CNN Money discusses three easy steps to becoming a millionaire:
Step 1. Time: There is really no shortcut to getting rich. The sooner you begin saving and investing (steps # 2 and 3 below), the faster you get there. If you cannot begin soon enough, retire late – the idea is to give your money enough time to grow.
Step 2. Save: Money does not grow out of a vacuum. You need to start somewhere, and the more you save – by cutting spending, or increasing income, or both – the better.
Step 3. Invest: Locking away your money in a vault will lose its purchasing power to inflation over time. Putting it in a low-interest bank account is not enough either. You should have a smart investment plan, so the interest you earn outpaces inflation.
This just restates one of the most basic formulas of investing, as shown here. “S” is the money you have today, which comes from your saving (step #2). “I” is the annual interest your investing earns you (step #3), which must exceed inflation that typically averages 2.3%. “T” is the time in years (step #1). Raising any one of these three, preferably all of them together, will get you that first million dollars quicker.
Credit : here
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