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Who wants to become a millionaire? Why, everyone, of course! Did you know that there are currently 12 million millionaires in the U.S.? That’s quite a lot — and there’s no reason you can’t be one, too.

The question, however, is how do you turn your current savings into those revered millions? Three Motley Fool contributors who are on the millionaire path (or already there) share with you three investing hacks that are helping them on their journeys.

Image source: Getty Images.

Make it automatic

Chuck Saletta: Perhaps the most powerful thing you can do when it comes to getting yourself on the millionaire track is to sign up and start contributing to your 401(k) or similar retirement plan at work. Your 401(k) contributions can be made directly by payroll deduction, which makes them automatic and gets your money working for you without it ever having to pass through your checking account.

By making your investing automatic, you increase the chances that you’ll be able to keep it going, since you’ll be less tempted to spend the money you never see. You might even forget you’re investing at all, even though your new contributions get added to your existing ones and compounding will work its magic on your behalf.

The table below shows how many years it will take to reach that $1 million milestone, based on how much you sock away each month and what rate of return you earn along the way.

Monthly Investment

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns

$1,625

18.2

20.4

23.5

27.9

$1,500

18.9

21.3

24.5

29.3

$1,000

22.4

25.5

29.9

36.7

$500

28.8

33.4

40.1

51.0

$300

33.7

39.4

48.0

62.5

Data source: calculations by author.

That $1,625 monthly investment works out to $19,500 per year, which is the maximum contribution people under age 50 are generally allowed to put in their 401(k) annually. Over the long run, the market has delivered returns somewhere in the neighborhood of that 10% annualized level, but those returns are never guaranteed.

Still, even if you can’t max out your 401(k) and the market doesn’t perform as well in the future as it has in the past, there are plenty of ways of reaching that $1 million mark in the space of a career. As that table shows, it might even be possible if you’re only ever able to sock away around $10 a day ($300 a month) but can keep it up consistently throughout your career. That’s not bad for doing nothing more than the crazy simple, yet powerful, step of making your investing automatic.

Image source: Getty Images.

Be greedy when others are fearful: Buy on dips

Barbara Eisner Bayer: In order to become a millionaire, it helps to follow the advice of billionaire investor Warren Buffett, who famously said, “be greedy only when others are fearful.” And that leads to investing hack No. 2: Add to your winning positions when the market is pulling back or correcting.

If you already hold a stock in your portfolio, I assume you’ve done your research and believe in the future potential of your holdings. Therefore, if the market experiences a general plummeting and nothing has changed fundamentally in the companies you own, it’s the best time to add to your positions.

While that sounds like ridiculously easy advice, it’s not. Because when everyone around you is yelling, “Sell, sell… the sky is falling out of the stock market,” it’s hard to be the contrarian who, instead of caving to mounting fear, becomes an exploiter of opportunity. But that’s the way people become stock market millionaires — by buying low and selling high (or in many cases, never selling at all until you’re living off your savings during retirement). Too many people buy high and sell low, which is the precise prescription for losing money.

In order to have the fortitude to put this millionaire-maker strategy into action, you need to take the following steps to be prepared to jump into action:

  1. Know the value or the growth potential of the stocks you own so you can take advantage of the opportunity when it strikes.
  2. Have enough available cash in your brokerage accounts to be able to buy.
  3. Have the ability to shake off the fear that the market is crashing and may never recover.

Nos. 1 and 2 are totally in your control, but No. 3 is the one you’ll have to wrestle with. Fear can be powerful, and if you don’t have confidence, it can get the best of you.

For instance, you may start asking yourself questions like, should I buy now or wait until the stock drops further? Or, has the stock hit bottom? The answer is that you don’t know when the bottom will occur because it’s impossible to time the market, so if you think the price is good, then it’s probably the time to buy. If you wait too long, you may miss the day the stock turns around and the moment may pass.

Taking advantage of opportunity by buying on dips is one way to become a millionaire. It worked for Warren Buffett… now go forward with courage and let that hack work for you, too.

Image source: Getty Images.

Profiting drop by drop

Eric Volkman: My hack is a classic one: Push some of your shareholder payouts back into the same security that paid them out.

Dividend reinvestment is a classic move because it works. For an investor who doesn’t mind forgoing an immediate payout in return for future gains, this strategy can help put some muscle on a portfolio, and quickly.

This strategy can be hatched in different ways. Many dividend-paying companies and funds run dividend reinvestment plans (DRIPs), which do what they say on the bottle: They use a shareholder’s payouts to buy more stock of that company. Brokerages and other third parties often offer this service, too, and these can be the go-to for investors interested in dividend reinvestment in companies that don’t have proprietary DRIPs.

Investors can set many of these plans on autopilot, having them invest back all or some of each dividend payout.

DRIPs, by the way, are often commission-free, as are quite a few of the programs run by outsiders. These freebies are plentiful, so there’s usually little reason to pay any fees for participating in one.

In fact, you can do it yourself. It’s easy enough for an investor to turn a dividend payment around, using the cash received to purchase new stock in the company doing the paying. Of course, there will be some money left over, but it’s easy enough to keep a record of this “change,” which can be tacked onto the following dividend payout(s) to help buy more shares.

By the way, many DRIPs and third-party programs reinvest into fractional shares, which erases the burden of having to deal with or account for that leftover cash.

One solid reinvestment play is to plow distributions back into a Dividend Aristocrat — one of the relatively small clutch of S&P 500 index stocks that has raised its shareholder distribution at least once every year for a minimum of 25 years running.

Investing in a solid, well-performing Aristocrat that lifts its payout on the regular can give an investor the best of both worlds: a rising stock price combined with steadily increasing dividends over time. 

Good recent candidates for this are Target and Johnson & Johnson, which has developed one of only three coronavirus vaccines authorized for use in the U.S.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.