Is it possible to aim for a million from minimum wage?

A young Asian woman holding up her index finger

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Could I build a £1m net worth from a minimum wage salary? It wouldn’t be easy, that’s for sure, but I could aim for a million and see how close I could get. Let me crunch the numbers and see what happens.

My plan to get there is to use stocks and shares. I won’t have lots of money to play with, so I will need the best return I can get my hands on. I’d say that comes if I invest in companies. As they make money and grow, my money will grow too. 

How much would I invest? Well, the full-time minimum wage now pays around £1,700 a month. It might not be possible for everyone, but if I could budget and save around £100 of that, I think I could really make that money work for me. 

40 years

Let’s also say, in this scenario, that I start at 26 years old. This is earlier than most investors get started — earlier than I did at least — but the more time the better. And because I’m looking to hit a big goal from a small salary, the 40 years until retirement age gives me a decent chance.

With all that said, can I get to £1m?

£100 a month
0% 6% 12%
1 year £1,200 £1,234 £1,265
5 years £6,000 £6,949 £8,034
10 years £12,000 £16,247 £22.193
20 years £24,000 £45,344 £91,121
30 years £36,000 £97,451 £305,201
40 years £48,000 £191,696 £979,307

Clearly I can’t. But I can get close. As long as I can reach an average 12% return, I’d get very near to a million from my minimum wage salary. Two details stand out to me. 

First, one quirk of investing is how little happens early on. My first £100 makes back only £12 in the first year even at a very generous 12% return rate. That doesn’t seem near enough to make me a millionaire. But by the 39th year, that same £100 has grown to £8,308 and makes back £997 in a year. If that sounds crazy, then put it down to compound interest. 

Compound interest works exponentially, like a virus. When three people have the virus, it doesn’t spread that fast. But when 30,000 have it, it spreads like wildfire. We all tragically got to see how that worked in the pandemic a few years ago. Well, I can watch my money do the same thing with stocks and shares.

Stock returns

This strategy isn’t without risk. A return as high as I’m targeting isn’t simple to achieve and I could make much less, or even lose money. A 6% return would only get me close to £200,000. Also, in 40 years inflation will mean £1m isn’t quite such a big number as it is today.

But let’s say I do make that (almost) million. A second oddity is that most of the million is interest. Even over that long timespan, I’ve only saved £48,000 in total. The rest, around £931,000, comes from the stock market. I think that shows how useful the stocks and shares are. Without them, I would find it tough to build wealth just from minimum wage. 

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