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Your 401(k) could make you a millionaire — how one man did it

GOBankingRates Logo By Cameron Huddleston of GOBankingRates | Slide 2 of 11: When Gilbert got his first job out of college as a customer service representative, his employer gave him the option of saving in a 401k. “I started saving with my very first paycheck,” he said. That’s played a key role in his ability to become a 401k millionaire.
Gilbert wasn’t earning much  — just $21,500 a year — so he didn’t contribute big bucks to his 401k during the early years of his career. But even those small contributions helped his balance grow to $1 million thanks to the power of compound interest. “Those early dollars are the most important because they have the most time to compound,” Gilbert said.
Compound interest is interest calculated on the principal (the amount deposited) plus the interest that is earned. For example, you could have $1 million by age 65 if you started investing $188 per month at age 25 and earned 10 percent annually. If you waited until age 35 to start saving, you’d have to invest $507 per month with a 10 percent annual return to have $1 million by age 65. 
“It was the earliest contributions that got me to the millionaire status,” Gilbert said.

Start Saving as Soon as Possible

When Gilbert got his first job out of college as a customer service representative, his employer gave him the option of saving in a 401(k). “I started saving with my very first paycheck,” he said. That’s played a key role in his ability to become a 401k millionaire.

Gilbert wasn’t earning much — just $21,500 a year — so he didn’t contribute big bucks to his 401(k) during the early years of his career. But even those small contributions helped his balance grow to $1 million thanks to the power of compound interest. “Those early dollars are the most important because they have the most time to compound,” Gilbert said.

Compound interest is interest calculated on the principal (the amount deposited) plus the interest that is earned. For example, you could have $1 million by age 65 if you started investing $188 per month at age 25 and earned 10 percent annually. If you waited until age 35 to start saving, you’d have to invest $507 per month with a 10 percent annual return to have $1 million by age 65.

“It was the earliest contributions that got me to the millionaire status,” Gilbert said.

© ©Fritz Gilbert

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