How Much To Invest Each Month To Become A Millionaire If You're 30

Where to stash your emergency cash

Where you keep your money is also an important decision. An emergency savings account needs to be accessible. You may want to find an interest-bearing deposit account – as long as it’s liquid (like the Ally Bank Online Savings Account). While investment accounts or other savings tools (such as CDs) may have more earning power, liquidity is important for short-term savings goals like emergencies.

Keeping your emergency fund in a savings account that earns a competitive interest rate means you don’t have to jump through any extra hoops to get cash when you need it. Plus, your money could earn interest at a potentially competitive rate — meaning it’s growing all the time. With other savings tools, such as CDs, you may have to wait until its maturity date to pull money out. Or, if you withdraw it early, you may have to pay a penalty. Drawing money out of an investment account could also trigger tax consequences, plus it usually takes several days before the cash hits your bank account.

Expert tip: Take advantage of tools and technology to help you reach your goals. With Ally Bank’s Online Savings Account, you can supercharge your savings with smart savings tools like Recurring Transfers and Surprise Savings, so you can reach your savings target even faster.


Lock in a Percentage of Your Income

Most financial planners advise saving between 10% and 15% of your annual income. A savings goal of $500 amount a month amounts to 12% of your income, which is considered an appropriate amount for your income level.

Assuming your income increases by an average of 4% per year, this automatically increases your savings amount by 4%. In 10 years, your annual savings amount, which started out as $6,000 per year, will increase to $8,540 per year. By the time you are 55, your annual savings will increase to $16,000 per year. This is how you reach your goal of $1 million at age 65 starting out on a $50,000 per-year income.

How long will it take?

The chart below shows how long it will take you to amass 25 times your expenses based upon the percentage of your income you save. (We assume a 5% average annual return.)

% of income savedTime required to save 25x annual expenses
5%66 years
10%51 years
15%43 years
20%37 years
25%32 years
50%17 years
75%7 years
90%less than 3 years

As you can see, by saving 20% of your income you’ll hit 25 times your annual income in 37 years. That means a 30-year-old who starts saving today (assuming no prior savings) will hit this target by 67.

And keep in mind, this is assuming only 5% growth. The stock market historically returns much more than that over long periods of time.

The lower you keep your expenses, the sooner you’ll achieve your personal savings goal. As it both lowers your overall goal, and allows you to save more.

Also, our savings chart doesn’t take taxes into account.

Tax-advantaged accounts can help

For simplicity, our chart looks at before-tax money going in, assuming that you’ll pay taxes on the money coming out. But tax-sheltered retirement accounts like 401(k)s and IRAs change that equation for the better.

If you qualify for a Roth IRA, use it! Money you contribute to a Roth IRA is taxed now but your withdrawals are tax-free when you’re retired. So the more you save in a Roth, the less you’ll need to save in total because you won’t have to pay taxes on the Roth withdrawals in retirement.

Contributions to a 401(k) can also help ease the pain of reaching a 20% saving rate, assuming you can take advantage of at least a 5% match from your employer when you put money into a 401(k). This means you’ll really only need to save 15% of your paycheck.

Plus, if you’re putting money into a 401(k), this money will be deducted from your paycheck before taxes which means that each dollar you deduct will save you some after-tax cash. But you will pay taxes when you withdraw the money in retirement.

Investing $100 Monthly: An Example

Now suppose the same 30-year-old investor finds a way to save an additional $100 per month. He contributes the extra $100 to his portfolio and keeps reinvesting his dividends and interest payments. His investment still earns 8% per year. For simplicity's sake, assume compounding takes place once per year in January.

After a 30-year period, thanks to compound returns and a small monthly contribution, his portfolio will grow to $186,253.14 (as compared to $50,313.28 without the monthly contributions). While $186,253.14 is not enough money to retire on, especially after 30 years of inflation, remember that this is just with $100 a month in contributions and returns below historical averages.

Suppose the annual return is 9%, which is closer to historical averages for a 30-year period. With a $5,000 principal investment and $100 monthly contributions, the portfolio grows to $229,907.44. If the investor is able to save $200 a month for contributions, the future value of his portfolio is $393,476.48.

Why 20%?

According to our analysis, assuming you’re in your 20s or 30s and can earn an average investment return of 5% a year, you’ll need to save about 20% of your income to have a shot at achieving financial independence before you’re too old to enjoy it.

Here’s the thing: If you want to work like a dog every day until you die, maybe you don’t need to save all that much. Sure, you’ll still want an occasional vacation and something in an emergency fund in case your car coughs up a radiator.

Beyond that, however, we save so that one day we no longer have to work for the money. For most of us, that day won’t come for many decades, but there are regular working people who reach it as young as 40 or even 35.

Read more: Emergency funds: everything you need to know

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50/30/20 rule

Did you want a simpler answer? No problem. Here’s a final rule of thumb you can consider: at least 20% of your income should go towards savings. More is fine; less may mean saving longer.


Retirement is the ultimate long-term savings goal.

Now back to the original question: How much should you save a month? Let’s break this down by goal:


Emergency savings should be placed in an account that is easily accessible, so you do not incur early-withdrawal penalties as you would with an account such as a certificate of deposit (CD) or Individual Retirement Account (IRA).

2. You end each month with extra money

Your emergency fund is looking good. You pay all the bills and any high-interest debt. You have enough to cover your expenses. Still some left over? It doesn’t have to be a lot. Investing is all about starting small and growing those dollars over time (more on that below). The key is to stick with it so the money invested can work for you.

Having trouble balancing your budget? Read “3 steps to allocate a paycheck when you want to get ahead with your money.”

