How to Become a Millionaire by 50

With the right strategy, you could amass $1 million or more sooner than you might think.

Many people dream of becoming millionaires but assume that goal is out of reach. However, if you commit to it and make some sacrifices, it can be done. Here's how to pull that off by age 50.

1. Start investing young

When it comes to growing wealth, time is perhaps the most valuable tool at your disposal. And if you start investing at a young age -- ideally, as soon as you have a steady paycheck -- you can set yourself up to accumulate a lot of money.

To be clear, you shouldn't start investing until you have a solid emergency fund with enough to pay for three to six months of living expenses. But once you've checked off that box, pump whatever extra money you can into an investment account.

Better yet, work that into your budget as a line item so it's not an afterthought. Just as you might budget $1,000 a month for rent and $300 for your car payment, budget a specific amount for investing.

2. Choose the right account for your investments

There are several kinds of investment accounts. An IRA, for instance, lets you enjoy tax benefits in your investing.

Traditional IRA contributions go in tax-free, and investment gains are tax-deferred, which means you only get taxed when you take withdrawals from that account. A Roth IRA works the opposite way. Contributions are not tax-free, but investment gains and withdrawals are tax-free.

Both types of IRA, however, limit you to $6,000 a year in contributions ($7,000 if you're 50 or older). So you may want to max out your IRA, then invest your leftover funds in a traditional brokerage account. Or you may decide to put all of your investing dollars into a traditional brokerage account.

No matter your choice, finding the right brokerage account is key. You may want to look for an account that doesn't charge fees for every trade. You may also want to avoid accounts that impose minimum balance requirements or charge inactivity fees.

3. Be willing to take some risks

There's no such thing as a risk-free investment. But generally speaking, stocks are considered riskier than bonds. They can deliver higher returns, though, and if you want to become a millionaire at a relatively young age, they're a good bet.

You could also branch out beyond stocks. Many investors are enjoying success buying cryptocurrency -- but that's generally an even riskier prospect than stocks, so if you're iffy about digital coins, stocks may be a more suitable pick.

Getting to $1 million

Let's take these three steps and apply some numbers as an example of how you could become a millionaire.

First, let's assume that you start contributing $1,000 a month to an investment account at the age of 22, and that you put in that much every month until you're 50. Let's also assume that your investments in that account deliver an average annual return of 8%. That is a few percentage points below the stock market's average, so it's a reasonable assumption for a 28-year savings window.

In this scenario, you'll have $1.14 million by age 50. Just as impressively, you'll have done so by contributing just $336,000 to your investment account ($12,000 a year × 28 years).

For you to reach that $1 million, certain factors have to line up. Let's look at what might happen if they don't. Let's assume you start investing your $1,000 a month five years later, at age 27 instead of 22. That would leave you with $731,000 -- an impressive sum, even if it's not $1 million.

Let's see what happens if you invest your $1,000 a month starting at age 22, but you invest more conservatively by sticking to bonds. In that case, you might see just a 4% average annual return. That would leave you with $600,000 by age 50. Again, that's an amount to be proud of, though it's not $1 million.

Becoming a millionaire by age 50 is more than possible. But you need to commit to that goal early on, prioritize investing over other expenses, fund your retirement plan and/or brokerage account consistently, and invest somewhat aggressively. If you stick to that plan, you could end up with lots to celebrate by the time your 50th birthday arrives.