To succeed in every trade has always been the dream of every trader. And to realize this dream, one must go through a lot of work and challenges. Adding to building up skills to win every trade, he also needs to acquire knowledge regarding trading strategies, markets, analyses, and so much more. Among others, he must also specify a goal – and among the most prominent goal of a serious trader is to achieve his first million in his account.
So how do you go about computing your first million in your account? How much should you be setting aside from your salary to achieve this goal? What’s the annual savings that you need to maintain to get to that first million?
Here’s how to do it.
The 3-step strategy to reach your first million
Table of content
Before actually thinking about getting your first million, you will need to have a definite timeframe of when you want it. Do you want to achieve your first million within the year? In the near future? At your retirement? In any case, you can estimate the time when to reach your first million.
The computation is actually easy as soon as you have specified the time required to achieve your first million. All you have to do is compute how much you should save today until the desired time frame. Additionally, you can also compute how much you should save until you reach the desired age from when you want to make your one million. The difference between today and your target year or time frame will give you the number of years wherein you need to focus on your savings to reach that one million in your account. Let’s say, you are 30 years of age and you are looking to make your first million at the age of 50. In this case, you have at least 20 years to save money and make your first million.
On this next step, you should consider the volume of your expected return. In this regard, you may want to bear in mind a few things to make your expected returns more realistic and achievable. One factor to bear in mind is your risk tolerance.
Risk tolerance is the degree of changeability or flexibleness when it comes to your investments. Having good risk tolerance means you are able to handle large swings in your trading plan. If you are firm with your investment return in your plan, you should have a good level of risk tolerance.
Most of the time, a “playing it safe” strategy on a stock leads to low or “safe” returns – not considerable or profitable returns. To counter this, many traders combine their “safe” stocks with other investments that potentially yield high gains. With the risk on the “safe” stocks combined with the potential yields on high-gain stocks, any greater risk is averted.
Amount of your savings
The ideal amount for your annual savings will depend largely on your eagerness to save. Say you have 30 more years until your retirement, having a 6% annual rate of return, you should have an annual savings of $14,315per year.
Having a clear picture or idea of your target savings amount will help you easily make changes to your plan and strategy when necessary to achieve your ultimate goal of reaching your first million.
Torodemotrading Millionaire Calculator
Now it can certainly be difficult to crunch the numbers when calculating your first million in your account. However, with this millionaire calculator from our platform, you’ll be able to have easy and fast computations.
To start using this calculator, all you have to do is fill in the details required such as current age, your desired retirement age, current net worth, the annual return of investment, and your target net worth. Upon clicking “Calculate”, you’ll immediately see the annual funding that you need in order to achieve your goal to reach your first million.
Notice that as you change the current age, your annual funding rate also changes proportionally. This means, if you start as soon as possible, you will get a lower annual funding rate. At the same time, you delay saving to make your first million, you will have a higher annual funding rate later on – so, the best time to start saving is now!
Our final thoughts
As you have learned, earning your first million in your account is definitely a huge challenge. However, with the steps mentioned in this article, along with the right tools, you’ll be able to achieve this goal with increased precision.
Also, age isn’t really much of a problem when saving money to reach a million – all you have to do is act now and respect or follow your allotted money-saving strategy or plan.
With these tips to reach your first million and the millionaire calculator, you will be able to visualize your goals.
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