Every parent dreams of giving their child the best possible financial start in life. With the power of compound interest and consistent investing, making your child a millionaire by age 30 is more achievable than you might think, but it requires starting early and staying committed. Here are ways you can start implementing now to make your child a millionaire by the time they are 30.
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The Magic Numbers
To reach $1 million by age 30, assuming a 7% average annual return (the S&P 500 has delivered approximately 10% annual returns historically according to Federal Reserve Economic Data or roughly 7% after accounting for inflation), you would need to invest approximately $820 per month from birth to age 30. This totals roughly $295,200 in contributions over 30 years, with compound interest doing the heavy lifting to generate the remaining $704,800.
If 7% seems optimistic, here’s how the monthly contribution changes with different return assumptions:
- 6% annual return: $995 per month
- 8% annual return: $670 per month
- 10% annual return: $442 per month
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Smart Investment Vehicles
- Roth IRA: Once your child has earned income (even from odd jobs), maximize Roth IRA contributions. For 2025, the annual contribution limit remains $7,000 according to the IRS. The money grows tax-free and they can withdraw contributions penalty-free if needed.
- 529 Education Savings Plan: While primarily for education expenses, leftover funds can be rolled into a Roth IRA under the SECURE Act 2.0. You can transfer up to $35,000 lifetime per beneficiary to their Roth IRA, making this a flexible wealth-building tool.
- Taxable Investment Account: For amounts exceeding IRA and 529 limits, a regular brokerage account invested in low-cost index funds provides unlimited contribution potential.
Making It Manageable
The $820 monthly target might seem daunting, but consider these strategies:
- Family Contributions: Grandparents, aunts, uncles and family friends can contribute to birthday and holiday gifts. Instead of toys that break, ask for investment contributions.
- Gradual Increases: Start with what you can afford and increase contributions with raises, bonuses or tax refunds.
- Automate Everything: Set up automatic transfers to remove the temptation to skip months.
The Power of Time
Starting at birth gives you the maximum benefit of compound interest. Delay just five year and the required monthly contribution jumps to approximately $1,200. Wait until age 18 and your child would need to invest roughly $2,900 monthly for 12 years, a much steeper climb.
The key is consistency and patience. While $820 monthly represents a significant commitment, it’s an investment in your child’s financial independence that will pay dividends for decades to come.
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This article originally appeared on GOBankingRates.com: How To Make Your Kid a Millionaire by 30
