How Much You Need To Invest Monthly To Have $1 Million in 20 Years
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G. Brian Davis
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Zuri Anderson
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Calculating the compound annual growth rate for the S&P 500 from 1928 to 2024, The Motley Fool reports it at 10%.
Of course, past performance doesn’t guarantee future results. But if you do earn an average of 10% on your returns over the next 20 years, how much would you have to invest each month?
The Math To Become a Millionaire
Assuming quarterly compounding, it would take around $1,343 invested at 10% each month to exceed $1 million over 20 years.
That also assumes you’re starting with nothing. You may already be well on your way however, in which case it won’t take nearly as long to reach $1 million.
Here’s how the math breaks down year by year, courtesy of Investor.gov:
| Years | Future Value (10.00%) | Total Contributions |
| Year 0 | $0.00 | $0.00 |
| Year 1 | $16,730.49 | $16,116.00 |
| Year 2 | $35,197.81 | $32,232.00 |
| Year 3 | $55,582.28 | $48,348.00 |
| Year 4 | $78,082.93 | $64,464.00 |
| Year 5 | $102,919.43 | $80,580.00 |
| Year 6 | $130,334.27 | $96,696.00 |
| Year 7 | $160,595.14 | $112,812.00 |
| Year 8 | $193,997.47 | $128,928.00 |
| Year 9 | $230,867.39 | $145,044.00 |
| Year 10 | $271,564.89 | $161,160.00 |
| Year 11 | $316,487.31 | $177,276.00 |
| Year 12 | $366,073.26 | $193,392.00 |
| Year 13 | $420,806.87 | $209,508.00 |
| Year 14 | $481,222.53 | $225,624.00 |
| Year 15 | $547,910.12 | $241,740.00 |
| Year 16 | $621,520.73 | $257,856.00 |
| Year 17 | $702,773.08 | $273,972.00 |
| Year 18 | $792,460.47 | $290,088.00 |
| Year 19 | $891,458.57 | $306,204.00 |
| Year 20 | $1,000,733.95 | $322,320.00 |
Will $1 Million Be Enough?
A million dollars today isn’t worth nearly what it was 20 years ago. The U.S. Bureau of Labor Statistics inflation calculator shows that in 2005 you only needed around $605,000 to have the same purchasing power that $1 million offers today.
So you better believe that in 20 years from now, $1 million won’t buy what it does today.
Fortunately, you can account for inflation in your projected returns. The Motley Fool calculates that the inflation-adjusted returns of the S&P 500 amount to 6.9% annually.
Running the numbers again at 6.9% instead of 10% returns, you would need to invest $1,964 each month to reach a $1 million purchasing power based on today’s dollars.
If that sounds like a tall order, well, only you know whether becoming a millionaire is worth the sacrifice. Research house hacking to reduce or eliminate your housing payment. It involves buying a multifamily or home with an ADU, and renting out units to cover the mortgage payment.
That alone could get you to your savings goal — and help you join the two-comma club within 20 years.
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