Class of 2016: How you can become a multimillionaire

Congratulations, class of 2016! Your graduation is quite an accomplishment, and it's a sure sign that you can get things done when you put your mind and heart to it. That perseverance will serve you well in your future — and whether you realize it or not, it could help you become a multimillionaire by the end of your career.

As you start your career, you may not have much experience or a big salary, but what you do have going for you is time. A little bit of money, consistently invested in decent stocks every paycheck throughout your career, can propel you to multimillionaire status. As a young graduate, you have a once-in-a-lifetime chance to get yourself started on the most straightforward path to millions — and you'll get there all the easier if you start right now.

Your straightforward path to $2 million
Because you're young, compound interest can work for you over decades, providing an amazing lifetime return on your investments. Here is how much you need to save every month to wind up with $2 million by age 67, depending on the age you start and the average rate of return you earn along the way:

At age 21: You need to save $173 per month with an annual return of 10%. You need to save $349 with an 8% annual return. You need to save $681 with a 6% annual return and $1,263 with a 4% annual return.

At age 30: You need to save $429 per month with a 10% return; $736 with an 8% return; $1,226 with a 6% return; and $1,971 with a 4% return.

At age 40: You need to save $1,215 per month with a 10% return; $1,752 with an 8% return; $2,480 with a 6% return; and $3,437 with a 4% return.

At age 45: You need to save $2,098 per month with a 10% return; $2,790 with an 8% return; $3,661  with a 6% return; and $4,737 with a 4% return.

Source: Calculations by author.

Three things should immediately pop out at you when you look at those numbers:

First, check out how quickly the monthly amount you have to sock away grows as you get older. That should show you how important it is for you to start saving now, while you're still young enough for compounding to work its magic.

The longer you wait, the more expensive it will be for you to reach that $2 million mark. If you think it's tough to come up with $173 per month now as a recent graduate, imagine trying to come up with nearly $2,100 per month at age 45 just to have a chance of winding up in the same place.

Second, check out how quickly the monthly amount you have to save grows as the rate of return falls. That should show you how important it is for you to invest in stocks for the long-term returns they can provide. While there are no guarantees in investing and stock market returns can be incredibly volatile, over the long run, stocks have returned around 10% annually.

Even if you don't think stocks will return as much in the future as they have in the past, it's a lot easier to save a little bit more now when you're young instead of having to sock away a whole lot more later. As a bonus, if you invest as though you'll really only get 6% or 8% annual returns but stocks do wind up returning closer to 10%, you'll hit multimillionaire status that much sooner.

Third, realize that the stock-focused potential returns for younger investors  are really likely within your reach, even as a new hire. $173 per month is less than $6 per day, and even $447 per month is under $15 per day. If you've been living like a broke college student, then you're already used to making your money stretch. Keep your other costs down as you set up your life as an independent adult, and you can free up the cash to invest to make yourself a multimillionaire.

You don't have to do it on your own
Perhaps best of all, you don't have to come up with all that cash entirely on your own. Your boss and Uncle Sam may very well be willing to chip in to help you along the way.

Here's how Uncle Sam will help: Money you sock away in a qualified retirement account like a 401(k) or an IRA will compound for you tax-deferred. In a traditional style plan, you might even get a tax deduction on your contribution, while in a Roth style plan, you could take your money out completely tax-free in retirement.

And here's how your boss might help: If your boss offers a 401(k) or similar plan, it might come with a match. A match is additional money your boss kicks in above and beyond your contribution, as an incentive for you to participate. Matches vary by company, but a typical match is 50 cents for every $1 you sock away, up to some percentage of your salary.

In addition, you can make contributions to your employer-sponsored plan directly out of your paycheck. You'll quickly find that you don't miss money you never see, but that money still works on your behalf.

Between the tax benefits and possibility of an employer match for contributing to your retirement plan, you just might find you only need to sock away half of the amount out of your own pocket. So yes that means that if you:

• start young enough;
• earn the stock market's historical returns;
• keep at it throughout your entire career; and
• have a decent match on your traditional 401(k) plan...

...then you might be able to wind up a multimillionaire by sacrificing less than $100 a month out of your own pocket.

Want to be a multimillionaire? Start today
The incredible opportunity that you have to become a multimillionaire with such a small investment is available to you only because you're young. Take advantage of it now — preferably starting with your next paycheck — and no matter where you end up in life, you'll be incredibly glad you did. Miss your chance by waiting too long, and it's gone forever. So get started now, while the opportunity is still there for you.

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Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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