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While the headlines have been dominated by a rollercoaster in the stock market, financial guru Dave Ramsey isn\u2019t going doom-and-gloom.<\/p>\n
In fact, the radio host believes every young American has a shot at becoming a millionaire.<\/p>\n
\u201cIf you\u2019re under 40 years old and you don\u2019t retire a millionaire, that\u2019s no one\u2019s fault but yours,\u201d the 64-year-old posted on X, formerly known as Twitter.<\/p>\n
Here\u2019s a closer look at the math behind his exhortation.<\/p>\n
Despite the economic challenges facing young Americans, Ramsey believes that the average 25-year-old needs to save just a fraction of their annual income to retire at 65 with over $1 million.<\/p>\n
However, his thesis assumes that this 25-year-old invests in \u201cgood growth stock mutual funds.\u201d Diligently investing just $100 a month into such growth funds could create a $1,176,000 nest egg within 40 years, according to Ramsey\u2019s calculations. Choosing the right fund is a big part of this.<\/p>\n
For example, since 2010 the Vanguard S&P 500 ETF (VOO) has delivered a compounded annual growth rate of 14.00%. Meanwhile, the S&P 500 has posted an impressive average annual return of 10.13% since 1957.<\/p>\n
The appeal of these platforms lies in their accessibility. Anyone, regardless of wealth, can participate.<\/p>\n
The four variables for compound growth calculations are time, initial investment, regular investment and growth rate. Of these, the only variable you can somewhat control is regular investment.<\/p>\n
Investing $200 or $300 a month could help you create a nest egg significantly bigger than just $1 million. Ramsey recommends setting the bar even higher at 15% of gross annual income.<\/p>\n
\u201cThe average household income in America today is $79,000. If you invested 15% of that ($11,850 a year), you would retire with around $11.6 million,\u201d he wrote in the same thread on X.<\/p>\n
However, most Americans are saving significantly less than Ramsey\u2019s target. As of May 2025, the average personal savings rate is just 4.5%, according to data by the Bureau of Economic Analysis.<\/p>\n
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Another common financial mistake is keeping your money in low-interest savings accounts. High-yield savings accounts can offer returns up to 10 times higher than those from traditional banks, according to NBC Select and Dynata Banking Behaviors. 82% of those surveyed weren\u2019t using this type of account.<\/p>\n
Read more: Rich, young Americans are ditching the stormy stock market \u2014 here are the alternative assets they’re banking on instead<\/a><\/strong><\/p>\n Once you\u2019ve started to save in earnest, it’s crucial to protect your portfolio against inflation. Investing in real estate can help diversify your holdings and grow your wealth over the long term.<\/p>\n New investing platforms are making it easier than ever to tap into the real estate market.<\/p>\n For accredited investors, Homeshares<\/a> gives you access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.<\/p>\n With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund \u2014 without the headaches of buying, owning or managing property.<\/p>\n With risk-adjusted internal returns ranging from 12% to 18%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties<\/a> across regional markets.<\/p>\n If you\u2019re not an accredited investor, crowdfunding platforms like Arrived allow you to enter the real estate market for as little as $100.<\/p>\n Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals<\/a>, curated and vetted for their appreciation and income potential.<\/p>\n