I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. The Game Show Who Wants to be a Millionaire was one of the most popular game shows of all time because of its premise, which is pretty obvious. Everyone wants to be a Millionaire. In fact, when Americans were asked to define rich, many say that the definition of wealth is having seven figures in your bank account. But you don't need to win a game show in order to become a millionaire. You can do it the old fashioned way through smart investing. And you actually don't need a lot of money in order to make this happen. You only actually need 200 bucks to put yourself on a path to wealth. Today, that's the path we're going to go down. I'm going to tell you how you can retire with a million bucks in your retirement account. We're going to use the stock market's historical 10 % return to gage how much the stock market will grow your money year over year until you're ready to kick your feet up and be out of the office forever. On the road to becoming a millionaire, you can think of the investment contributions as the speed that you need to drive in order to get to your destination on time.

I'll tell you how fast you should be driving or how much you should be investing in each decade of your life if you start investing in your 20s. However, this episode isn't just for the 20 somethings. If your 20s are well in your rear view mirror, you can still retire with seven-figure wealth. You're just going to have to speed up a little bit on the highway. I'll tell you what you need to do, but first, let's start with the early birds. Your 20s is your time to build your financial foundation. My God, if I could go back in time. During this whirlwind decade, you should really focus on establishing good financial habits like creating a budget, building out an emergency fund, and starting your investment journey, even if you're not starting with big contributions. If you start investing early, you can really gain compound interest, because when it comes to compound interest, time is actually more valuable than however much or a little you have to contribute. And If you're making contributions in your 20s, those contributions are so valuable because they have over 40 years to grow, assuming that you're planning to retire in your 60s.

So if you could swing it, I'd shoot to invest 200 bucks a month. Ultimately, how much you can squirrel away is totally your call. I can't make this investment decision for you, but I will tell you what I would do. I would prioritize my investing budget, meaning I'd find a cheaper living situation in order to make sure I could keep up with that $200 monthly investment contribution. Let's be honest, in your 20s, you're probably not going to be in your house a lot anyway. Again, your budget during this time in your life is really going to depend on what's possible with your income and all the intangible things that make you happy. I cannot take that test for you, but I can tell you how I'd prioritize. I'd try to make some compromises with my living situation in order to invest in a meaningful, consistent way. And as I take you through these decades, I'm going to track how much you'd have in your retirement account if you follow this millionaire roadmap. If you start investing 200 bucks a month at age 25, assuming a 10 % annual return, you'd have just about 15K in your retirement account by the time you turn 30.

Your 30s should really be when you hit the gas on your good financial habits. By 30, aim to increase your monthly investments to $325. A lot of adulting happens in your 30s. You're going to make a bunch of big decisions that will look like choosing a car you can afford, whether or not you should rent or buy a house, and whether or not to to start a family or move to a new city. As you're making these decisions that feel so close and so immediate, you really can't lose sight of your long term investing goals. And if you haven't by now, you should consider automating your investments so you keep consistent investment habits and take advantage of free money, like if you have an employer matched for a 1K plan. If you can up your contributions to $325 a month, you'll have $105,000 in your retirement account by the time you sunset your 30s. By 40, level up your monthly contributions to 850 bucks. This is the perfect time to check in with your goals for retirement, make sure you're on track, and if you're not, make adjustments so that you can get there by 65.

This is also a It's right time to take a hard look at your income. In your 20s, it can really be challenging to lock in that raise, but by your 40s, you have 20 more years of life experience under your belt, and therefore, 20 more reasons to get a raise. The average millionaire has seven streams of income. By your 40s, you should start thinking about whether or not there's another way to monetize the skills that you've built throughout your career. More income, of course, means that you'll have more wiggle room in your budget to stretch your monthly retirement contribution to 850 bucks a month. And lastly, your late 40s are a good time to start thinking about your risk profile. As O. G. Money Rehabbers know, conventional advice is that you build your portfolio that represents your age and bonds. So if you followed this advice, this would mean that when you're 25, for example, your portfolio would be 25 % in bonds, and then the rest, 75 % in stocks. And basically, up until you turn 50, your portfolio would be heavier in stocks than in bonds. This is because stocks have a higher risk profile and higher chance of reward compared to bonds.