How to Increase Your Savings

Thinking about becoming a millionaire is exciting, though it could leave you wondering whether saving $2,000 a month is even possible. It may be more easily said than done, but you can increase your savings by working to earn more and spend less. If you don’t indulge in lavish luxuries and avoid consumer debt, you should be able to save more as your career progresses.

Work-Sponsored Retirement Plans

Many companies offer a 401(k) retirement plan that includes matching contributions up to a certain percentage of the amount you contribute. For instance, if you contribute 4% of your income, and your employer has a 4% match, your savings rate is effectively 8%. For someone who earns $800 per week, that comes out to more than $250 in savings per month. Take advantage of this free money to double your savings rate and reach your goal of being a millionaire even sooner.

Individual Retirement Accounts

Not all employers offer a 401(k) match. There are contribution limits for IRA accounts that depend on your level of income, and ideally, you should aim to maximize your contributions up to that legal limit.

How Much Money Do I Need to Invest?

The good thing about investing today is that you can start with a little or a lot. There used to be a time when the minimums for investing were unreachable for everyday people. Not today! Once you have determined how much disposable income you have, you can then allocate a portion to investing using one of the options below:


Micro-investing allows you to get started with just your spare change. Yes, that’s right, you can begin investing without having the barrier of thinking you don’t have enough money. You connect your bank account, set your investing goals, choose which investments and you set the amounts you want invested. Some will withdraw automatic small amounts if you select that option. Many of the apps also have educational components as well so you can learn while you earn!   

Online Brokerage

You can start investing with an online brokerage account and set up recurring deposits weekly or monthly. Most do not have minimum requirements so you can start with whatever you have.

Employer Retirement

This is your 401(k), 403(b) or TSP Savings Accounts provided by your employer. You can generally start with any percentage, but many companies have matching requirements. For example, if you contribute 1%, they may not match until you are contributing 5%. Others match any amount you contribute each pay. Either way, do what you can afford and are comfortable with. There is nothing wrong with starting low, just get started!

How to become a millionaire in 28 years

There are a few key factors that affect how much you’d need to save per month to become a millionaire by 2050. The first is how much you’ve already saved. Someone with $50,000 in the bank will have a much easier job than someone without any savings, but both can still get there.

Image source: Getty Images.

Image source: Getty Images.

The other key factor is how quickly your investments grow. You can influence this by choosing your investments carefully. Stocks offer higher earning potential than bonds, but they’re also more volatile, so if you invest heavily in them, you face a greater risk of loss. This isn’t a big deal when you’re young and have decades until you plan to use your savings. But older adults nearing retirement will want to be more conservative.

No matter how you invest, though, you can’t control the kind of return you’ll get. Some years you might lose money and others you might see returns in excess of 10%. Because of this unpredictability, it’s usually best to err on the side of caution when deciding how much to invest each month.

The table below shows how the two above factors interact with one another to affect how much you’d need to save per month to become a millionaire by 2050.

Initial Savings Amount

6% Average Annual Rate of Return

8% Average Annual Rate of Return

10% Average Annual Rate of Return


$1,179 per month

$839 per month

$590 per month


$1,173 per month

$831 per month

$581 per month


$1,148 per month

$803 per month

$547 per month


$1,118 per month

$766 per month

$505 per month


$1,028 per month

$658 per month

$377 per month


$877 per month

$477 per month

$165 per month


$576 per month

$116 per month

$0 per month

Data source: Author’s calculations.

As you can see, the path to $1 million by 2050 can look a lot different for each person. Worst-case scenario, you’d have to save about $1,179 per month, but if you have as little as $1,000 saved up already, you’ll see that savings target drop by $6. Saving $6 per month may not seem like that much, but over the course of 28 years, that adds up to over $2,000.

It’s also worth noting that if you’ve already saved $100,000, you may not have to contribute any more money to become a millionaire by 2050. With a 10% average annual rate of return, you’d end up with over $1.4 million without contributing another cent over the next 28 years. All you’d have to do is sit back and let the money you’ve already invested continue to grow.

But as I mentioned above, it’s risky to plan for a high rate of return to make up for a lack of personal contributions. If it doesn’t pan out, you could end up with a lot less than you expected. That’s why it’s best to contribute as if you were only going to earn a 6% average annual rate of return if you can afford to do so. 

What is the $1,000 per month rule?

The $1,000 per month rule is a simple metric used by financial planners to determine how much money an investor needs to have in savings to generate a pre-tax income of $1K per month for 20 years during retirement.

Assuming a deduction rate of 5%, savings of $240,000 would be required to pull out $1,000 per month:

  • $240,000 savings x 5% = $12,000 per year or $1,000 per month

While the rule is easy to use, it’s based on a couple of assumptions that may or may not be correct. 

First, the rule assumes the savings amount doesn’t change at the same time deductions are being made. For example, there’s volatility risk to consider if the funds are held in the stock market. If the stock market drops by 10% in 1 year, savings would decline to $216,000. 

Secondly, $240,000 will last 20 years (ignoring interest) if $12,000 is deducted each year. After 20 years the money runs out, and so does the $1K per month in income, assuming that the savings balance doesn’t increase. 

But what happens if an investor wants to have his or her cake and eat it too? In other words, is there a way to generate an income of $1,000 per month without tapping into a nest egg? 

Happily, the answer is “Yes!” In the next section, we’ll discuss 5 strategies that may help you make $1K per month while still keeping those hard earned savings intact.

What is a millionaire?

A millionaire is someone whose net worth is valued at $1 million or more. That means the total value of their assets minus their liabilities is at least $1 million.

The Bottom Line

Investing $100 a month adds up over time, especially with compound interest. Making small sacrifices every day to consistently add $100 to your stock investments every month will benefit you in the long run.


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