You'll Become a Millionaire -- Here's When

Could you become a millionaire? Probably. The trick is figuring out just how to get from where you are now to that point.

A bunch of factors influence how you'll get there:

  • How much you have invested already.
  • How much you can save and invest each year.
  • What average annual return you expect to earn.

Let's see how these factors can work for you, supposing you're 40 years old with a $50,000 nest egg:

Amount Invested Per Year

Average Rate of Return

Years to $1 Million

Age at $1 Million





































These reasonable inputs would let you achieve millionaire-hood within about 20 to 30 years, depending on how quickly your money grows, and how much you manage to save and invest.

You might already know that the stock market's longtime average return is about 10% per year. But remember, that's a very long-term average -- stocks could average 8%, 12%, or something else entirely during the 20, 30, or 40 years that you invest. And that's not the only complication the market could toss your way.

Before you start seeing dollar signs ...
As we've seen over the past year or two, even stocks considered the safest blue chips can have widely differing performances over short or long stretches of time alike. Check out how some companies that made up the Dow 20 years ago have fared since then:


20-Year Average Annual Return

Procter & Gamble (NYSE: PG  )


ExxonMobil (NYSE: XOM  )


Coca-Cola (NYSE: KO  )


General Electric (NYSE: GE  )


American Express (NYSE: AXP  )


Alcoa (NYSE: AA  )


Eastman Kodak (NYSE: EK  )


Source: Yahoo! Finance.

Your best path to a million bucks
You can get to a million faster by saving and investing more, and by picking the right stocks to generate higher returns. And you'll stand a chance of compounding at higher rates if you invest in stocks with the healthiest growth rates.

Smaller companies are generally one good area to start looking for strong growers. After all, it's easier to double your revenue from $50 million to $100 million than from $50 billion to $100 billion. To an extent, the outsized returns in the table above reflect companies that were much younger and smaller 20 years ago.

Not only do small caps outperform their larger peers overall, but according to data compiled by my colleague Tim Hanson, all of the past decade's best performers were small, most with capitalizations less than $100 million.

Compare those puny market caps with those of today's blue chips -- ExxonMobil's, for example, tops $350 billion, while Coca-Cola's exceeds $100 billion.

It's critical to choose your stocks well, and to keep up with your holdings, making sure you're devoting money to your best ideas. It's also critical to start soon. The more time your money has to grow, the sooner you'll reach a million.

If you're looking for small companies with lots of room to grow, try our Motley Fool Hidden Gems newsletter absolutely free. Even in this crummy economy, its recommendations have been outperforming the market. Discover all our past issues and recommendations with a 30-day guest pass.

Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola and American Express. American Express and Coca-Cola are Motley Fool Inside Value recommendations. Coca-Cola and Procter & Gamble are Motley Fool Income Investor picks. The Fool owns shares of Procter & Gamble and American Express. The Motley Fool is Fools writing for Fools.

Read/Post Comments (25) | Recommend This Article (61)

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 June 15, 2009, at 5:13 PM, j326s9425 wrote:

    I bought and still own Coca-Cola which I bought in Feb.1999 at 63 3/8 down from 90. It came close to touching 63 once in that period.

    I own General Electric (13+) which is down from 60!!! It's run by a nice guy but a POOR manager. In business, sports and lot of other things, you never get accolades for all that goes well (it's suppose to) but you get killed for one slip (GE Capital). The days of the conglomerate are over Jeff. See Citibank, GM,ITT,Rockwell Intnl, etc

    Need more?

    Jim Schwickert

  • Report this Comment On June 15, 2009, at 5:31 PM, Brettze wrote:

    Sooo rad!

  • Report this Comment On June 15, 2009, at 5:33 PM, Brettze wrote:

    My neighbor uses firewood EVERYDAY. We dont live in the cold mountains... We live in a stinking surburb town... Farmers are burning crop waste and foul the great view of the Sierra mountains from the valley. Billions of poor people use cooking bricks made of cow dung.... ENERGY INDEPENDENCE! Why is there no firewood corporations?? EPA dont regulate Pop n' mom firewood operations, so we fly under the radar! Clever, indeed!?

  • Report this Comment On June 15, 2009, at 5:36 PM, Brettze wrote:

    You can no longer push for growth without stable energy supplies... Our energy picture is getting worse and worse as we throw up our arms and start chopping wood for heating and cooking... Soot and particulates floating in the air unseen but coughed out ...

  • Report this Comment On June 15, 2009, at 5:38 PM, Brettze wrote:

    America's health industry propser based on maximum production of sick patients .. We are literally sucking tailpipes!! We need electric cars that means more coal powerplants but air will be a lot cleaner in town ... There is plenty of room for air pollution in the boonies... We have enough of that in towns....

