One million dollars is a magic number.  Not so much for what it can buy these days, as anyone trying to purchase a home can tell you.  But the label millionaire still has a nice sound to it, and most important, one million dollars is a significant milestone that can serve a springboard to achieving real wealth.

Accumulating that first million dollars is not all that easy.  In the article Your First Million is the Toughest, Motley Fool describes what it takes to accumulate the first million assuming different rates of savings and returns.   For example, assuming a 10% rate of return, if you save $100 per month it will take you 44.5 years to become a millionaire.  That is a very long time to wait.  Obviously, the more you save the faster you can accumulate the magic one million dollars.  For instance, let’s say you will contribute the maximum monthly contribution to your 401K which currently is $1,291.66.  At a ten percent rate of return you will become a millionaire in 20.2 years.  In other words:

At a 10% rate of return, it takes almost 13 times as much saving to cut the amount of time it takes to make the first million dollars in about half.

However, once you get past the first million-dollar-mark life becomes a lot easier.  For example, let’s say you have been able to achieve the magic one million dollars milestone.  How long will it take you to get to your second million?  Assuming the same 10% rate of return, if you save $100 a month, it will take you 6.9 years.  But what if you save a lot more?  What if you save almost 13 times more as in the previous example?  Well, if you save $1,291.66 a month you will become a millionaire in 6.3 years.  That is right.  You only saved about 6 months by saving 13 times as much money!   So take note of this:

After you make your first million dollars, the amount of money you save will have a negligible effect on how long it will take you to accumulate your next million!

And the same is true for your third million and so on and so forth.  So basically what this is saying is that once you have accumulated your first million you are done saving!  At that point all you need to do is let your money accumulate and soon you will become a multi-millionaire without any additional effort.

As unintuitive as this may seem, it is absolutely true!  For most people, once you make a million dollars, it will not matter how much more you save.  This is possible due to the power of compounding which Einstein referred to as one of the most powerful concepts in the universe.

The key then is for you to make that first million as soon as possible.  In order to do that you may have to make many sacrifices early in life, such as delay gratification, increase you savings rate, and take some additional risks with your investments.  For example, when you are young you may want to allocate a higher percentage of you assets to stock investments in order to achieve as high a rate of return as possible.  The more you save, and the higher your return on those savings, the sooner you will get to the magic one million dollars.

For more ideas on how to become a millionaire, be sure to check out the articles One Million Dollar Generators, Becoming a Millionaire with Agloco and How to Become a Millionaire.  If you are curious to know how many people in the world have already reached the magic one million dollars mark and are now enjoying their accumulated wealth, make sure to read How Many Millionaires Are There in the World?