by Peter Bernard

Created on: November 11, 2008   Last Updated: December 11, 2008

How To Become a millionaire in one year:Strategy Compound interest I remember when I was a young computer consultant. It was great each week I would fly to a foreign country Italy, United States, and even further afield I would at the end of the week get my pay packet. Sometimes it would be $5000 sometimes $7000. I would bank most of it and spend some. Won't be long now before I hit my first million I would say to myself. For some odd reason I would see some of my consultant friends taking out pension policies and putting every penny of their earnings into it while living a spartan lifestyle. How silly I thought to myself until I realized at 40 they were retiring with a hefty lump sum and life style. Some even said that they would get a sum of a cool $1,000,000 when they really retired at 60.Hmm I thought to myself I wonder how it is done.

The richest people in the world all use the power of investing

If you want to become wealthy you can start at any age,it is advisable to start young. Why? well for a start you can allow the amazing magic of compound interest start working for you and your money. Throughout history some of the greatest minds in the world have been amazed at compound interest. Einstein called it the eighth wonder of the world. So how does it work. Lets look at an example of using compound interest to make a cool one million dollars.
A cool $1 million in a year!

If you start early enough here is the master plan! The idea is to invest one lump sum of $26,000 and for that sum to blossom by the power of compounding(Each year the sum increasing by a particular rate of interest with the new lump sum increasing the following year and so on) into a cool $1 million.

It can be seen that the more years you have the more years the lump sum has to grow. Considering standard policies wont offer you anything near this. So here is the exact plan...

For one year pay to the max your 401(k) contributions
Pay to the max your IRA for that same year
Meet the market's historical 10% annual returns

... by the time you hit retirement bingo you are a millionaire

In 41 years of compounding at 10% annually, $20,500 ($15,500 in a 401(k) and $5,000 in an IRA) will turn into $1 million. And you'll never have to contribute a single dime. Of course, inflation between now and then means that $1 million won't buy nearly as much four decades in the future as it does today. It still an amazing feat as far as compounding is concerned.

Here in this example we use time shift technology. Instead

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