How to become a millionaire on a $70,000 salary

Want to become a millionaire? Albert Einstein has some helpful advice.

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I think it's definitely possible for someone on a salary of $70,000 to reach millionaire status, it's not just for people with large incomes or generational wealth.

Albert Einstein, who was one of the world's greatest scientists, once supposedly said:

Compound interest is the most powerful force in the universe. Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't pays it.

There are two important things to keep in mind for a normal Aussie worker to become a millionaire in less than 30 years. That's not a guarantee of course, but I'll show how compounding gives us a great chance of making that happen.


Australia has one of the most helpful retirement saving systems. Employees are meant to receive mandatory superannuation contributions, and it's possible to make non-mandatory contributions as well. The contributions are taxed at a lower rate and earnings within superannuation also have a low tax rate.

There are supportive policies to help grow our nest egg, but ideally the superannuation fund has low fees. Higher fees can harm the superannuation balance over time like ants at a picnic.

I think superannuation can do a lot of the work to become a millionaire.

I'll do a simple calculation to show what a future superannuation balance could be. I'm not going to adjust the salary for inflation and I will use the current superannuation guarantee rate of 11% (less the 15% tax) of around $6,550. This is just a rough example, not an extensive calculation.

Shares have returned an average of 10% over the ultra-long-term. So, let's assume an average return of 8% over three decades – the superannuation balance could theoretically become worth $742,000. Almost three-quarters of the way to becoming a millionaire!

Remember, I haven't adjusted for earnings inflation with this calculation.

Extra investing

Australia has a high cost of living, particularly after the last few years of inflation.

I'm not going to suggest that someone on a $70,000 salary would be able to invest lots of money every year while paying the bills and having a roof over your head – a household can cost a lot.

However, to reach $1 million we need to find that extra $260,000 of wealth.

It could be a good strategy to focus most, or even all, of the extra savings from the after-tax salary into buying a home and then paying off the debt. Hopefully the property would rise in value.

Some people may like to focus some of the saved money towards investing in ASX shares outside of superannuation (or add more money into superannuation).

Using the same timeframe of 30 years and 8% per year returns for the share market, that person would need to invest $2,300 per year, or save $192 per month, to create that extra $260,000 of wealth.

Foolish takeaway

I'll point out that we can reach millionaire status faster than 30 years if we earn more than $70,000 per year, add more than $6,550 annually into super, earn better returns than 8% per annum and/or invest more than $2,300 per year into additional investments.

What ASX shares would be good to invest in? I think a great place to start is exchange-traded (ETFs) that can provide access to quality global shares with growth characteristics and low fees such as Vanguard MSCI Index International Shares ETF (ASX: VGS) and VanEck Morningstar Wide Moat ETF (ASX: MOAT).

I believe there are more exciting individual ASX shares that could make even better returns than 8% a year.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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