How to Achieve a Million Dollars by Investing

It is often said that the first million is always the hardest. Assuming you are building your wealth from scratch and not raking in a six-figure monthly income like a professional footballer, you may have bills to pay, family to feed, and risks to worry about. 

So how can you do it in a reasonable amount of time?

The answer is simple (but not easy) - Discipline and Compound Interest.

Firstly, we need to instill the discipline of "paying yourself first". This means setting aside a non-negotiable proportion of your income into investments every payday. I recommend 10-20%, but you can do more if you wish to. This money must not be touched for any purpose other than for growing it.

Next, we need to choose where to invest this money, and use the effect of compounding to grow it. 

As Albert Einstein said, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."

The type of instrument that you invest in makes a significant difference in your results. 

Let's say you are extremely risk-averse, and invest in fixed deposits generating 1% interest, according to the "Rule of 72", it will take 72 years (72÷1) for your money to double.

On the other hand, if you take some risks and invest in an equity fund that generates a 9% return, it will only take 8 years (72÷9) for your money to double!

By combining Discipline and Compound Interest, it is possible for an average investor with minimal investment knowledge to achieve a million dollars in 20 years.

Start with an initial capital of $50,000, and with a disciplined monthly investment of $1,200, you can achieve $1,000,000 in less than 20 years at a return of 9%! 

(For perspective, the S&P 500 index returned 13% p.a. over the last 10 years, and you don't even have to think what companies to buy!)

So keep investing and stay disciplined on the path. In due course, you can achieve FIRE (Financial Independence, Retire Early) and have a very comfortable life indeed!