How to Save A Million Dollars

Many people I know are always dreaming of having a six-figure salary and/or having a million dollars in savings. Both of these are awesome goals but are not necessarily tied together. One can have a million dollars in savings without making six-figures and of course one can have a six-figure salary without have a single dollar in saving let alone one million dollars.

This post will focus on what it takes to save a million dollars. I will outline the slow but steady approach to growing your money through investing in the stock market. I will also discuss building a real-estate empire of rent properties or flipping houses that will allow one to save a million. If this is on you goal list there are multiple ways to obtain a million dollars in savings. Regardless of the approach one chooses, saving a large sum of money such as a million dollars will require one to be aware of the decision one makes and how those decisions will affect your finances.

Because I believe in helping the next generation; we should all thrive to help them to begin their financial journey where we finish ours. To put it another way, our children should not start their financial lives from the same place you began yours. So, if you have zero dollars in savings today, you want to train your children to have a million in saving by the time they are 65-years-old. The chart below outlines the amount of money you and your child will need to save monthly bases with an 8% return to reach the goal of having a million dollars in savings.


Age Goal Amount # of Years Until 65 Monthly Savings Amount
15 $1,000,000 50 $145.24
20 $1,000,000 45 $215.61
25 $1,000,000 40 $321.68
30 $1,000,000 35 $483.61
35 $1,000,000 30 $735.62
40 $1,000,000 25 $1,139.90
45 $1,000,000 20 $1,821.02
50 $1,000,000 12 $3,069.13
55 $1,000,000 10 $5,752.46
60 $1,000,000 5 $14,204.70


Now some of you may find these numbers disheartening and depressing, but it should not. The chart should encourage you to start saving if you have not already and increase your monthly savings/investing amount if you need to make an adjustment.

Now that the math is out of the way, let’s review ways to start on the path to saving a million dollars.

Investing in the Stock Market:

According to polling data from Gallup, only 52% of all Americans say they own stocks. I have a lot of friends that are afraid of the stock market. Some of them consider it gambling and figure it is a game of chance. What they don’t consider is that all wealth building strategies have some level of risk. You just have to make peace with the amount and type of risk you are willing to take. Mrs. Broke Architect and I have decided that we are comfortable with using the stock market as our vehicle  for saving a million dollars. There are advantages and disadvantages to investing in the stock market. Listed below are just of few that come to mind:

  • Advantages:
    • Requires little time, depending on investment strategy
      • In theory, you can set it and forget it
    • Requires very little upfront capital
  • Disadvantages:
    • Seems complicated and scary
    • Return on investment seem to be relatively slow and small depending on amount invested
    • The market may lose value and I may lose money
      • Only if you cash out during a market down turn. Market downturns are a great time to invest. It is like going shopping when every thing is on sale.

When friends ask me about investing in the stock market it usually starts with the same question. How quickly can I flip (double) my money? I proceed to tell them about the rule of 72.

The rule of 72 tells you how long it will take to double your money for an investment. 72 = Investment return * # of years it will take you to double your money. If your investments are earning 8% it will take you 72/8, or 9 years to double your money.

So, after I explain that it will take years for their investment to double, they usually become discouraged and do not invest. The problem is that most people want to become rich quickly, like yesterday. But in reality, it takes the average self-made millionaire 32 years to build their wealth. Most of them do not become wealthy until they are between the ages of 51-55, according to Tom Corley research. Building wealth takes years of investing, being frugal and living less than you make. According to Dr. Thomas Stanley’s book The Million Next Door, the typical millionaire stated “We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent. Seventy-nine percent of us have at least one account with a brokerage company.”

As for Mrs. Broke Architect and I, we are not millionaires but we have adopted many of the saving, investing and spending habits we learned from “The Millionaire Next Door.” We are currently saving at least 20% of our household income, have a brokerage investment account with Vanguard and we are frugal with any money that comes under our control.

Now the next question that many of you will have is, what should I invest my money in, if I should place it in the stock market? Should I buy Apple which is over $150 a share, or Google which is over $900 a share? Each person must decide what kind of investor they are, as for Mrs. Broke Architect and I, we do not believe in buying individual company stock. We took our investing advice of Warren Buffet who said “My advice to the trustee (wife) could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors.” Now to be totally honest, we did not place any money in government bonds, but we did follow Buffet’s general advice. We place most of our money in Vanguard’s S&P index fund. We also placed some in the international fund and a small cap fund to provide some diversity to our portfolio.

Real Estate:

I have many friends who have taken the real estate route to having a million dollars—whether it is via buying several properties to rent or flipping houses. Both of these are options for people who want a more hands on approach to building wealth. But for some reason, people always seem blind to the risks of this approach. Listed below are the advantages and disadvantages of real estate investing:

  • Advantages:
    • Simpler to understand
    • Return on investment is more visible
    • Return of investment seem to happen quickly
  • Disadvantages:
    • Requires a sizable amount of upfront capital
      • Usually a loan/mortgage (Debt)
    • Maybe time consuming
    • Relying on a tenant to pay the rent so you can pay the mortgage
    • The apartment unit could sit empty and unrented
    • You under estimate the cost of the renovation
    • The flip won’t sale the amount required to cover the cost of the loan or the renovation

To be honest once, we do not invest in real estate. So, I may be missing out on landlording and/or flipping. I see nothing wrong with this approach, it’s just not the path Mrs. Broke Architect and I have chosen.

Of course, there are other ways to build wealth, such as starting a business. The two ways I outlined above are the way most people consider when developing a wealth building strategy. Once you pick your method, do not forget to implement it well. And hopefully you will one day you will have a million dollars in savings

Without sacrifice there is no growth

The Broke Architect

(-$8,750 negative)

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