  • Report this Comment On June 15, 2009, at 5:41 PM, Brettze wrote:

    Today new automobiles is too expensive due to excessive complex emission controls installed in ...Electric cars is simpler and is supposed to be cheaper , yet Mitsubishi is due to come up with the world's first mass commerical electric vehicle with 99 mile range ... How much?/ still $40,000. See how hopeless it is ??

  • Report this Comment On June 15, 2009, at 5:48 PM, Brettze wrote:

    America is still incapable of investing in the right places.. America's prosperity owes much to Franklin Roosevelt's New Deal... You know the rest... He built a great foundation for today's or (yesterday's) prosperity... What will it take to prosper again?? More dams, nuclear plants, coal plants, wind power, or what?? We are already bickering over where to place future new grid system that is needed to hook up future solar farms. During FDR era, there was no squabblings at all,,, no lobbyings... etc... We are democratically paralyzed! I think that the answer to solar energy is every town's own municipal solar utility because every town can sell back electricity through existing grid system.. Why are we planning solar farms out in the deserts and waiting for 500 mile grid line to connect it to the old grid system??? This just doesnt make sense to me... Also, homeowners who already or plan to install solar modlues on rooftops will end up having to replace them and recycle them at the end of its lifecycle... Where do we recycle them?? We havent thought things through... Have we??

  • Report this Comment On June 15, 2009, at 5:49 PM, Brettze wrote:

    America needs so much new energy sources right now... We are stuck in the mud with wheels spinning ...our lobbyists suck mud!!

  • Report this Comment On June 15, 2009, at 5:50 PM, Brettze wrote:

    Tailpipe emissions kills hundreds of thosands motorists with cancer... We are still stuck in heavy rush hour traffic sucking in tailpipe fumes... Why?

  • Report this Comment On June 15, 2009, at 5:51 PM, Brettze wrote:

    People are getting sick from air pollution by breathing fumes right behind tailpipes, yet we are scoffing at coal powerplants that we have no worry about sucking any fumes from there... People are pointing at wrong places ....

  • Report this Comment On June 15, 2009, at 5:53 PM, Brettze wrote:

    Medicare will be in deficit before too long... We are still not addressing that coming disaster by acting now to make Americans healthier... Is America fast into a economical quicksand with nobody around to toss a rope??

  • Report this Comment On June 15, 2009, at 5:53 PM, Brettze wrote:

    Thank you!

  • Report this Comment On June 15, 2009, at 6:03 PM, Brettze wrote:

    Global climate change is a real issue but certainly not a TOP ISSUE! It is not.... It should be put in the back burner but not forgotten... We have no choice but to pursue a new energy policy as we go along.... I cant see how Detroit can carry out the changeover to mostly electric cars without any government assistance. I just cannot... It is similiar to the demise of horse buggy days... Our cars are already obsolete ... We will still build gasoline engines that will be used in rental fleets for people who need to make long trips... Most of us dont drive far most of the times... Electric cars is now!! Convert all plants now!! Increase coal, solar , wind now.. Do it now!! We are trading wrong stocks... Just forget about becoming a old geezing millionaire for now!! It is not worth the damn dream!! Start it all over and do it fast!!

  • Report this Comment On June 15, 2009, at 6:06 PM, Brettze wrote:

    Please start to act now in a sensible way.. My neighobr is eavedropping or "hacking" into my computer as I post those comments... My neighbor is killing me with his homemade fumes as I speak ... Why all the delays?? foot draggings?? I will be dead before long. I am the lone voice of democracy.. My neighobr is a redneck meth operator and tinkering with motorcycles...

  • Report this Comment On June 15, 2009, at 6:07 PM, Brettze wrote:

    He is not gonna give up on gasoline... He is a dopey gas addict! Whoa! I just feel an earthquake right now... lets me check the news...

  • Report this Comment On June 15, 2009, at 6:08 PM, Brettze wrote:

    Politicians are playing deadly games.. Just forget them and lead ourselves now..

  • Report this Comment On June 15, 2009, at 6:09 PM, Brettze wrote:

    The health industry depends on millions of tailpipes to keep sick patients coming....

  • Report this Comment On June 15, 2009, at 6:09 PM, Brettze wrote:

    It is called the military-industrial complex! What a nutcase idea!!

  • Report this Comment On June 15, 2009, at 6:10 PM, Brettze wrote:

    Americans are still willing to suck in tailpipe fumes for prosperity's sake!! Why?

  • Report this Comment On June 16, 2009, at 8:18 PM, TxTom wrote:

    I'm buying GE and AA at these levels. They are still severely undervalued in relation to the earning power of these companies. Look for GE at or above $23 by the end of this year, and AA has a wonderful business opportunity with all the smaller, lighter autos to be produced here and abroad. Think "aluminum and titanium".... when investing.

