Why Focusing on This One Aspect of Investing Can Make You a Millionaire

80% of millionaires did this -- and so can you.

It's no secret that becoming a millionaire requires hard work and dedication. But what's the key to getting there? Winning the lottery? Is it inheriting money or earning a high salary? Believe it or not, 79% of millionaires in the U.S. did not inherit any money, and 1 out of 3 didn't even have a six-figure salary. According to a new study, 8 out of 10 millionaires regularly invested in a 401(k) plan, which was the key to their financial success! Here is why focusing on this one aspect of investing is the path to becoming a millionaire.

The power of compound interest

Millionaires understand the power of compound interest. Compound interest is when you earn interest on both the money you've invested and the interest you already earned. So each time you earn interest, it compounds -- meaning your investments grow exponentially over time. This is why having an early start in investing can make such a big difference. The earlier you start saving, the more time your money has to grow with compound interest working in your favor.

If a 22-year-old invested $5,000 each year and earned an annual return of 8%, by retirement (age 62), he would have $1,452,259.26! In the same example, someone who started 10 years later would have just $619,989.53 by age 62. The 22-year-old would end up with more than twice as much money just by starting at age 22 instead of 32. Even though time is an important factor, don't let that discourage you. It is never too late to start investing.

And while compound interest can be used with any type of investment vehicle, taking advantage of employer-sponsored retirement plans, like 401(k)s, can help boost your savings even more because contributions are tax-deferred and often come with matching contributions from employers.

Don't leave free money on the table

If you are already enrolled in an employer-sponsored retirement plan like a 401(k), that's great! But don't forget to take advantage of any employer matching contributions as well. Many employers will match up to 3% or 4% of your contribution each month -- which means they are essentially giving you free money. That number may not seem like much at first glance, but over time those contributions add up significantly and can really help boost your savings when combined with compound interest.

Invest consistently

Compound interest can substantially grow your savings even if you can only put aside a small amount. The key is to start with something, even if it is $20 per paycheck. Try to save a little more over time. When you get a pay raise, it's tempting to spend on new things and raise your standard of living. A better bet is to keep your standard of living the same and sock away any pay raise you get.

If you can save $50 per paycheck, assuming you get paid twice a month, that would be $100 a month. If you are 22 and earn 10% in a retirement account like a Roth IRA, by the time you retire at 62, you would have over $630,000. Want to save more? Bumping that amount to $200 a month would result in about $1,265,000 and saving $350 a month would be $2.2 million!

The goal is to make saving an automatic habit. The study found that in addition to investing in their 401(k) plan, 3 out of 4 millionaires said that they invested a regular and consistent amount of money over a long period of time. They didn't become millionaires overnight. Only 5% attained that feat in less than 10 years. It took the vast majority 28 years to become a millionaire, and the average age they hit that milestone was 49.

Investing consistently over time helps ensure that your money has enough time to grow with compound interest working for you. While it may be tempting to invest large sums all at once or to skip months where funds are tight, regular investments are key if you want to reach financial independence in the long run.

It takes hard work and dedication to become a millionaire, but understanding how certain aspects of investing work can put you on track towards financial independence. Focus on what you can control, like enrolling in an employer-sponsored retirement plan and taking full advantage of employer matching contributions. This will help you boost your savings so you too can reach millionaire status one day. Investing consistently will give compound interest plenty of time to work its magic!