Build wealth with ETFs: This is how you can save 1 million

Can you become a millionaire just by saving? “Impossible,” one or two people are probably thinking. But is that really the case? Not at all! Because it is definitely possible to become a millionaire with an average salary just by saving. Even if you start from scratch.

However, it depends on certain factors and (admittedly) you need a longer breath. Using an example calculation, we will show you how this can work.

Become a millionaire - This example calculation shows: It's possible!

First, you should write down your income and expenses in detail. This is the only way to find out how much money you can save each month. In addition to your age, your income and your expenses, it also depends on your willingness to put money aside. Because everyone should be aware that a high savings rate is required in order to achieve the ambitious savings goal of one million.

In the calculation examplewe are of an interest rate of7 %went out. That's slightly less than the average annual return of a stock ETF, such as the MSCI World in recent years. This was loudFinancial tipso far at9.2 percent. The savings rate in this example is600 Euro.

Calculation example:

Starting capital: 0 euros

Sparrate: 600 Euros

Interest rate: 7%

Savings period: 35 years

Result:1 million euros

In order to get to one million euros with the saved capital including interest, you would have to start from zero,Save almost 35 years. To be precise, 34.56 years, which is 34 years and 7 months. Interest is continually reinvested, meaning you benefit from the compound interest effect.

According to this calculation, at the end of the savings period you only have248,832.00 euros investedanda total of 751,340.51 euros in interestreceive.

If you assume that you also make special repayments in between, for example if you have Christmas money left over and would like to invest that too, you will of course reach your goal even faster.

However, you should always be aware that in order to achieve this ambitious savings goal you have to make sacrifices over many years. At the same time, you should approach the matter realistically.

Because even if you can currently afford a high savings rate, that doesn't mean that this option will also exist in the long term. Because living conditions change and so do income and expenses.

Ask yourself what you want to use your assets for

If you want to build wealth, you should first ask yourself what you want to use the money for later. Do you want your assets to protect you in old age, do you want to retire earlier or are you planning something completely different for which you will need a lot of money at some point? This depends on how high you should set your savings goal.

In general, it makes sense to invest in an ETF for private retirement in order to benefit from the compound interest effect in the long term. Nevertheless, it is also an individual question. Many employees want to use their assets to retire earlier. Others prefer to invest in tangible assets and buy a property, for example.

Regardless of which path you choose, you should always keep your savings goal in mind and approach your wealth creation realistically.

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This article is not an investment recommendation. Only you can decide how you invest your money. We can only give you suggestions and tips that have generally proven to be useful. Nevertheless, finances are a sensitive topic that you should approach individually.

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