Here’s How Much You Need To Invest To Be Wealthy

A recent Charles Schwab Modern Wealth Survey found that Americans now believe they need to have an average net worth of $2.2 million in order to be considered “wealthy.”

This is an increase from the magic number of $1.9 million in 2021, but still falls short from what net worth was considered wealthy in 2018, 2019 and 2020, according to survey results. It’s clear that, as economic situations have changed, Americans’ perception of wealth and money has changed as well.

While some people may have no desire to make millions of dollars — and that’s totally okay — others may find that the closer they get to reaching that number, the more feasible it becomes for them to afford new opportunities and eventually reach their lifestyle goals.

Beyond just thinking of net worth, however, it’s important to consider just how much savings are required to afford what you think you’ll spend each year in retirement — and this article helps illustrate that logic. For context, future retirees who plan to live off $50,000 a year will need to save $1,250,000, using the 4% rule, to carry them through the rest of their nonworking lives. (Naturally, different variables like market volatility and one’s cash reserve may affect this savings goal.)

Select wanted to see what it would take to reach this $2.2 million number that Americans consider “wealthy,” so we calculated how much you’d have to invest monthly over the course of 10, 20, 30, 40 and 50 years to get there.

Keep in mind that your net worth is defined as the total assets that you own (the cash you’ve got in bank accounts, investments, retirement accounts, etc., as well as the value of any real estate) minus the total liabilities that you owe (debt, including student loans, credit card, your mortgage, etc.). Once you hit that $2.2 million portfolio mark, your true net worth will depend more on what your liabilities are.

To figure out how much you’d need to invest to end up with $2.2 million, we used this investment calculator.

For this example, we assume that you’re starting with $0 and are earning a moderate 7% average yearly return after adjusting for inflation (the average stock market return is historically 10% annually before inflation). Using these numbers, here’s how much money you would have to invest each month to reach a $2.2 million portfolio value and be considered “wealthy.”

• Invest $12,861.61 each month for 10 years to reach $2.2 million
• Invest $4,334.66 each month for 20 years to reach $2.2 million
• Invest $1,881.22 each month for 30 years to reach $2.2 million
• Invest $890.13 each month for 40 years to reach $2.2 million
• Invest $437.12 each month for 50 years to reach $2.2 million

As it goes with any other investing calculation, we see here how the earlier you start investing — and thus the more time you give your investments to grow — the less money you have to commit each month. Someone who has 50 years to invest can contribute $12,424.49 less each month than someone who has only 10 years to invest.

The above calculations may seem like good news or bad news, depending on how much time you have to invest your cash. While we wanted to see what it would take to reach the benchmark $2.2 million net worth (again, not accounting for any debts), it’s important to know that anyone can build wealth no matter when they start — and they don’t need to be rich to do so.

Many investing apps allow users to dip their toe into the market with fractional shares — a portion of a stock’s share based on the amount of money they want to invest rather than the number of shares they want to purchase — costing as little as $1. This makes it much more affordable to start putting your money into the stock market and earning a return.

Robinhood is a solid option for those who are interested in investing their money in fractional shares, while apps such as Acorns cater to newbies by allowing users to invest the spare change that’s left over from their everyday purchases such as coffee, food and clothing. Obviously only investing your spare change likely won’t provide a substantial amount of investment cash each month, but it’s a good way to get started. Plus, you can plan to make regular investment contributions and have the spare change be extra investment money working in the background.

Another option is to work with robo-advisors, such as Wealthfront and Betterment, to help you determine which investments make the most sense based on personalized factors such as your risk tolerance, time horizon and overall financial goals. The best robo-advisors will also automatically rebalance your portfolio as you get closer to the target date for your goals. That way, you won’t have to worry about adjusting the allocations yourself.

When getting started, know the timeline you have to invest, how much risk you can take on and the amount of money you can contribute. These, plus your expected rate of return, are all significant factors in how much wealth — or net worth — you can build in your lifetime.

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