Can investing make me a millionaire? It’s the sort of question every aspiring investor is bound to ask at one point, and we often hear it at Aikido.
The short answer is yes!
Even the strategies most investors will overlook, like saving tiny amounts on a daily basis, have a significant impact. Even if you can only put aside $10 or $20 at a time, each of these investments will help you build a solid financial foundation.
Is there anything else you need to know?
This article highlights the type of investments that can make you a millionaire and investment rules that will guide your journey to becoming a millionaire.
Types of investments that could make you become a millionaire
One of the most successful strategies to becoming a millionaire is to invest in the stock market. However, you must ensure that you are investing correctly, as injecting your money into the wrong investments might lead to financial ruin.
Here are three types of investments that can help you grow your money and make you a millionaire in the long run.
- S&P 500 ETFs
S&P 500 ETFs are reasonably safe investments. While the stock market is prone to corrections and collapses, it has always recovered in the past. That indicates that, while S&P 500 ETFs will have ups and downs, they are very likely to earn good long-term returns.
If you start with $3,000 and save an additional $300 each month while earning 10.00% on your investment, you will have accumulated $737,658.58 after 30 years.
While becoming a millionaire takes time, S&P 500 ETFs are hands-off investments. All you have to do now is invest regularly and watch your money increase.
- Dividend Funds
Dividend stocks are investments that pay you a cash dividend simply for owning them. You’ll get a little dividend payment for each share you own every quarter or year.
If you invest in a dividend fund, you won’t have to worry about purchasing specific equities if that’s not your thing.
Dividend payouts vary per stock, but you should expect to receive a couple of dollars per share. While this may not appear to be much, it can add up to a lot more than you might expect.
Most dividend funds allow you to reinvest your dividends to purchase additional shares. The more shares you possess, the more rewards you’ll get. You might potentially develop a passive revenue stream over time.
Assume, for example, that your investments are yielding an annual return of 10% on average. You’d be a millionaire in 30 years if you invested $400 every month, plus you’d be collecting passive income from dividend payments.
- Individual Stocks
Individual stocks may be a good fit for you if you enjoy researching different firms and having a hands-on approach to investing. You can build a fully tailored portfolio to meet your needs by investing in individual equities.
If you decide to invest in individual companies, make an effort to diversify your portfolio by purchasing equities from at least 10 to 15 different industries. This will help you diversify your portfolio while also reducing risk.
Most importantly, do your homework because the wrong investments might wreck your money.
Investment rules that will make you a millionaire
Investing is the quickest path to becoming a millionaire, and you don’t have to be rich to do it.
Let’s look at some of the rules you need to follow.
Rule #1: Set an investment goal
It’s now up to you to select what you want to gain from investing. Your ultimate goal is obviously to become a millionaire. Take into account your age, personal circumstances, and financial situation.
Rule #2: Start investing now
Investing for the long term is the best approach to make money in the stock market. Put another way, buy suitable investments and keep them for at least three to four decades.
If you invest $20 per week, you will have $1,082 after one year, $6,346 after five years, and $15,672 after ten years.
If you spend $200 per week, you will have 10,820 after one year, $63,460 after five years, and $156,720 after ten years.
Despite the unpredictable swings in the stock market, the best thing you can do is look long-term and begin investing early:
Rule #3: Invest in Stocks
Stocks will help you increase your money faster than more conservative assets.
Bonds, CDs, and high-yield savings accounts have smaller returns than stocks but are less volatile. Bonds may only return 4% or 5% per year, and even the finest high-yield savings accounts only pay 1% per year in interest.
That’s unlikely to stay up with inflation, which means your money in a savings account could lose value over time.
Rule #4: Diversify Your Investment Portfolio
To reduce risk, diversify your investment portfolio by purchasing different stocks from various industries. In this case, if one or two of your equities underperform, it won’t have a significant impact on the rest of your portfolio.
Buying funds like mutual funds or ETFs lets you diversify more quickly because each fund may comprise hundreds of equities. However, making sure the funds include companies from a variety of industries is still a good idea.
Know what you’re investing in, keep an eye on your investment, build a diverse portfolio, and invest for the long term.
Rule #5: Automate your investment schedule
Set aside a certain amount of money each month to be automatically invested.
Brokerage firms and automated investing programs can assist you in setting up automatic investment strategies. As a result, you will avoid stalling and be able to invest consistently.
Following these three rules can help you start generating wealth today, regardless of how much money you have.
Learn more about the companies that you could invest in right now to become a millionaire.