Monevator: The UK's leading website for private investors

How long to earn a million pounds?

Updated by The Accumulator on August 25, 2026

The old quip “Beer money, champagne taste” can be levelled at several acquaintances of mine – not least a good friend who lives in fine style for the present, but reacts like Dracula to sunlight when he hears the word ‘pension’.

Jousting over our contrasting lifestyles – “You can’t take it with you!” comes his retort – reminds me of our different visions of what we can do with our money.

After all, we will see a good deal of the stuff over our working lives. Research from the Prudential in 2014 reckoned that the average Brit would have earned a million pounds by age 46. ¹

That made for a great headline back in the day. But in truth a million wasn’t what it used to be even then. And it certainly isn’t now, after several years of especially uppity inflation.

For what it’s worth, Prudential calculated it’d take a man (I’m one of those) 28 years to notch up his millionth pound earned (assuming average wages for his age, starting at 18).

But after those 28 years, a million would only be worth around £492,000 ², as inflation got to work like woodworm on Pinocchio.

Worse, while a million pounds still sounds like – and is – a lot of money, it’s worth a lot less than it was in 2014.

You’d now need £1,428,000 to live it up like a millionaire back when Prudential ran the numbers.

Remember: inflation is the first reason why we invest.

A million through your fingers

There’s more bad news for anyone aiming to barge into the seven-figure club.

Obviously, you’ll have to pay bills along the way. This will consume much of your million pound earnings.

Food, water, a roof over your head – even the most extreme frugalists can’t avoid spending a few pennies over the course of nearly three decades.

Then there are taxes. It won’t have escaped your notice that income tax thresholds and most personal allowances have been frozen for – technically-speaking – ‘yonks’.

Chuck in a cost-of-living crisis, and it’s tougher for us to pile up our hard-earned loot than it was for would-be millionaires a decade ago.

Time to put that Ferrari catalogue back on the shelf?

How to earn a million pounds on today’s wages

Everything has gone up in price, and the value of the pound ~~in your pocket~~ on your banking app screen has gone down.

But the silver lining is that wages have risen, too.

Well, a bit:

In 2014, the UK median wage for full-time employees was £27,000 a year.
As of the latest numbers, that figure is £39,039.

Here’s the direction of travel in pretty graphical form:

Source: Sage / ONS

There are many ways to slice-and-dice earnings data. We’ll stick to full-time employees, as working a 9-to-5 for five days a week seems like the least one can do in the pursuit of millionaire status.

On a gross income basis, it would take an employee earning £39,039 exactly 25.6 years to pass through the £1m in lifetime earnings mark.

But of course there are taxes. Very generally we can assume annually:

Income Tax (at 20%): £5,294 (after the £12,570 personal allowance)
National Insurance (8%): £2,118
Annual take-home pay: £31,628 per year

On this basis it would take 31.6 years of continuous work to see £1,000,000 in take-home earnings.

Just three decades, then, on average wages, to become a millionaire. Assuming someone is paying for all your living costs so you can save every penny.

Ahem.

But, but, but…

I hear you! What about high earners? How much faster if you stashed your spare cash in a pension? What if you’d invested the lot in nVidia – would it even have taken a decade?

Clearly there are a gazillion permutations in reality. We’re just spitballing.

I will look at savings in a moment, though. (Think of it as the cavalry coming over the hill!)

The best way to earn a million pounds

Leaving out those who enjoy a leg-up from their parents, a lot of people who get very rich do it by starting a business, or otherwise operating outside the mainstream.

However as we’ve seen above, millionaire status and wage money are not incompatible these days. Albeit that’s because a million pounds is worth so much less than when everyone was writing songs about it.

Accountancy software firm Sage compiled a handy list of the highest-paying industries for all you financially-motivated wage slaves:

Source: Sage

Before you rush to Heathrow to ask about a job in the control tower, I’d take this list with a pinch of salt. It’s suspiciously short of bankers and others in finance.

If you really want to make money, go where the money is!

What does a million pounds buy these days?

The big question is what could I do with a million pounds if I had it now?

