asset that hedges against inflation. You can hold an asset and let it appreciate in value while earning profits.

  If you want to just buy properties, you can rent out the real estate for extra income every month. This will help pay off your mortgage and if you sell it, you have a nice chunk of change.

How much to save to become a millionaire

The key to becoming a millionaire is starting early. Here's how much you should set aside every month to hit seven figures.

1. Decide when you want to reach $1 million
   Most people retire at 65 and want to save $1 million by that point or earlier. What's your time horizon?

2. Find out how much your investments are expected to earn
   This question depends on your risk tolerance. It's hard to predict when the market will hit a downturn. The market went down - 36.65% in 2008.

   But if you're able to wait it out, the average annual return for the last 50 years was 11.23%.

   Bonds are generally safer returns. Their annual returns from the past 20 years was 5.31%.

   If you park your money in a traditional savings account or just in cold hard cash, it'll lose purchasing power due to inflation.

3. Find your target savings per month
   Let's assume an annually compounded interest rate of 6%. Here's how much you'd need to save:
   
   • If you have 40 years until retirement - $522/month
     
   • If you have 30 years until retirement - $1,021/month
     
   • If you have 20 years until retirement - $2,195/month
     
   • If you have 10 years until retirement - $6,125/month

As you can see, things are a lot easier when you have more time. Don't wait to start saving.

Best ways to invest

You know how much to put away every month now. But how do you grow that money and get closer to your $1 million goal?

1. Pay off your debt - High-interest debts can steal away your investment returns

2. Invest in the stock market - Be sure to choose a brokerage account with commission-free trades

3. Diversify your portfolio with ETFs and mutual funds - Investors buy into a fund that holds several assets

4. Buy real estate - You can invest in real estate crowdfunding, REITs or physical property

5. Use CDs - This is a risk-free investment vehicle but today, CD rates are pretty low

6. Try alternative investments - Other options like cryptocurrency are highly volatile with potentially high returns

Bottom line

You can hit seven figures. All you need is a game plan and a timeline.

Whether your target age is 10 years or 40 years in the future, start saving yourself as much as you can.

If you're open to higher risk, consider investing in stocks, ETFs, mutual funds, or cryptocurrency.

If you're more risk-averse, consider CDs and high yield savings accounts. Check for a high APY and no monthly bank fees.

Do your homework to pick the right approach for you. And remember: Invest as soon as you can to reap the benefits of compound interest.