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15 Moves to Ensure You'll Retire a Millionaire -- or Multimillionaire

By Selena Maranjian - Aug 15, 2021 at 8:00AM
A person in a suit is holding a cigar while seated in an expensive-looking leather chair.

15 Moves to Ensure You'll Retire a Millionaire -- or Multimillionaire

You can do it!

People who never thought they could run 5 kilometers have embarked on training programs that got them there. Many who doubted they could end up in the career they dreamed of have achieved that, due to hard work and persistence. Similarly, while you might assume that you'll never be a millionaire, you may actually be able to become one -- and possibly even a multimillionaire -- if you take some effective measures to get there.

Here are some tips that can help you amass much more wealth than you thought you could -- possibly even a million dollars. See how many of these steps you can act on.

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Blackboard reading Get Out of Debt.

1. Get out of debt

Let's start with debt. Are you laden with a lot of it, at steep interest rates such as those charged by credit cards? If so, then you're not quite ready to be investing in earnest, which means it might take you a bit longer to achieve millionairehood. Still, don't get discouraged -- because it's very possible to pay off huge mounds of debt, and many people have done it. It will take dedication, though.

ALSO READ: 3 Smart Strategies to Become a Millionaire Retiree

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Hands holding a small chalkboard with the words Spend and Save, with Spend crossed out.

2. Stop spending too much

While heavy debt can slow your progress to millionairehood, cutting back on your spending can hasten it. At a minimum, you should be living below your means, spending less than you bring in -- but ideally, aim to live way below your means, in order to free up significant sums for your savings and investments. It can help to make a budget, and that process can lead you to see where you are spending too much and where you might trim your spending. For example, you might be able to save $50 per week if you take over your own landscaping work. Or eat out at restaurants half as often as you currently do.

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Adults sitting with baby while reviewing paperwork.

3. Save aggressively

By living well below your means, you can free up significant sums to invest, which can help you reach millionairehood. It's simply a matter of spending less (ideally much less) than you bring in. This is easier said than done, though, for many people. It means not racking up credit card debt and not buying things you can't afford or don't really need. If you are socking away 10% of your income, that's great, but you may really need to be saving 15% or more, in order to amass the kind of big nest egg that you want. Take a little time to figure out just how much you really need to be saving. The more you save -- and the sooner you start doing so -- the more you can amass.

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Hands playing a child's game with a folded paper labeled Stocks, Bonds, Commodities, and Mutual Funds.

4. Favor stocks

Another way to become a millionaire is to favor stocks in your investing. Yes, it can be good to diversify your portfolio with other assets than stocks, such as real estate and/or bonds, but there are good arguments for investing in real estate via stocks such as real estate investment trusts (REITs). And over long periods, stocks have almost always outperformed bonds -- along with gold and cash, too. University of Pennsylvania professor Jeremy Siegel's research has found stocks outperforming bonds in 96% of all 20-year holding periods between 1871 and 2012, and in 99% of all 30-year holding periods. If you have several decades before you retire, it can be effective to invest solely in stocks.

ALSO READ: Is Your 401(k) on Track for a Millionaire Retirement?

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Two green street signs marked Short Term and Long Term with arrows pointing in different directions.

5. Invest for the long term

The most reliable way to amass a million dollars or more by retirement is to start early and invest meaningful sums regularly for a long time. That means being invested in stocks for several decades, and it also means staying in great performers for many years, if not decades. If you think about stocks you may wish you owned, such as Amazon.com, Netflix, Apple, or Costco, their shareholders who have done best are the ones who bought and hung on for 10, 20, or more years.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Yellow road sign warning Volatility Ahead against backdrop of beautiful blue sky.

6. Have rational expectations

Many people have jumped into the stock market only to jump out again, with regrets. It's important to know what to expect when you invest in stocks. For example, expect volatility. Even the best stocks will go up one day and down the next. On occasion, they may fall sharply, and stay down for months or longer. Expect the entire stock market to crash every few years, or to remain relatively flat for a long time. It's the long run that matters, and the stock market has always recovered lost ground and set new highs ... eventually. It's the same with stocks -- as long as the underlying business is strong and growing, the stock should do so, too, over the long run.

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Hand draws an upward curving line representing Dividends.

7. Grab dividends

Including a bunch of dividend-paying stocks in your portfolio is a great way to build wealth. That's because when the dividends are coming from healthy and growing companies, they will likely keep coming no matter what the economy is doing. Even during market downturns, you'll be likely to be receiving regular cash infusions from your dividend payers. Better still, not only are the stock prices likely to grow over time, so are the dividend payouts.

