How to Get from $100K to $1 Million in Savings
It does not take very long to realize that $100,000 sounds like a lot of money, but it will not last very long if you are no longer earning any money. To begin with, you should be commended if you have been able to reach this milestone in your savings. With so many people having no money in their savings account, passing the $100,000 is certainly nothing to sneeze at. At the same time, you will not want to stop there. You will want to keep going. This is why many people have their sights set on $1 million. Here are some practical tips to get from $100,000 in savings to $1 million.
The Beginning
Before you can move towards the one million dollar mark, you will want to make sure a few financial items are taken care of. It does not do much good to have so much money in savings if your financial house is not in order. This means that you should have an emergency fund in the bank. This is a sum of money that should cover you and your family for between three to six months should something happen to your own earning potential. That will also mean that you do not have to dip into your hard earned savings account just to get living during a difficult time.
You will also want to pay off your high interest debt. Your savings should not accumulate too rapidly if you are still paying off credit cards, for example. Now, there is some debt that you can carry and still add to your savings. These include mortgages and certain other types of personal improvement loans. You also want to make sure that you have maximized your retirement contributions. Because these come with positive tax implications, you will want to ensure that you are taking advantage of these before you start working towards the $1 million mark that you have set in front of yourself. Once you have settled on these items, you can begin saving again in earnest.
Set Some Financial Goals
Now that you have $100,000 to invest, it is important to set out some financial goals in front of you. Goals always help you to reach your main objective. You need to know where you are heading before you can understand how to get there. You might want to grow the amount of money in your retirement accounts. You may have children who you wish to save for their college account to use in the future. Some people want to get out of an apartment and into a home of their own. You will want to map out the next 30 years of your financial life so that you know what big ticket items you be spending money on. This will then help you determine what you need to do in order to meet that $1 million mark in your savings account.
Know Your Time Frame
This is largely a question of age. The older you are, the less time you have to reach $1 million. This will hep to determine how long you have to get there. If you are younger, you have more options to turn that $100,000 into $1 million. This will open up your financial horizons. Being older, however, does not mean that you cannot get there. It simply means that you have to be a bit more aggressive in your approach. In the end, you have the same goal. It is just the deadline is moved up somewhat.
Do You Have Special Circumstances?
It is always difficult to point to one set strategy for turning $100,000 into a million dollars. Every person is different. You will have different financial needs than the person next door. If you have children, this limits your savings power. You might have to pay child or spousal support. Other people may have no such obligations. Knowing where your money goes each and every month will determine how you can best allocate what is leftover so that you can invest it wisely.
Risk Tolerance Does Matter
All of these sections kind of go together. You will have to determine how it is possible to get to the $1 million mark. In order to get there, you might need to make some investments that can fail. This will mean you lose money. You have to determine how much you risk you are willing to take in order to meet your goal. A lot of this has to depend on your personal situation. If you have a bunch of other people depending on you and your ability to provide for them, then you might be less willing to lose any money. If you can afford to be without some money for a period of time,, however, then you might be able to cash in big on some investments that take years to come to fruition. This is when it is often helpful to speak with a financial advisor.
The Bottom Line
It does not take very long to realize that $100,000 sounds like a lot of money, but it will not last very long if you are no longer earning any money. To begin with, you should be commended if you have been able to reach this milestone in your savings. With so many people having no money in their savings account, passing the $100,000 is certainly nothing to sneeze at. At the same time, you will not want to stop there. You will want to keep going. This is why many people have their sights set on $1 million. Here are some practical tips to get from $100,000 in savings to $1 million.
Conclusion
Getting to a million is not that difficult. It just takes time and perseverance. You have already set a pattern for saving, or you would not have accumulated $100,000. Just keep going and have your goals set out in front of you. If you will do that, then you will be able to get a million dollars and be able to enjoy the process when it is all said and done.
