How to Become a Millionaire

A one followed by six zeroes is one of the most enticing numbers in the public imagination: a million bucks -- a millionaire! Reaching a million dollars of investment wealth or net worth is not out of the question for almost any young couple. Make a plan, start early and relatively small regular investment amounts can grow to a million dollars or more.

How Much to Put Away Every Day to Make a Million Dollars

If you put $100 in a drawer every day for 27.4 years you would end up with a million-dollar pile of cash. Fortunately, the power of compounded investment growth allows you to save a lot less than $3,000 per month and still have your million dollars in 20 to 30 years. If you can invest and grow your money at the 9 percent historic rate produced by the stock market, saving $25 per day would produce a million bucks in the same 27.4 years.

How Much Does a 20 Year Old Need to Put Into the Bank in Order to Have One Million Dollars?

The future value of an investment deposit depends on the return the money earns and how long it is allowed to grow. Work backwards from the million-dollar goal with compound growth calculations to determine how much to deposit today. A matrix using returns of 4, 8 and 12 percent for a 20-year-old investing money until age 60 shows a range of possible outcomes. If your investment earned 4 percent, you'd need to invest $208,290 at age 20; if your investment earned 8 percent, you'd need to invest $46,031; and if your investment earned 12 percent, you'd need to invest $10,747.

How Much Money Is Left After Taxes on a Million Dollars?

The amount of taxes you pay on a million dollars depends on the source of the money. Wages, interest income, lottery winnings and short-term capital gains would all be taxed at your regular income tax rates. If you received a million dollars from one of these sources, the federal income tax bill would be about $320,000, based on the tax rates in effect at the time of publication and a filing status of married filing jointly. Of course, that's a ballpark figure, and everyone's situation is different. Your deductions and exemptions would reduce your tax bill; your state taxes would increase it. In addition, you would also have to pay FICA taxes -- Social Security and Medicare -- if the income came from wages or salary. If you made your million from long-term capital gains, the tax would be significantly lower: about $150,000.

How Much Would You Have to Put Away Every Month to Become a Millionaire?

Since it is very difficult to determine the future return from investments, the best advice is to save as much as you can every month. If you reach $1 million faster than planned, you probably will not complain. Stocks are viewed as the best investment choice for long-term growth and the Berkshire Hathaway 2011 letter to investors gives a 9.2 percent average annual return for the market. If you save $500 per month and earn that 9.2 percent return on average, it would take 30.5 years to have $1 million. Invest $1,000 per month and your reach the goal in 23.5 years.

How Long Would It Take to Become a Millionaire?

The time it takes to have a million dollars is based on how much you save and invest and what rate of return you earn on your investments. If you save $1,000 a month into a stock mutual fund and the stock market produces returns similar to historic results, you could be a millionaire in about 20 years. You should save as much as possible and, as your income grows, increase your savings rate. Even if you cannot save enough each month now to reach the million-dollar goal, increasing your savings each year makes it still possible to get to $1 million.

Can You Become a Millionaire Overnight With Investments?

You can become an overnight millionaire if you start with about $999,000. Use the rule of 72 to determine how fast you could get your starting investment amount to $1 million. Divide 72 by your annual return to get the number of years it takes to double an investment. For example, if you earn 10 percent a year in the stock market, your money will double in about 7 years. Start with $50,000, double it four times and you have your million.

About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.