Can Investing Make You Rich?

Can investing make you rich? Yes it can. If your investment horizon is long enough and you are willing to put money aside every month, investing can make you rich. Past returns are not a guarantee for future returns, but based on returns we have seen in the past, investing in the stock market can make you rich.

What does “being rich” mean?

What does “being rich” mean to you? How do you define rich? Does it mean having a mortgage paid off and having savings enough to not have to work for the rest of your life? The definition of being rich can be different for everybody.

I would say having a million dollars’ worth of investments and savings can be considered as being rich. So, let’s look at a few examples on how to get to that million dollars and how much effort and time it will take.

How long does it take to get million dollars?

In the chart below, I have gathered a few different scenarios on how long it will take to gather a million dollars. The longer the time frame you are willing to invest, the less money you need to put aside every month. I used an 8% annual return, which is the average inflation-adjusted return in the past.

Time in years200/month500/month1000/month2000/month
Year 1                 2 400                  6 000          12 000          24 000
Year 2                 4 992                12 480          24 960          49 920
Year 3                 7 791                19 478          38 957          77 914
Year 4               10 815                27 037          54 073        108 147
Year 5               14 080                35 200          70 399        140 798
Year 6               17 606                44 016          88 031        176 062
Year 7               21 415                53 537        107 074        214 147
Year 8               25 528                63 820        127 640        255 279
Year 9               29 970                74 925        149 851        299 701
Year 10               34 768                86 919        173 839        347 677
Year 11               39 949                99 873        199 746        399 492
Year 12               45 545             113 863        227 726        455 451
Year 13               51 589             128 972        257 944        515 887
Year 14               58 116             145 290        290 579        581 158
Year 15               65 165             162 913        325 825        651 651
Year 16               72 778             181 946        363 891        727 783
Year 17               81 001             202 501        405 003        810 005
Year 18               89 881             224 701        449 403        898 806
Year 19               99 471             248 678        497 355        994 710
Year 20             109 829             274 572        549 144     1 098 287
Year 21             121 015             302 538        605 075     1 210 150
Year 22             133 096             332 741        665 481     1 330 962
Year 23             146 144             365 360        730 720     1 461 439
Year 24             160 235             400 589        801 177     1 602 354
Year 25             175 454             438 636        877 271     1 754 543
Year 26             191 891             479 726        959 453     1 918 906
Year 27             209 642             524 105     1 048 209     2 096 418
Year 28             228 813             572 033     1 144 066     2 288 132
Year 29             249 518             623 796     1 247 591     2 495 182
Year 30             271 880             679 699     1 359 399     2 718 797
Year 31             296 030             740 075     1 480 150     2 960 301
Year 32             322 112             805 281     1 610 562     3 221 125
Year 33             350 281             875 704     1 751 407     3 502 815
Year 34             380 704             951 760     1 903 520     3 807 040
Year 35             413 560          1 033 901     2 067 802     4 135 603
Time it takes to reach million-dollar mark when investing

As you can see from the chart above, the more you invest monthly, the faster you will reach the milestone of a million dollars. With 200 dollars per month, it would take around 47 years to reach the million-dollar mark. The table was already long enough, so I didn’t put the whole chart there. But anyhow, here are the results in a nutshell:

  • 200 dollars per month, 47 years to reach million dollars
  • 500 dollars per month, 35 years to reach million dollars
  • 1000 dollars per month, 27 years to reach million dollars
  • 2000 dollars per month, 20 years to reach million dollars

As you can see, even if 2000 dollars is ten times compares to 200 dollars, the time it takes to reach a million is not even close to ten times as much. This is because with 200 dollars, it takes longer, so compounded interest will have more time to do its magic.

I know that not everybody wants to wait 47 years to get a million dollars, but that can be a good option if you invest for your child, for example. I have a post about how to make your child a millionaire by the time they retire, you can read it here.

The sooner you start the better

Have you heard the saying, “The best time to plant a tree was 20 years ago. The second best time is now”? This can be applied to investing. The sooner you start your investing journey, the less money you have to put away monthly. On the other hand, if you put in more money sooner, you will reach the million-dollar mark and future milestones will come much faster as well.

In summary

Investing can make you rich. However, it will take either a lot of time or a lot of monthly contributions. The sooner you start, the less you have to put away monthly to accomplish your goals. Keep in mind that past returns are not a guarantee of future returns.

I have more posts about investing as well. You can read them here.

Also, you might also be interested in a post comparing the differences between active funds and passively managed funds; you can read it here.

This is not investment or financial advice. Past returns are not a guarantee of future returns. Always do your research before risking your hard-earned money.