How complicated is it to make money? Not very complicated at all, according to Suze Orman. Orman believes there is a very simple recipe for financial success and the steps she suggests to achieve it are ones that anyone can take.

So, how can you make a lot of money? Here’s Orman’s advice from a recent YouTube video.

This is all you need to do to make money, according to Suze Orman

According to Orman, you will end up rich if you take these two simple steps:

1. Open up a retirement account like an IRA or sign up for your 401(k) at work
2. Put your money into the retirement account and invest it in an S&P 500 index fund

Retirement accounts like 401(k) and IRA accounts offer tax breaks if you invest in them. If you choose a traditional 401(k) or IRA, you don’t pay any income tax on the money that you are putting into these accounts. This means each contribution effectively costs you less due to the tax savings.

If you are in the 22% tax bracket and you invest $1,000 that you don’t have to pay tax on, you end up cutting your IRS bill by $220.  Your take-home income goes down by just $780 for each $1,000 you contribute because of that tax savings. That’s one reason these accounts are so powerful in helping you grow wealthy. If you have a 401(k) match from your company, those funds also help your wealth grow as your employer gives you money when you invest.

Once you’ve put your money into your 401(k) or IRA, an S&P index fund is a great place to invest it. The S&P 500 is a financial index that is widely viewed as a barometer of the stock market as a whole. If you buy an S&P 500 index fund, you’ll pay very low fees and will gain ownership of around 500 large U.S. companies so you’ll be instantly diversified.

Since the S&P 500 has produced 10% average annual returns for many years, you can also feel pretty confident about the returns you’ll earn over time. That’s not to say there won’t be some down times, but if you invest for the long-term, you stand a great chance of wealth building. 

How rich can you get following Orman’s approach?

So, exactly how wealthy can you become if you follow Orman’s suggestions and put money into a retirement plan that you invest in the S&P 500? It depends on how much you can invest, as well as your investing timeline. However, if you have a reasonable amount to invest or a reasonable period to leave your money to grow, you can get pretty rich. 

Say, for example, you invest $300 a month over 35 years and earn 10% average annual returns. At the end of that 35 years, you’d have around $975K — so you’d have amassed almost $1 million by making small investments over the years And, of course, the more you invest and the longer you can leave your money to grow, the wealthier you can become.

Fortunately, it’s pretty easy to get started following Orman’s advice. Just sign up for your 401(k) or open your IRA with any broker today and get working on building the wealth you deserve.

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