And as you get closer to retirement, you should have less exposure to risk. So as you approach 50, you should keep in mind that your allocation is about to flip. If you follow this conventional allocation Allocation advice, you're about to be more invested in bonds than in stocks. And that bond allocation is going to get steadily higher each and every year. If you have more money to play with, perhaps you don't have to be as conservative. As you get into your 50s, though, this is the time to have these conversations with yourself and your financial advisor. If you keep investing 850 bucks a month from 40 to 65, you will have over $2 million by the time you retire. And the coolest The nice part about this is that you'll have $2 million in your account, but you'll have only contributed $306,000. I know that 306 grand is not nothing, but the fact that your money can grow six times over is the reason why compound interest is the eighth wonder of the world. Now, if you didn't start investing in your 20s, let's talk. You can still retire with a million bucks, but I'll rip off the bandaid here.

You'll need to be more disciplined and contribute more in order to get there. For example, let's say you're 45 and you have zero dollars saved in your retirement fund. You can accumulate a million bucks in your retirement account, but you're going to need to contribute $1,500 a month, and that is almost double what's required if you started in your 20s. Now, if you haven't started investing before your 40s or 50s, think of this as your catch-up period. Now that that bandaid is off, catching up is not going to be easy. You're going to need to make significant adjustments to your budget in order to carve out the right investment allocation, and definitely money, take advantage of any catch-up contributions allowed in retirement accounts like 401(k)s and IRAs. This is the time to focus on maximizing your contributions, and consider consulting with a financial advisor to optimize your investment strategy for the home stretch. Net-net, at the end of the day, becoming a millionaire by 65 is an absolutely reasonable goal, so long as you have the right strategy and a long-term perspective. By understanding the importance of starting early and increasing your contributions As your financial situation improves, you can set a solid foundation for your future.

Remember, it's not just about how much you invest, but also about giving your investments enough time to grow. Start today, if you haven't already. As I say, you're never as young as you are today. And as far as I'm concerned, today is as good a day as any. For today's tip, you can take straight to the bank. Gosh, this is a really nerdy one, but my favorite tool to keep me motivated and on track with my financial goals for retirement is a compound interest calculator. This is not a joke. For me, nothing gets me more hyped and motivated than seeing my contributions and how they'll compound over time and how much money I can actually make if I keep up with it. So give it a try. And if you're someone who wants to retire before your 60s, you can play around with how much you'll need to contribute if you want to retire early. Did you know that even if you have a 401k for retirement, you can still have an IRA? Robin hood has the only IRA that gives you a 3% boost on every you contribute when you subscribe to Robin hood Gold.

But get this, now through April 30th, Robin hood is even boosting every single dollar you transfer in from other retirement accounts with a 3% match. That's right, no cap on the 3% match. Robin hood Gold gets you the most for your retirement thanks to their IRA with a 3% match. The offer is good through April 30th. Get started at Robinhood. Com/boost. Subscription fees apply. And now for some legal info, Claim as of Q1 2024, validated by Radius Global Market Research. Investing involves risk, including loss. Limitations apply to IRAs and 401(k)s. 3% match requires Robinhood Gold for one year. From the date of the first 3% match. Must keep Robinhood IRA for five years. The 3% matching on transfers is subject to specific terms and conditions. Robinhood IRA available to US customers in good standing. Robinhood Financial, LLC. Member Sippik, a registered broker dealer. As a small business owner myself, or as I I like to call it a pre-big business owner. I know how critical hiring is to the success of a company. When you have a pre-big business, hiring isn't just adding a new employee, it's adding a new family member. The problem I run into is that I don't have the time or the resources to give hiring the TLC it deserves.

That's why I love LinkedIn jobs. Linkedin isn't just another jobsport. Linkedin is a vast network of more than a billion professionals, which makes it the best place to hire. It gives you access to professionals that you can't find anywhere else. Linkedin does all of that while making the process easy and intuitive. Hiring is easy when you have that many quality candidates. So easy, in fact, that 86 % of small businesses get a qualified candidate within 24 hours, and it really works. 2.5 million small businesses use LinkedIn for hiring. You can post your job for free at linkedin. Com/mnen. That's linkedin. Com/mnen, as in Money News Network, to post your job for free. Terms and conditions apply. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan LaVoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your moneyquestions, moneyrehab@moneynewsnetwork. Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content.

And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.