I’m 23 years old with $70,000 in savings. What is the smartest and safest way to invest to eventually be a millionaire? by @DollarBits
Answer by Dollar Bits:
Congratulations on amassed $70K by the time you are 23 years old. Roughly 50% of people in America today have no savings at all. As several other people have indicated, you are well on your way to becoming a millionaire, perhaps even a multi-millionaire. The reason is your best friends: time and compounding. These two components work hand in hand to help you grow your net worth.
If you following Warren Buffett’s suggestion for individuals, you would put 90% of your money in an S&P 500 index fund and the remaining 10% in some sort of cash vehicle.
Assuming the historic 8.5% return on your money invested in the S&P 500 and conservatively assuming 0% on the cash, you would have an average annualized return of 7.65%.
After 42 years, when you turn 65, you will have over $1.547 million. If you add more money into your investments along the way, your net work will continue to grow. Assume you add $5K per year, every year from now until your 65th birthday, your net worth should grow to more than $3 million. If you were to add $10K each year, you would reach $4.5 million
(Of course this assume no catastrophic world events, and past performance is not guarantee of future results…)
Best of luck and congratulations again.