Personal Finance

With this strategy, 'you can't avoid becoming a millionaire'

Key Points
  • You don't need a lot of money to start investing. What you need is time.
  • If you save $5 a day in an account with a 10% annual return, you'll have around $30,000 in 10 years, $330,000 in 30 years and $2.3 million in 50 years.

Can you spare $5 a day? If so, you could become a millionaire — one day.

"If you start in your 20s with a couple of reasonable investments, you can't avoid becoming a millionaire," said Michael Taylor, author of "The Financial Rules for New College Graduates."

However, many young people are delaying or refusing to invest. 

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The average millennial doesn't expect to start saving for retirement until their late 30s, while half the generation isn't invested in the stock market at all, according to a study by TD Ameritrade.

That's a problem. 

Taylor provided some math to explain why. If you save $5 a day in an account with a 10%  annual return, you'll have around $30,000 in 10 years, $330,000 in 30 years and $2.3 million in 50 years. (The S&P 500's annual rate of return over the last 90 or so years has been around 10%. After adjusting for inflation, however, it's closer to 8%.)

Assuming a more modest 6.5% annual return, you'd have around $26,000 in 10 years, $168,000 in 30 years and $667,000 in 50 years.

"If you start late, you will never catch up to the person who started early with the same amount," Taylor said.