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A recent Charles Schwab survey of modern wealth found that Americans now believe they need to have an average net worth of $2.2 million to be considered “wealthy”.
That’s up from the magic number of $1.9 million in 2021, but still below what net worth was considered rich in 2018, 2019 and 2020, according to results from the investigation. Clearly, as economic situations have changed, Americans’ perceptions of wealth and money have also changed.
While some people may not want to make millions of dollars – and that’s completely normal – others may find that the closer they get to that number, the more possible it becomes for them to afford new opportunities and eventually achieve their lifestyle goals.
However, beyond just thinking about net worth, it’s important to consider how much savings you need to pay for 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 on $50,000 a year will need to save $1,250,000, using the 4% rule, to see them through the rest of their lives out of work. (Naturally, different variables like market volatility and cash reserve can affect this savings goal.)
Select wanted to see what it would take to reach that $2.2 million figure that Americans consider “wealthy”, so we calculated how much you’d have to invest monthly over 10, 20, 30, 40 and 50 years to get there .
Keep in mind that your net worth is defined as the total assets you own (money you have in bank accounts, investments, retirement accounts, etc., plus the value of any real estate ) minus the total liabilities you owe (debt, including student loans, credit card, your mortgage, etc.). Once you reach that $2.2 million threshold, your true net worth will depend more on your debts.
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Here’s how much to invest to be considered “rich”
To determine how much you would need to invest to get $2.2 million, we used this investment calculator.
For this example, we assume you start with $0 and earn a moderate average annual return of 7% after adjusting for inflation (the average stock market return is historically 10% per year before inflation). Using these numbers, here’s how much money you would need to invest each month to reach a portfolio value of $2.2 million and be considered “wealthy.”
- Invest $12,861.61 per month for 10 years to reach $2.2 million
- Invest $4,334.66 per month for 20 years to reach $2.2 million
- Invest $1,881.22 per month for 30 years to reach $2.2 million
- Invest $890.13 per month for 40 years to reach $2.2 million
- Invest $437.12 per month for 50 years to reach $2.2 million
As with any other investment calculation, here we see how the sooner you start investing – and therefore the more time you give your investments to grow – the less money you have to commit each month. Someone with 50 years to invest can contribute $12,424.49 less each month than someone with only 10 years to invest.
How to start building wealth now
The calculations above can seem like good or bad news, depending on how much time you have to invest your money. While we wanted to see what it would take to reach the $2.2 million benchmark net worth (again, not including debts), it’s important to know that anyone can build wealth no matter when they start – and they don’t have to be rich to do it.
Many investing apps allow users to dip their toes into the market with fractional stocks – a portion of a stock’s action based on the amount of money they wish to invest rather than the number of shares they want to buy – costing as little as $1. This makes it much more affordable to start investing your money in the stock market and earning a return on it.
Robinhood is a solid option for those looking to invest their money in fractional shares, while apps such as Acorns cater to beginners by allowing users to invest spare change left over from daily purchases such as coffee, food and clothing. Obviously, investing just your spare change probably won’t provide a substantial amount of investment money each month, but it’s a good way to start. Additionally, you can plan to make regular investment dues and have the reserve currency as additional investment money working in the background.
Robin Hood
On Robinhood’s secure site
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Deposit and minimum balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account or start investing
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Fees may vary depending on the investment vehicle selected. Trade without commission; regulatory transaction fees and trading activity fees may apply
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Robinhood will add 1 free share of stock to your brokerage account when you link your bank account and meet the terms of your promotion (you can keep the stock or sell it after 2 trading days)
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Stocks, ETFs, options trading, fractional shares, IPOs, plus some cryptocurrencies through Robinhood Crypto (depending on where you live)
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tassels
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Deposit and minimum balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account, $5 minimum to start investing
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Fees may vary depending on the investment vehicle selected. Monthly plans include: Personal ($3 per month) and Family ($5 per month)
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Diversified ETFs including over 7,000 stocks and bonds
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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 like your risk tolerance, time horizon, and overall financial goals. The best robo-advisors will also automatically rebalance your portfolio as you get closer to your goal target date. This way, you won’t have to worry about adjusting the allocations yourself.
wealth front
On the Wealthfront secure site
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Deposit and minimum balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
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Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront’s annual management advisory fee is 0.25% of your account balance
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Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
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Offers free financial planning for planning college, retirement and buying a home
Improvement
On Betterment’s secure site
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Deposit and minimum balance requirements may vary depending on the investment vehicle selected. For Betterment Digital Investing, minimum balance of 0 USD; Premium investment requires a minimum balance of $100,000
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Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has an annual fee of 0.40%
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Up to one year of free management service with qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
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Stocks, bonds, ETFs and cash
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Betterment RetireGuide™ helps users plan for retirement
At the end of the line
It’s interesting to see what it takes to reach the net worth that Americans consider “wealthy,” and the $2.2 million figure provides a solid benchmark against which to measure our future. The key to remember, however, is that building wealth can be accessible to anyone, regardless of your net worth goal.
When starting out, know the timeline you need to invest in, how much risk you can take and how much money you can contribute. These, along with your expected rate of return, are all important factors in how much wealth – or net worth – you can build over your lifetime.
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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.
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