Millionaire status. Everyone wants it but what does it take to get there. Besides winning the lottery or being lucky enough to come into a large inheritance, there are some more realistic, albeit less exciting ways to hit millionaire status.

As a banker and personal finance educator for over nine years, I’ve frequently seen an interesting paradox of excuses among a mix of individuals who say they want to be millionaires but do not have the will power and courage to begin working towards that goal.

The students and twenty-somethings say they are too young and do not have a source of income. The middle-aged claim they have too many responsibilities and do not earn enough. The high inflation in Zambia has also become a very popular excuse. These two age groups will always promise themselves that they will work towards that goal once their income increases. The older folks, even the high-income earners will usually begin taking control of their finances because retirement is looming. However, they too assert that millionaire status is too far out. They believe they are too old and will settle for just a comfortable and minimalist retirement as the goal.

The truth is that millionaire status is simple but it’s not easy. Thousands upon thousands of average people have done it. Most of these are average earning individuals from small business owners, teachers, lecturers, nurses and so on. This is according to Thomas Stanley and William Danko’s study of “The Millionaire Next Door.”

These people followed a simple sequence of;

  • Financial goal setting with a long-term view of ten years or more
  • Hard work to earn and increase income
  • Consistent savings and investments
  • Frugal living or at least keeping monthly expenses below the incomes received

The younger an individual is, the easier the climb to millionaire status. On the flip side, the older an individual is, the more likely they are to have access to larger amounts of disposable income to save and invest. The difficult part is getting clear on the vision and beginning to consistently act.

Below is a simulation of what an individual would be saving and investing every month from their current age to retire a millionaire at 65 or even sooner.

Figure 1: How much you need to save to retire a millionaire by different age groups.

The Nerd Wallet investment calculator on was used to derive the final savings value at the end of each time period.

The following assumptions were made for this simulation.

  1. The individuals are beginning their savings and investing at Zero.
  2. A conservative interest rate of 8% was used over the entire period. In Zambia, 8% was the average of high interest savings accounts that are relatively easy to access
  3. The savings amount also remains constant over the entire period. This means that any increase in savings amounts would shorten the period to the millionaire status.
  4. For the purposes of this article, millionaire status is at cash (liquid) savings and investments.
  5. No other accrued assets are considered. Assets such as real estate, statutory pension contributions, extra investments in stocks, government securities which would occur over the natural life of a financially conscience individual would be a bonus and further serve to bettering the ultimate financial status.

Some pretty cool realisations stick out of the simulation. A 20-year-old would only be saving a minimum of K200 to be a millionaire by 65. A 40-year-old would need to commit to K1050 only whereas a sixty-year-old would need to save close to K14,000 a month. The amounts start increasing dramatically from 45 years old. This is because of the shortened time period.

Looking at the simulation from time horizon on the left as the base, an individual would be saving that age groups amount to millionaire status. For instance, a 35-year-old aiming to be a millionaire in 5 years’ time, would need to be saving the same amount as the 60-year-old.

The compounding effect is the best part. For K200 a month, contributed over 45 years. The 20-year-old contributes only 10% of the million at K108,000 over their lifetime but still ends up with K1,061,940.70 meaning the extra K953,940.70 was all earned from compound interest. On the flip side, the older someone starts the more actual cash they contribute. For instance, someone starting at 50 years old will contribute almost 52% of the million targets at K522,000 and earn only 48% or K488,200.91 in compound interest for a total net of K1,010,200.91 at retirement.

A lot more can be stated about how to become a millionaire. Diversified investment portfolios that offer a mix of real estate, government securities and even cryptocurrencies, which in Zambia earn some of the highest returns, are great options and should be pursued in earnest. However, the point here is to show the reader that millionaire status is attainable. Clarity, commitment and consistency that’s all. Along the way knowledge is gained, complex investments are used, and the goal runs towards the pursuer.

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