14 May 2011

How To Become A Millionaire With £200

We all have aspirations of becoming millionaires, but most of us resign to it only being a pipe dream or something that will become a reality if we win the lottery. Talk of investments and building businesses bore most people to tears. They are simply hardworking individuals who want nothing more than to become significantly richer over a long period of time so that they can be comfortable when they retire. 

 Well, what if I told you that becoming a millionaire is no big deal at all and that you could do it by sticking to a very boring formula that requires close to zero effort and very little cash? 

Read on….

According to Motley Fool, the stock market has returned an average of about 11% a year over the long term. This means that a £100 investment over the course of 1 year would increase to £111. Compound interest would also come into play, which simply means that in the second year [with another £100 investment] you would gain interest on £111 + £100 and so on. 

Just £200 a month will get you there

How many would agree that if they stretched they could save £200 a month with an average job? Most people could. There are many ways to become a millionaire, but the easiest way is to utilize the method that follows. 

Thanks to compound interest and a long term conservative plan, a small sacrifice of £200 a month would get you there. All that is needed to make this come to life is an index tracker. Using this allows you to put in as little or as much as you like on a monthly basis, whilst the money is divided automatically against a variety of companies in the stock market it tracks [An example is the S&P 500 or the FTSE for example] You could also ask for the dividends that they payout to be reinvested back into the tracker, which would boost your earnings even more.

The hard-worker will typically stay in the workforce for about 40+ years. So if a worker started this plan at 21 and invested £200 a month, by the age of 60 [with an average 11% interest] their investments would be worth £1,329,474! Not a figure to be sniffed at!

It’s simple to do

Finding out about index trackers is pretty easy work. A search on Google for index trackers would bring up some names of companies that provide the facility. With a little education on how it works and some due diligence on the various fees that are applied, in no time at all you would be ready to take advantage of this lovely opportunity.

Some say life begins at 50. By using this formula, it truly could do! Another excellent source of information around the subject of wealth creating comes from Barbara Friedberg. She has an excellent take on the subject and I have always believed it is best to study various ideas to increase your overall knowledge. Feel free to leave a comment with your thoughts below!

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