There are plenty of answers to that, but essentially I’d like to live it up, draw an income, and never work again please.

The standard rule of thumb for living off your assets in retirement is that you can withdraw 4% a year without going bust before your clock runs out.

On this basis, a million pounds equates to a £40,000 annual income:

£1,000,000 x 4% = £40,000

However many people around these parts want to retire early. And questions persist about how sustainable 4% will be going forward, given it was originally based on US investors and their dream team returns from the US stock market.

For today, let’s plump for a more cautious 3% to keep us out of harm’s way:

Our million pounds now delivers an income of £30,000 a year.

So if you can’t live on less than £30,000 a year, you’re going to need to be a millionaire by the time you retire. ³

A real millionaire. ⁴

How to save a million

We have our roadmap. All we need now is the saving ethic of a Swedish tramp, an eye on inflation, the magic of compound interest, and a fair wind for a stock-heavy portfolio.

Well I say that, but while the average Brit may see a million pounds slip through their fingers long before they’re 50, it’s going to be a b’stard for most to become millionaires.

The key factors are:

How much you save

How long you save

The growth rate you achieve

If you’ve got nothing in the bank now and we assume a growth rate of 5.5% ⁵ for your portfolio, then you’d need to save around £28,000 per year for 20 years to hit the magic million.

You can use Dinky Town’s investment return calculator to run your own numbers. Or check out Monevator’s millionaire calculator for a quick estimate.

The snag, again, is inflation.

At 2.5% a year, inflation will wear down that million to around £600,000 in today’s money after two decades. On that you could draw an equivalent income of £18,000 per year, at a 3% withdrawal rate.

So just how much do we need to put away to earn a ‘real’ million, assuming annual growth conditions of 5.5% nominal return and 2.5% inflation?

20 years to save a million

To earn the equivalent of a million pounds in today’s money, we need to invest nearly £46,000 a year for 20 years.

By that point, we’ve amassed around £1,640,000 in nominal terms. That’s just over £1 million in real terms.

Impossible you say? It would have been for me.

Let’s take a more leisurely 30-year route to Millionaire City.

30 years to save a million

Annual investments of just over £13,000 a year would balloon into a million after 30 years, given the same growth and inflation assumptions as above.

But, tragically, a cool million in our hypothetical 2056 will only be worth a very uncool £468,000 in today’s money.

You’ll need over £2m to have the same spending power as a millionaire does now, which means you’d need to invest nearly £28,000 a year to hit a real million after 30 years.

Hmm, let’s be more optimistic. Thirty years is a long time. Who knows what might happen?

What if growth was a not unreasonable 7% nominal for a 60/40 portfolio of equities, bonds, and other bits over that time?

Well, you’d still need to find almost £22,000 a year to achieve the £2m target that would make you the equivalent of a millionaire in today’s money.

My Ferrari catalogue is burning on the fire because I can’t afford central heating.

A country estate is something I’d hate

Clearly millionaire status will be beyond the reach of the average Brit for a while yet, barring a dose of Weimar inflation.

UBS estimates that just one in 29 or so Britons are US dollar millionaires – and the number would be lower in pound sterling terms.

On the other hand, the same estimate was one in 65 back in 2014, when I first wrote about this topic.

Eventually inflation will make millionaires of us all!

Pension pots of gold

The truth is even a comfortable retirement status is a steep climb for many of our fellow citizens. You’ll need a pot into six figures, as a minimum.

Going on to hit seven figures in a hurry – unless you’re already rolling in it – is a tough ask. But it can be done.

Indeed a seven-figure pension pot is arguably becoming a necessity for the typical higher-earning Monevator reader, given the latest estimates on retirement spending.

Who wants to be a millionaire, eh? Perhaps I’ll re-read The Investor’s tips on living like a billionaire in the meantime.

Take it steady,

The Accumulator

Note: We’ve updated this article with 2026 salaries and other details. Comments below may refer to the original article. Or they may be sour grapes from those still chasing that elusive seventh digit!