    GE Capital? Sure, it has to recover, but with all the resources of GE and the seemingly endless other GE business branches closing new business deals literally by the day, GE will flourish.

    These are two stocks that will remain in my portfolio.

    Happy investing everyone!

  • Report this Comment On June 17, 2009, at 9:22 PM, salvadorveiga wrote:

    TxTom good luck.... look at S&P to be under 500 before the end of the year... GE above 22 ?

    BIG LOL....

  • Report this Comment On June 18, 2009, at 2:06 PM, daveandrae wrote:

    20 years ago, Coca cola was also trading at 14 times 1989 earnings, or the equivilent of 4 bucks a share. In 1999, this very same stock was trading at a ridiculously overpriced 40 TIMES 1999 earnings.

    Which equates into an earnings yield of 2.5%, and a dividend yield that was less than 1%. I am certain that cash was a better investment than Coca Cola stock in 1999.

    It was not until March of 2009 that you could buy Coca Cola at the same price Warren Buffet paid. Which equates into 38 bucks a share at a 4% dividend yield.

    This is yet another reason why there is absolutely NO correlation between "investment performance" an Investor Return. Warren Buffett is up more ten fold on his coca cola investment, excluding dividends, while other investors are still in the red ten years later.

    As for GE, here is a business, that has generated, on average, 1.50 per share in net income from 1999-2008 with no deficits. For 126 billion dollars you could buy ALL of the General Electric company, and expect to pocket at least 16 billion each year, for the rest of your life.

    RIGHT NOW, GE is yielding 12.5% on invested capital. The s&p 500 does not yield this kind of earnings power. Neither does bonds, cash, Google, or Apple. At worst, no long term GE investor in his right mind should sell his shares at such an absurdly low price. One could argue that this entire AA+ rated business is being given away, with no takers.

    Now I ask you, if an entire business is worth buying, shouldn't one be buying as many shares as he can afford, whenever he has the money?

    Converesly, if the entire business is NOT worth buying, as Coca Cola obviously was in 1999, then why would you buy even one single share of the stock?

    Truth be told, most people forget to ask the basic question of "how much?" before they buy or sell something. If more people bought their stocks, like they bought their gasoline, we would all be better off.


  • Report this Comment On June 18, 2009, at 10:43 PM, goalie37 wrote:

    Very good article. Just have one question regarding the math. Does this include reinvested dividends?

  • Report this Comment On June 19, 2009, at 12:02 AM, wannainvestsmart wrote:

    To Goalie37, the numbers do not include the reinvested dividend rate. but since dividend stocks generally don't perform as well as non-dividend stocks. if you can reinvest the dividend well you may be able to get the 10-12% rate

    To daveandrae, this is what distinguishes Buffett from us. He has the time and talent to do the digging. This is why if we don't have time, just buy an index fund. In fact, Motley Fool recommends it

    Hope this helps

    Alex Wong

  • Report this Comment On June 22, 2009, at 9:47 AM, rmiers1 wrote:

    This time in the markets make me like a kid in a candy store. With Obama's anti business policies as the wild card you can buy stuff at super bargains.

    AA, X, Tie, WFI, are all super long term deals but the deal of deals, above all, is ISRG.

    Here is a company taking control of all surgery. A simple better mousetrap. No competition, life sparing, painless, no recovery time, infection, complications and the list goes on.

    Birthed at NASA and perfected in silicon valley, this one stock is without peers and aside a miracle cancer pill is headed toward a medical behmouth that manufactors cash as people enter their boomer years

    A truly slam dunk, look for another killer quarter

    I someone wants to cut on you, RUN to an experienced DaVinchi center, you'll be glad you did the very next day after any procedure

    All the top and famous hospitals have them, if they don't, you are in a substandard facility, with a substandard healthcare proffessional administration.

    JMHO and the same of MD Anderson, Mayo, UT Texas, U of Penn, Beth Israel, Scott White, Scripps, Ford, Cleveland Clinic and 1170 others all over the world.

    Many estimates estimate room for 10,000 machines worldwide. This little machine turns major surgery into day surgery......take your pick when it happens to you....ISRG to the moon....O yes, no debt and 900 million in cash, 50 to 90 million added each quarter. Shorts love it because no chance of losing money, if they can scare ya, its like money in the bank for them, 20% average till CC time and they sneak back in the woods and rat

    Look at the total procedure growth and it's like finding gold in a deserted mine....Prsby dallas just got one and are glowing.......send me a ruth Chris gift certificate after your first six figure coming very soon

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