How to Make $1 Million With a $50,000 Salary

Photo to accompany story about investing strategies.4 Getty Images

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  • Because of compound interest, a monthly investment of $500 can eventually turn into $1 million.
  • The idea is to start today. Time in the market beats timing the market.
  • My favorite investment vehicle is a Roth IRA, and I made this chart to show you why.

I started First Milli to show with fun graphics and easy-to-understand breakdowns that it’s possible for anyone to build a net worth of $1 million — even, for example, someone with a $50,000 salary. 

Having doubts? Well, I proudly hail from a FGLI (first-generation, low-income) background, and I’m telling you it is possible. As the pandemic continues to further the inequality gap, it’s important to show that there are ways to passively grow wealth, and one of those ways is via the stock market. 

Let me convince you with the numbers. Here’s the scenario: Nancy is a twentysomething earning $50,000 in salary. She has been able to free up $250 per paycheck, so that’s $500 monthly that she can contribute to investing. To be tax efficient, she has opened a Roth IRA and invests in high-performing, low-cost index funds that offer an average annual return of 7%. After 37 years, with the power of compound interest, her total contributions of $222,000 will grow to $1,048,272. And because Nancy used a Roth IRA, she can access that money completely tax-free. 


The best part? This is assuming Nancy never gets a raise in those 37 years. In fact, Nancy should expect to earn more money over the course of her career — whether by getting promoted, changing industries, or even starting a side hustle or small business. If she stays consistent with her $500 monthly contributions, she can save and invest that additional income for other goals and priorities. 

She won’t have to wait 37 years to be rich. The idea is to start today. The great thing about wealth-building is that over time it no longer becomes about the destination, but rather the journey. Nancy will learn as she starts building her wealth that she can dig into hacks to further accelerate her financial journey. $1 million is only the beginning. 

Probably my favorite part about all of this is showing how massive change starts small — and small can start with a $16 a day investment. 

With this, I’d love for you to walk away with the following to keep in mind during your wealth-building journey:

Get Your House In Order Before Investing

  • Make sure all of your toxic debt is paid off, which is what I would describe as interest rates of 4-5% and above. 
  • Build an emergency fund, if you don’t have one already. Experts commonly advise an emergency fund that can cover 3-6 months of expenses, which will be easier to tap into than an investment account if times get tough.
  • Figure out what budgeting strategy works best for you. Check out zero-based budgeting if you haven’t tried it yet.
  • Have clear goals on how you’ll be reaching a million dollars.

Invest Early and Often 

  • The best time to start investing is now. The numbers show that a 21-year-old who invests for 10 to 15 years for a lower amount can outperform someone who starts investing heavily at 45. The idea is that you want to give our friend compound interest the time to work its magic.

Time in the Market Beats Timing the Market

  • Pick a date — say, the 15th of every month — and marry that date. Invest the same amount of money each time, no matter what the stock market is doing. (Unless the world has truly gone in flames, you have nothing to worry about if you’re investing for the long term.) 
  • Investing should come as natural as paying bills. Pay your “investing bill” as religiously as you would pay your rent or mortgage.

Index Funds 

  • Invest in low-cost index funds. They can be ETFs or mutual funds. Compare their expense ratios and average annual returns using a site like Morningstar. For Nancy, I assumed an average annual rate of return of 7%. 
  • First invest in tax-efficient accounts, like 401(k)s, IRAs, or HSAs, before using normal brokerage accounts

I would love to learn more about what you think. Send me an email at hello@firstmilli.com if you have any questions or doubts. Meanwhile, check out the following hashtags #debtfreecommunity #FIRE #FIREjourney and be empowered by all the amazing goals these communities are accomplishing across the socials.