Start an IRA, Now!

An IRA is an Individual Retirement Arrangement. This is one of the most important tools to becoming a millionaire and being able to retire with dignity when you are older. This is why it is one of my first posts. If you just do this one thing right now and maintain it for at least 27 years it's possible to have $1,000,000 in that account alone! (I told you this wasn't a get rich quick scheme)

There are several types of IRAs available, I find the Wikipedia page is quite good at explaining the different types but you can get lost in all the mumbo jumbo legal talk, get discouraged and then do nothing. I want to keep it simple and so I am only going to talk about my favorite and the one that I own and recommend, the Roth IRA. Everything deposited in the account is an after-tax contribution. This means I don't get any extra tax benefits on my filings for the fiscal year BUT the money is then allowed to grow TAX FREE!! That means that the million dollars I mentioned earlier is yours without taxes. If you want to see how I calculated it, check out the end of the post.

Although I show you the math, it is not really that important. What is important is that you are actively saving for your own retirement. We can not trust the government to do this for us, planning to live off of Social Security will not make you a millionaire. Also if you pay attention the stock market, you have see that it has been down recently and a lot of people have lost money, which is scaring people away. I look at it the opposite way, I see it as the stock market is ON SALE! You have a chance to buy into these mutual funds at a great price and when the economy recovers you can expect a great return.

So I beg you to find a financial planner that you trust and have them explain this further, open your account and choose quality mutual funds. The sooner you do it, the more time your money has to build! Remember that this alone can make you a millionaire and one of the several reasons why I know, without a doubt, I will become one.

--A Future Millionaire


This is how I calculated 27 years:
First off, I assumed that the maximum contribution of $5,000 dollars per year was deposited into the account and that the account was invested in good growth stock mutual funds that make 12% interest per year (which is the the stock market average). Grant it that both of these situations are ideal BUT possible. I also assumed that the interest is compounded monthly.
The equation for this is:
N=log(1+(i/12)*F/(P/12))/log(1+(i/12)) where i=0.12, F=1,000,000, P=5,000
If plugged in correctly N should equal 323.40 months which is equivalent to 26.96 years.