ALSO READ: 4 Reasons to Invest in Dividend-Paying Stocks for Retirement

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Person working on graphs on office computer.

8. Participate in your 401(k)

In the best-case scenario, it won't be just you contributing to your retirement savings -- it will be your employer, too, chipping in some matching contributions to your 401(k) account. If you have a 401(k) plan at your workplace, aim to participate in it, contributing at least enough to max out any matching dollars -- as that's free money. Consider setting up a Roth 401(k) account, too, if your employer offers that. A Roth 401(k), like a Roth IRA, gives you no up-front tax break on your contributions, but when you eventually withdraw money from the account, it will be tax-free (assuming you've followed the rules). Roth savings accounts can be particularly powerful for younger savers, as the accounts can grow to encompass large sums, which may end up free from taxation.

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Jar of money labeled IRA sitting next to a calculator and atop various denominations of U.S. currency.

9. Make use of IRAs

While Roth IRAs are terrific for many, if not most, of us, traditional IRAs can be best for some people (and there's no rule against having one or more of each type). For example, if you're in a very high tax bracket now and expect to be in a significantly lower one in retirement, you can enjoy avoiding taxes on contributions to your traditional IRA, expecting to pay much less upon withdrawal years down the road.

Note that you can save in one or more IRA while also contributing to a 401(k) account.

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A keyboard key is labeled Indexing.

10. Consider index funds

All this talk about investing in stocks may have you a bit flummoxed about just how you'll do that -- especially if you have little time for or interest in studying stocks and deciding when to buy and sell them. Fortunately, you have a terrific option: You can just invest all (or much) of your money in low-fee, broad-market index funds, such as those based on the S&P 500 or the total stock market. Don't think of index funds as any kind of poor-performing compromise, either: Over long periods, index funds tend to outperform actively managed mutual funds.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Cost versus value trade-off graph.

11. Pay attention to value

Many of the best long-term investors out there adhere to the value investing approach, which has them investing in undervalued stocks with a healthy margin of safety built in. Warren Buffett is one example. His mentor, Benjamin Graham, has reportedly explained: "The individual investor should act consistently as an investor and not as a speculator. This means ... that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase."

ALSO READ: Maxing Out Your 401(k) Could Score You This Much by Retirement

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Person lying on couch with laptop screen showing charts.

12. Consider growth stocks

Value investing is often presented as the opposite of growth investing. In a sense it is, if a growth investor is willing to pay any price for stock in a rapidly growing company. But you can actually be both a growth and value investor, by seeking rapidly growing companies whose stocks are also priced attractively. There will be times when it's hard to find such stocks, but usually at least some can be found. At the time of this writing, for example, Amazon's seemed reasonably valued. Warren Buffett's partner, Charlie Munger, from whom he has learned a lot, has quipped, "A great business at a fair price is superior to a fair business at a great price."

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A businessperson working on paperwork behind a desk with business cards that say IRS.

13. Be tax smart

The more you know about taxes, the more money you may be able to keep in your own pocket instead of handing it over to Uncle Sam. For example, if you frequently sell stocks for big gains before you've held them for more than a year, you'll face short-term capital gains tax rates, which can be much steeper than the current long-term capital gains tax rate. (Short-term gains are taxed as ordinary income, and you may be in a 24% bracket or higher.)

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The question What's Your Plan written on a Post-it note.

14. Have a plan -- and stick with it

A common way that people become millionaires is by having a plan and sticking to it -- because a million dollars will generally take a while to amass. So do take some time to figure out how much you need to save for retirement and how you will do so. Don't let yourself get discouraged or distracted along the way. Know that many years of saving and investing effectively will pay off handsomely -- with the biggest gains coming in later years.

ALSO READ: How to Retire With $4 Million on a $40,000 Salary

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The phrase Never Stop Learning is printed on a scrap of paper.

15. Keep learning

Finally, keep learning -- because there will always be useful things to know, whether about effective investing strategies or amazing new companies or new ways to save on your taxes or insurance. You'll find many informative articles at various sites online, and plenty of good books can give you even deeper insights.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Previous

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A finger pointing to the word Millionaire.

You can get richer than you ever expected

Even if you apply all these strategies and suggestions, you might fall short of a million dollars, but you'll likely end up with much more money than you expected to have, which can be an enormous help in retirement. If you have enough time and are able to sock away some meaningful sums regularly, you do stand a good chance of amassing a million dollars or more. Don't assume millionairehood is a pipe dream: It probably isn't.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian owns shares of Amazon, Apple, Costco Wholesale, and Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, Costco Wholesale, and Netflix. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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