Want To Be A Millionaire By 40? Here’s The Huge Difference That 8 Years Can Make

millionaire by 40

Do you want to be a millionaire by 40? How about by 50? Well, although it can seem like an impossible hill to climb, it is more than possible if you understand three things: Time, consistency and the power of compound interest.

We all have different financial goals. Happiness to one person might be $1 million retirement fund and a simple, low cost life. While happiness to someone else might be $10 million and virtually no worries about going broke (Provided you’re not an idiot. You’re not an idiot are you? Of course not!).

But whether you want $1 million or $10 million, the principles of investing remain virtually the same. There are obviously outside factors such as inheritances, salary and dumb luck, but if two people start from point A and they invest in assets that have an annual return of 8% on average, you can figure out just what you need to do to get where you want to be. It is that simple.

The Power Of Time In Investing

Below is a tweet we sent out last night. Using a simple investment calculator, we’re able to show how valuable time in the market is as opposed to timing the market. In fact, as you can see, the impact of as little as 8 years is staggering.

Now, this simple comparison shows a person investing the same amount of money (nothing more, nothing less) every month over the course of 28 years and 20 years respectively. Imagine how powerful compound interest becomes once you start making more money and are able to increase that consistent amount.

Let’s actually imagine it together!

How To Become A Millionaire At 40

In both examples above, the person doesn’t become a millionaire in either scenario by the time they turn 40. That’s because everything remained completely constant. We assumed there were no windfalls of cash and no salary raises to allow them to invest more than $1000 per month. That’s generally not how life works, so let’s see what it really looks like and, more importantly, what it will take for both of these people to achieve $1 million investment portfolio by the age of 40.

You can already guess that this is going to be much harder for the 30 year old who got a late start. See how it plays out below. Again, this all assumes no amount of life-changing cash falls into your lap. That will obviously super charge your future.

What A 22 Year Old Needs To Do To Be A Millionaire By 40

Invest $1000 monthly until age 26. At 8% that leaves you with $56,349.

Say at 26 you get your first real promotion and raise. You can then afford to invest $2000 per month under the same circumstances and you do that for the next 5 years.

By the time you’re 31, you now have $230,904. 

Let’s now assume that at 31, you are earning a much larger salary and you’re able to put in $3000 per month.

By the time you’re 35, you now have $486,696. 

If you’re saying to yourself “wow, that is great but what to I have to do from 35 to 40 to make up the final $514,000?” The simple answer is keep going and save a little more. How much more should you save? An extra $750 per month.

By the time you’re 40, you now have $1,000,640.

That is the power of compound interest.

The craziest part? If you hold the line for only 5 more years — at the same savings and investment rate of $3750 per month — you could be sitting on over $1.75 million in your retirement account.

That might not be enough for you to retire (depending on your expenses and desires) but it is still a big chunk of financial security.

What A 30 Year Old Needs To Do To Be A Millionaire By 40

Oh man. So much more.

Let’s now assume that this 30 year old example isn’t totally broke. Maybe they have the Disease of More or they just didn’t realize investing is a better idea than parking cash in a savings account. We’ll say this person is starting their road to a $1 million by 40 years old with $10,000 sitting in a savings account.

Since the window to hit $1 million is so short, a 30 year old needs to be all gas, no brakes from day one. There isn’t a ramp up period where you can invest a little here or there.

Instead, to hit $1 million by 40, a 30 year old needs to invest $5,450 every single month for 10 years at an annual average return rate of 8%.

That is huge hill to climb. To become a millionaire by 40, this person has to basically invest the entire paycheck of $100,000 salary after taxes every month.


Becoming a millionaire by the age of 40 is an ambitious goal. Of course it is, right? If it weren’t, everyone would achieve millionaire status.

But that doesn’t mean that it can’t be done with the right strategy. Because it can!

The first step is to set a clear goal and timeline to follow.

Next, create a budget and track your income and expenses so you know how much you have to save each month. Having a budget also helps you to prioritize your spending and identify areas where you can reduce your expenses.

One you have excess cash, then you need to consider investing your money in stocks, bonds, or real estate. Research the different options available to you and invest (meaning don’t try to day trade stocks) in an asset class that makes you comfortable and also has a great long term outlook.

Finally, make sure you have a plan for what to do with your wealth once you reach your goal. Create a plan that outlines how you will spend, save, and invest your money. This will help you to achieve financial security and stability for the future.

This is why we (average people who might not have major windfalls of cash) must start investing early. But becoming a millionaire by 40 or even 50 is possible for everyone. That that is all thanks to time, consistency and the power of compound interest.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.