# How Much Do You Need to Invest Each Month to Have a Million Dollars in 30 Years?

In the past, being a millionaire was mostly a marker of wealth rather than a necessity.

However, with the rising cost of living, longer life expectancies, and the growing number of years the average Singaporean will spend in retirement, each of us might actually need a million dollars to see us through our golden years comfortably.

The need to save more for retirement applies especially to millennials and Generation Z, who will bear the brunt of rising healthcare costs but enjoy ever-increasing life expectancies.

As such, learning to save money to achieve the goal of a million dollars is becoming more crucial.

While the thought of saving a million dollars may sound daunting at first, the power of investing and compounding actually make the task more achievable than you may have imagined.

How much do we really need to save each month?

If we plan to retire in 30 years and need to save a million dollars, simple mathematics dictates that we will have to save at least \$33,333 a year, or \$2,777 a month. The majority of Singaporeans might look at that number and gawk. \$2,777 a month in savings can be difficult to achieve, especially when you consider that many Singaporeans need to pay their mortgages, children’s expenses, day-to-day needs, etc.

Thankfully, by investing the money we save, we can make use of the power of compounding to help us grow our money. This means the money we save can earn interest that will, in turn, earn interest on itself.

Using the power of compounding and long-term investing

In Singapore, interest rates in bank savings accounts are notoriously low, but that does not mean we can’t find investments that can help our money compound much faster. For instance, real estate investment trusts listed in Singapore are averaging a yield of around 6%. If instead of putting our money in bank savings accounts, we invest in REITs each month, the amount we need to achieve a million dollars decreases dramatically.

Using a simple investment calculator tool, I have calculated that to achieve a million dollars in 30 years, all we need to do is invest a much more palatable \$1,100 each month into a 6% yielding investment and continually reinvest the dividends.

By the time we reach that 30-year marker, we would have invested a total capital of S\$396,000. This sum is just a third of the million dollars we set up to achieve, but because of our investment returns, we would now be sitting on a S\$1,071,964 retirement fund. The graph below illustrates this point.

Source: Calculator.net

The Foolish conclusion

Retirement may seem like a long way away for most millennials and Generation Zers who are perhaps just starting their careers. However, planning for retirement early is essential if you want to utilise the power of compounding over a longer time frame. Hopefully, this article inspires you to start investing at a young age so you can live comfortably through your golden years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.