Simple, DIY Methods To Retire With $1 Million

Better Investing

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

For those who can start saving at a young age, a simple formula can yield a million-dollar nest egg.

Retiring as a millionaire is within anyone’s reach if they start young enough and can follow a simple recipe.

Financial writer William J. Bernstein has broken down one recipe in a 16-page e-book called “If You Can: How Millennials Can Get Rich Slowly,” which he made available free on his website.

But you don’t need to read his free book, or any book. Suggestions similar to those he makes have been made many times before by people such as John Bogle, legendary founder and retired CEO of Vanguard Investments.

Here’s how Bogle suggests you invest: It’s an asset allocation method he calls “the majesty of simplicity.” You just divide your long-term investment money into three mutual funds:

  • A U.S. total stock market index fund
  • An international total stock market index fund
  • A U.S. total bond market index fund

You simply put equal amounts into each fund. As they grow at different rates over time, you make adjustments to keep their values roughly equal.

As for how much to invest, Bernstein suggests 15 percent of your salary. Obviously, using tax-advantaged accounts, like a 401(k) or IRA is preferable, but the key is to put aside as much as possible.

That’s it. If you can follow this simple recipe throughout your working career, you’ll likely beat most professional investors, while keeping things simple. More important, providing you invest enough, you’ll likely accumulate enough savings to retire comfortably.

How you get to $1 million

Using any number of online calculators, like this one from Bankrate, you’ll see that a 30-year-old who can save $500 monthly and earn an average of 8 percent on his or her investments can accumulate $1 million by age 65.

While 8 percent may sound high in today’s low-interest rate environment, it’s not out of the question in the stock market, particularly over time. Vanguard’s 500 Index Fund, for example, has returned an average of nearly 11 percent annually since it began in 1976.

The Bogle/Bernstein formula is one of many for accumulating wealth with a simple system. Money Talks News founder Stacy Johnson suggested a formula in his 2003 book “Money Made Simple” that incorporates not just stock and bond investments, but money market or other safe savings as well.

Here’s how he recently broke it down in “Ask Stacy: Do I Need a Financial Adviser, or Can I Manage My Money Myself?

  1. Decide how much you can put into long-term savings. Long-term means money you positively won’t need for at least five years.
  2. Subtract your age from 100 and put that percentage of your long-term savings into a simple, unmanaged stock index fund. So if you’re 40, put 60 percent (100 minus 40) of your savings into a fund such as the Vanguard 500 Index Fund or 500 Index ETF. (I typically suggest Vanguard because they’re low cost. I have no affiliation with the company.)
  3. Take the remaining part of your long-term savings, 40 percent, and divide it equally. Leave half in an interest-bearing, risk-free savings account, and put the other half into a bond mutual fund, such as the Vanguard Intermediate-Term Bond Index Fund, or ETF.

You don’t need a professional financial adviser to do this. Of course, knowing what to do is the easy part.  The hard part is doing it, day in and day out, for the years it takes to accumulate wealth.

However, whether you use one of these formulas or create one of your own, becoming a millionaire is within reach, especially for those willing to start young.

Check out “9 Things Beginning Investors Don’t Know But Should.”

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: Beware These 12 Common Money Mistakes

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,018 more deals!