Notwithstanding a raft of exciting caveats, like losing an arm and a leg to taxes.[↩]
Assuming a steady rate of 2.5% p.a.[↩]
Not accounting for taxes or the state pension.[↩]
In other words, you’ll need a lot more due to inflation.[↩]
Nominal return after 0.5% investment costs.[↩]

{ 72 comments }

Weekend reading: Vanguard goes global for 0.07%

by The Investor on August 22, 2026

What caught my eye this week.

Many things have got worse over the past decade. But thankfully, low-cost investing isn’t one of them.

Weekend Reading – featuring the week’s best money and investing articles from around the web – can be read by any logged-in Monevator member. Alternatively please subscribe to our free email newsletter to get future editions direct to your inbox.

{ 6 comments }

Practical FX hedging options for retail UK investors [Members]

For MOGULS by The Investor on August 20, 2026

Last time, Monevator guest contributor Ho Simpson explained what really happens when you currency hedge something in your portfolio – whilst simultaneously hammering our finance dictionary like an online Scrabble player who has bet their house on finding a 1,500-point word. This time he looks at the practical ramifications and tells us what he’s doing in his own portfolio and why, before concluding with an FX hedging jargon buster that should make Billions more intelligible if you ever commit to a rewatch.

The funny thing about passive investing is that we are all so-called macro tourists. Both the hedged and the unhedged exposures are macro trades. And many of us are running these trades without realising that’s what we’re doing.

This article can be read by selected Monevator members. Please see our membership plans and consider joining! Already a member? Sign in here.

{ 1 comment }

How to buy and sell index tracker funds

Updated by The Investor on August 18, 2026

Previously we’ve run through how to open an online broker account and how to buy and sell ETFs.

Today we’re going to look at purchasing an index tracker fund.

Next stop, the world – muhaha!

(Oops, did I say that out loud? I meant to write: ‘Next step, a globally diversified passive portfolio’…)

What is an index tracker fund?

An index tracker fund is typically an Open Ended Investment Company (OEIC).

In normal-person speak, this means a tracker fund is set-up as a company that you can buy and sell shares of.

Index trackers are ‘open-ended’ because the number of shares in the company will rise and fall when investors buy or sell them from the manager of the fund. ¹

Some tracker funds are still set up as Unit Trusts. These are structured as a trust rather than a company, and investors buy and sell units in the trust. Like OEICs these are also ‘open-ended’.

From an everyday investor’s point of view, the two flavours mostly amount to the same thing.

We’ll focus on OEICs, which we’ll refer to simply as index funds from here.

Pricing

Before buying anything, it’s important you know how the market works.

Index funds are priced by a set formula based on the value of their assets.

Unlike ETFs or shares, a single-priced index fund has one published price for buyers and sellers. The price is calculated at a set time – called the valuation point – which for most funds is once each working day.

To complete your trade on a given day, you must do so before a cut-off time:

If you place an order before the fund’s cut-off time, you’ll normally receive the price calculated at that valuation point.
If you place your order after the cut-off, then your trade will go through at the next valuation point.

Note this means you might mistakenly think you’re invested before your money has actually gone into your chosen fund. For example, you could put in a buy order on Tuesday afternoon. But it could be executed, say, at midday on Wednesday.

Normally being out of the market for a few hours doesn’t matter much. But if markets are making huge moves up or down, it might!

You can find an index fund’s valuation point in its documentation, or on your investment platform’s research page under ‘fund facts’ or ‘dealing deadlines’.

I’ll trade yer…

Let’s say you know what fund you want to own. For instance, you want to put £1,000 into the Fidelity Index World (Acc) fund. (Here is its webpage).

You’re ready to put your money to work.

First you need to locate the fund you want to buy into. To find a fund, search for the fund’s name or identifier – such as its ISIN, ticker, or platform fund code – on your platform.

Be persistent! Broker search tools can be shonky. A fund name can often be the easiest way to find a fund, rather than trying to hit on the required code. You might even have to resort to a Google search of your platform to find the fund page on its website, and then go from there. In all cases, triple-check the details to make certain you’ve got the fund you want.

Deal with it

Here’s that Fidelity World Index Fund located at Hargreaves Lansdown:

You can see the Buy and Sell prices are the same. That’s because Fidelity Index World is a single-priced fund ². More on that below.

Note that this quoted price is the last traded price – not the price we’ll pay.

As we saw above, an index fund is generally valued once a day, at its valuation point. Hence you’ll only know the exact price you paid when your trade completes.

Having logged into the platform and clicked through to Invest Now, we see this screen:

Notice we’re only confirming the total order value – here it’s £1,000 – and no price. Again, we won’t know the exact price we paid until the deal is done.

Because OEICs have a single published price, there isn’t a conventional bid-ask spread in the way there is with an ETF. The transaction costs are embedded in the fund’s pricing, rather than through a spread. ³

You’ll also see that Hargreaves Lansdown will charge us £1.95 to do the deal.

Who pays for all the underlying buying and selling?

Here’s some slightly geeky details.

When you buy or sell units in, say, an equity index fund, your fund manager may have to buy or sell the underlying company shares on your behalf. These transactions cost money – racked up by things like dealing spreads, commissions, and the market impact of large trades. ⁴

Now, if transaction costs were simply absorbed by the fund, then existing investors could end up paying for the trading activity of other investors.

That’s called dilution, it’s not really cricket, and so fund managers – and regulators – have devised ways to make sure the people who create the costs actually pay them.

For example, a fund might apply an explicit dilution levy.

Or, commonly with a single-priced fund, it can use swing pricing – also known as a dilution adjustment – to nudge the fund’s published price up or down to reflect the estimated costs of dealing in the underlying investments.

The point is that while an OEIC may show one price rather than an ETF-style bid-offer spread, that doesn’t mean buying and selling is costless. The costs of trading the underlying investments must still be paid somewhere.

The swing pricing mechanism is designed to protect long-term investors from subsidising other people’s trading. The FCA’s rules require any dilution adjustment or levy to be operated fairly and solely to reduce dilution – which is nice.

(Incidentally, if you Googled ‘swing pricing’ to read about the cover charges when throwing your keys into a bowl at a certain sort of party in Surbiton, well, each to their own.)

What will the trade cost you?

Many good brokers don’t charge a dealing fee for trading index funds. Historically, this usually made index funds cheaper to buy than ETFs, where dealing fees were levied.

However with today’s zero-commission platforms, ETFs can also be bought without an explicit dealing charge.

Meanwhile some platforms do charge a fee for index fund dealing, as we saw above.

Other investment costs will usually apply either way, so scrutinise fee structures before you pick your platform. Even trivial charges add up over time. Find what’s best for you.

Assuming you’re not getting badly stung some other way – be particularly wary of annual percentage-based charges on large investment pots – then paying no trading fees is a nice benefit, especially when you’re starting out.

Have a look at the Monevator broker comparison table to compare charges.

Doing the deed

Continuing our example, we click along to the final confirmation screen.

Pressing ‘Place a deal now’ will do the deed and commit your cash:

Then it’s just a matter of sitting back and waiting for our order to be fulfilled. The buying bit on our side is done.

As with our ETF purchase in the previous article, we’ll have to wait a while for the trade to settle, but in practice you’ve committed your investment into the fund.

Your broker should supply you with a contract note for your records.

That’s all folks

Buying and selling index funds can feel easier than trading ETFs, if only because there’s not the pressure of a countdown and you don’t need to worry about spreads.

True, you do have to wait to know the exact price you paid with index funds, unlike ETFs.

But for long-term passive investors putting money into broad index funds, that’s no big disadvantage.

Price fluctuations on a day-to-day basis are essentially random. We’re growing our investments for decades.

Inspired? If you’re after ideas about what index tracker funds to buy then check out The Accumulator’s overview of low-cost index trackers. Note that comments below might refer to an older version of this article.

In contrast, an investment trust is ‘closed-ended’. It has a fixed number of shares that you trade on a stock exchange.[↩]
i.e. There’s no bid/offer spread.[↩]
Some Unit Trusts do still have two prices, like ETFs, but most have switched to single pricing.[↩]
That one is more of an issue for the likes of Warren Buffet than you or me![↩]

{ 16 comments }