What is the safest and best way to be a millionaire by retirement?

Ok, I'm 23 years old. I want to save around $500 a month till 65. What is the safest way and best way to be a millionaire or more? I want to pull out my money whenever I want but knowing me, I'll only do that like once every 5-6 years.

Public Comments

1. I have four words for you: 401k. Many employers offer 401k plans, where you can contribute pre-tax part of your salary. Many employers also make matching contributions to your account (free money - matched to up-to certain percentage - depends on employer). The benefit of 401k is that, you can invest from relatively low risk Money Market to high risk index accounts. This is usually almost effortless and as easy as telling your employer the percentages of your contributions you want to put in any of those accounts. Many plans can be managed online so tha you can move around your money between funds. 401k has a huge tax benefits. You are actually contributing your pre-tax income, so your taxes will be lower for the year you are contributing (taxable income is lower). With 401k you only pay income taxes when you withdraw (penalty free after your retirement age). If you retire in a state that doesn't require paying income taxes, you pay nothing! With 401k all your growth is automatically reinvested into the account, so that the compounding power is working for you almost daily! Since you are "only* 23 you may want to start with allocating the money to riskier indexes (historically most growth), and as you are approaching the retirement age, start moving to lower risk , lower gain accounts. Another benefit is that you can withdraw 401k in certain circumstances before retirement without penalty (hardship, illness, I believe first home downpayment, education, etc.) though not recommended.. You can take money from your 401k as a loan and pay back slowly (while paying YOURSELF interest!). There are limits to how much you can contribute but youu can also make catch-ups, roll-over to another account (if you change your job for instance). IRA accounts can be icing on the cake at the end of year, but II would max-out 401k first as much as I can afford (remember free money from matching contributions). Read more at: http://en.wikipedia.org/wiki/401(k) Good luck P.S. Although risky, I consistently make about 30-35% year gain on my investments in riskier indexes. When market slips, those risky ones fall the most. When it recovers the risky indexes gain the most as well. Although historically, and in the long run the rains are great, you should consider these consequences as you may lose lot of money if market goes to south.
2. You should save as much as possible in tax-deferred accounts. Step 1 is to get your company match with your 401k. Step 2 is open a ROTH IRA. If you think you will want additional schooling open a 529. If you don't go to school you can use it for any children or I think even nieces or nephews. While it will hurt your returns, the ROTH IRA will let you withdraw your contributions for any reason. You may only touch the earnings for qualified expenses. The other key is to increase your savings when you get raises and promotions or your expenses decrease. If you do not increase you monthly savings you will end up with only about 250K(assuming an 8% return).
3. You need to save at least $1,000.00 each month.