How to Create a Nation of Millionaires

Perhaps the best-kept secret when it comes to investing is that time¸ not cash, is the most important asset you can put to work for you. Just a little bit of cash, socked away for a long while, has the potential to grow into a substantial amount of wealth. Given enough time invested, even a person of modest means can retire with a million dollars or more.

This chart shows just how powerful of an ally time can be for someone targeting retirement at age 70 with a cool million, simply by earning the market's long-run 10% historical average returns:

Starting
Age

Monthly
Investment

Total
Invested

% of a Full-Time Minimum-Wage Salary

18

$47.24

$29,477.10

4.3%

21

$63.81

$37,521.83

5.8%

25

$95.40

$51,514.42

8.7%

30

$158.13

$75,900.37

14.5%

35

$263.39

$110,624.19

24.1%

40

$442.38

$159,257.65

40.5%

45

$753.67

$226,102.24

69.0%

50

$1,316.88

$316,051.95

120.6%

55

$2,412.72

$434,289.21

221.0%

60

$4,881.74

$585,808.84

447.2%

A teenager who can consistently sock away less than 5% of the salary from a minimum-wage job can retire a millionaire. On the flip side, even a well heeled 50-year-old who hadn't yet started saving for retirement would probably struggle with reaching that same milestone.

Small investments for real people
You might believe that with a mere $47 per month to invest, your money would get eaten alive by fees and commissions. In most cases, that might be true, but there's one class of investments that actively welcomes even small investments.

They're known as DRIPs -- dividend reinvestment plans. You might have to pay a small fee or come up with a bigger initial investment to join one. Once you're in the plan, however, many allow you to make additional contributions and reinvest your dividends with no fees or additional out-of-pocket costs.

Here are just a few companies that welcome the small investments that can help make millionaires out of ordinary folks:

Company

Initial Enrollment

Minimum Optional Contribution

More Information

3M (NYSE: MMM  )  

1 share of stock

$10

Click here

Abbott Labs (NYSE: ABT  )

1 share of stock

$10

Click here

American Electric Power (NYSE: AEP  )

1 share of stock or $250 + $10 initiation fee

$25

Click here (opens PDF)

Kellogg (NYSE: K  )

1 share of stock or $50

$25

Click here

Colonial Properties Trust  (NYSE: CLP  )

1 share of stock or $200

$25

Click here (opens PDF)

Dow Chemical (NYSE: DOW  )

1 share of stock

$25

Click here (opens PDF)

General Mills (NYSE: GIS  )

1 share of stock

$10

Click here

Poverty is not permanent
The big barrier to creating a nation of millionaires isn't cash -- it's ignorance. DRIPs and other low-cost, low-barrier investment strategies are available to anyone who cares to seek them out. But if you don't know how money works and don't realize how important time is to securing your financial future, you won't get started until it's too late.

That's why The Motley Fool has teamed up with DonorsChoose.org to fund classroom projects that teach and improve financial literacy for students who are most at risk of falling through the cracks. Every time these programs reach a student, that student gets the valuable gift of time. And with that gift, he or she acquires the opportunity to move from poverty to prosperity.

You can change lives
Creating a nation of millionaires just might be as simple as improving financial literacy for children and then letting the power of time work its magic. It doesn't take much to make a huge difference. Every donation, no matter how small, is appreciated and goes directly toward the classroom project of your choice. If your donation doesn't completely fund a project, it's pooled with ones from other like-minded people, until the project is completely covered.

If you've ever wanted to make a huge difference in the life and future of a child, now's your chance to turn a small investment into a gigantic impact. Simply click here to see the financial-literacy projects that the Fool is sponsoring, and when you've found one you like, donate.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. Dow Chemical is a Motley Fool Income Investor pick. 3M is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days. The Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (34)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2008, at 7:02 PM, guychan wrote:

    How true, and so simple. Yet, I am testament to the unfortunate truth that most parents do not convey these crucial matters of life to their children. I had to learn it all though mistakes before I saw the light. I began educating my children about money matters when they could just about talk. Gave them a weekly allowance, of which they had to save 50%. Every year they got a raise but still had to save a substantial amount. Now I "insist" only on 30% savings. When they had $500 and $250 saved, respectively, I had them pool their savings and invest in stocks. Nothing exciting - a pipeline (I want them to get dividends and also the compounding power of that investment feature). I am passing on to my kids what my parents (though well educated) could not or would not do for whatever reason. I am teaching my kids the steps to financial independence. This is a societal responsibility. Thanks

  • Report this Comment On December 04, 2008, at 12:20 PM, Bucks2407 wrote:

    The "time" argument seems to be the last leg that the investment community has to stand on. I've faithfully invested 16% in of my salary for the last 15 years in a 401K and would be infinitely better off, if I would have put it in t-bills or in a mattress. The last 10-12 years of basically zero gain, assuming you are fully in the market equates to 13% of life expectancy and roughly 30% of a work career.

    It is stunning to me when I talk to my friends with different investment advisors that we all got the same advice...."hang in there....ride it out....over time, equites perform the best. Well....we are all down 40% despite clouds this summer that any moron could have seen coming. What the heck, keep buying and maybe my attitude will change in 10 years, at least thats what my investment advisor says!

  • Report this Comment On December 04, 2008, at 7:55 PM, guychan wrote:

    Bucks - I think an important point of the article was that financial education is fundamental to even getting to be a "savings" persons. Unless the necessity of saving is understood and put into practice, then that person is doomed to financial quasi-survival, living from cheque to cheque or worse...

  • Report this Comment On March 31, 2009, at 6:37 AM, KameronH wrote:

    Thanks for sharing this article! Yes, I agree. Investment is just a matter of skill and luck. If we are just efficient in saving money for our future, we can be millionaires like those well-known investors. Investing is a good idea these times of economic depression and stagnation. Investing is really the key to retirement because no companies ever offer pension plans anymore and it isn't like you can rely on Social Security. Building an investment portfolio is something you want to start sooner rather than later. It might be worth getting a payday loan to start one. If you manage your investments carefully, you could even possibly retire early, and live off the interest. It's the way Warren Buffet has made billions, and it is the way to build a nest egg for your golden years, so you really can't afford to not start <a rev="vote for" title="Make a cheeky investment with a payday loan" href="http://personalmoneystore.com/moneyblog/2009/03/26/cheeky-in....

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 786831, ~/Articles/ArticleHandler.aspx, 10/1/2014 12:13:51 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement