There's no cookie-cutter financial roadmap or universal approach to financial freedom. However, many would agree that the $1 million mark is a key milestone in the journey toward financial freedom in retirement. There's just something about it that has a nice ring to it.
Luckily, hitting the million-dollar mark doesn't have to be a pipe dream. With enough time on your side and patience, it's a goal many can accomplish. For people looking to grow $100,000 into $1 million in retirement savings, the following three steps can accelerate your progress.
It's not foolproof by any means, but it's a great framework to use. 1. Invest a lump sum and let compounding work its magic You could argue that the most powerful force in investing is compounding .
It's one thing to invest and earn a return on your investments. It's another, more transformative thing when you reinvest those returns and they just to earn their own return. That's what compound interest is.
As an example, let's assume you invest $100,000 and earn a 10% return annually, reinvesting your profits each year. Here's roughly how your investment would shape up each year: Calculations by author. Numbers rounded to the nearest dollar.
If you removed the return you earned yearly, you would've only made $100,000 over those 10 years. However, with compounding, you would've earned nearly $160,000 in that span with no extra work. Because of compounding, a $100,000 lump-sum investment could reach $1 million in just over 24 years by .
