As a financial advisor with extensive experience in wealth management and retirement planning, I'm often asked about the steps one can take to accumulate wealth over time. The question of saving a certain amount each day to become a millionaire by the age of 65 is a classic one, and it's a great way to demonstrate the power of compound interest and disciplined saving.

To begin with, the concept of saving a fixed amount each day to reach a million dollars by retirement is based on the principle of compound interest. This principle states that the interest you earn on your initial investment also earns interest over time. The more time you give your money to grow, the more it will accumulate due to the power of compounding.

Let's break down the calculation. If you want to become a millionaire by age 65 and you start saving at, say, age 25, you have 40 years to save. Assuming a conservative annual return on investment of 5%, which is a reasonable assumption for a well-diversified portfolio, you can use the future value of an annuity formula to calculate the amount you need to save each day.

The formula for the future value of an annuity is:
\[ FV = P \times \left( \frac{(1 + r)^n - 1}{r} \right) \]
Where:
- \( FV \) is the future value of the investment.
- \( P \) is the periodic payment (in this case, the amount saved each day).
- \( r \) is the annual interest rate (expressed as a decimal).
- \( n \) is the number of periods (in this case, the number of days in 40 years).

Rearranging the formula to solve for \( P \), we get:
\[ P = \frac{FV}{((1 + r)^n - 1) / r} \]

Plugging in the values:
- \( FV = 1,000,000 \) (the goal of becoming a millionaire).
- \( r = 0.05 \) (5% annual return).
- \( n = 365 \times 40 \) (number of days in 40 years).

This calculation will give you the amount you need to save each day. It's important to note that this calculation assumes that you will save the same amount every day without fail and that the investment will earn a consistent return of 5% annually.

However, the real world is a bit more complex. There may be fluctuations in the market that could affect the return on your investment, and you may not be able to save the exact same amount every day. But the key takeaway is that starting early and saving consistently, even if it's a small amount, can lead to significant wealth accumulation over time.

In conclusion, the journey to becoming a millionaire by age 65 through daily savings is not only achievable but also emphasizes the importance of starting early, saving consistently, and the power of compound interest. It's a testament to the idea that small, disciplined actions can lead to large outcomes over time.

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Picture: (istock / SLphotography) To illustrate the simplicity of building wealth over time, Bach created a chart (which we re-created below) detailing how much money you need to set aside each day, month, or year in order to have $1 million saved by the time you're 65.May 7, 2017read more >>