Three factors matter most when it comes to determining when you will become a millionaire. They are:

  • The amount of money you can invest,
  • The length of time you can invest that money, and
  • The rate of return you earn on that money.

While it may be a case of stating the obvious, the more you can sock away for a longer period of time at a higher rate of return, the easier it will be for you to become a millionaire.

If you're like most of us, though, you don't have thousands of extra dollars lying around every month to invest for your future. While that's OK, just understand that the tradeoff you'll face is between time, money, and financial risks while striving for those higher potential returns.

Pick your battle
The chart below shows the number of years it will take for you to go from $0 to $1 million, based on the amount you can sock away each day and the return your money earns:

Daily Investment

4% Annual Returns

6% Annual Returns

8% Annual Returns

10% Annual Returns

Significance of the Daily Value

$1.00 117.7 85.1 67.4 56.2 Help Your Kids Become Millionaires
$2.00 100.5 73.7 58.8 49.3 N/A
$5.00 78.3 58.7 47.5 40.2 N/A
$10.00 62.0 47.6 39.2 33.5 N/A
$13.69 54.9 42.8 35.4 30.5 $5,000 a year, IRA limit for people under age 50
$20.00 46.7 37.0 31.0 26.9 Become a Millionaire on $20 a Day
$45.20 30.8 25.6 22.1 19.5 $16,500/year, 401(k) limit for people under age 50
$58.90 26.3 22.2 19.4 17.3 $21,500/year, IRA + 401(k) limit for people under age 50
$76.71 22.2 19.1 16.9 15.2 $28,000/year, IRA + 401(k) limit for people age 50+

The swap among money invested, return rate, and time should be pretty apparent. What also should be pretty obvious is the choice you'll have to make if you want to become a millionaire in a reasonable approximation of a working career. You'll have to either come up with some serious cash or invest what you can fairly aggressively.

Getting those 4% returns requires you to do nothing more risky than invest in AAA rated bonds like Johnson & Johnson's (NYSE: JNJ) bonds maturing in 2023, then hold on to maturity. You can still get to the 6% returns by investing in long term, investment-grade debt like Citigroup's (NYSE: C) or AT&T's (NYSE: T) Ameritech subsidiary's A-rated bonds maturing in 2028.

In today's market, you need to dig into high yield (also known as "junk") territory to get to the 8% yield to maturity range on debt, and in that category, the default risk starts to get significant. Yields in the 8% range can be reached, but to do so in today's market typically requires some sort of financial engineering on the part of a capital management company.

Leveraged investments like closed-end fund Nuveen Quality Preferred Income Fund 2 (NYSE: JPS) and mortgage REIT Annaly Capital (NYSE: NLY) currently sport 8%-plus yields. But the volatility of their dividend payments and other risks that come with those securities underscore the lengths that their managers have to go through to deliver such tempting top line income numbers.

Add a dash of growth
The timelines offered by the higher-return part of that table typically requires a willingness to look beyond income and accept part of your potential returns as growth. Or in other words: stocks. As volatile as their day-to-day -- or even decadelong -- returns may be, over longer periods of time, making regular stock investments can be a great way to earn those higher returns.

Over long periods of time, the S&P 500 has returned close to that 10% range when dividends are reinvested. Should that trend be continued over the long-term future, tracking fund SPDR Trust (NYSE: SPY) would be a good potential option. And if you think better returns are available elsewhere, there's the Vanguard FTSE All-World ex-US (NYSE: VEU) ETF, which attempts to track the rest of the investable world.

It's up to you
If you really want to become a millionaire investor, you've got to understand the tradeoffs between time, money, and potential returns that govern your ability to get there. By regularly investing what you can, accepting the risks that come with more aggressive choices, and starting early enough to keep time on your side, you can greatly increase your chances of success.

Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Inside Value pick and a Motley Fool Income Investor pick. The Fool owns shares of Annaly Capital Management and Johnson & Johnson. Motley Fool Alpha owns shares of Johnson & Johnson.

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At the time of publication, Fool contributor Chuck Saletta owned shares of Johnson & Johnson and Annaly Capital. The Fool has a disclosure policy.