How 20-Somethings Can Become Millionaires for Just $225 a Month

A report from Charles Schwab (NYSE:SCHW) last week indicated that only 67% of singles are saving for retirement right now, versus about 85% for married couples (across all age groups). Separately, a depressing report from PNC Financial Services (NYSE:PNC) earlier this month reported that a mere 18% of 20- to 29-year-olds �whose adult lives began amid the 2008 Great Recession� believe they will retire comfortably.

In short, if you�re single and you�re young, you probably aren�t even thinking about retirement. And if you are, you�re so pessimistic about it that you probably don�t bother to invest.

If this sounds like someone you know (or are related to), then keep in mind that a little goes a long way in retirement planning. Consider these three ways to retire with $1 million:

• You can invest $2,700 per year for 60 years at a 5% rate of return annually.
• You can invest $14,500 per year for 30 years at a 5% rate of return annually.
• You can invest $44,500 per year for 15 years at a 5% rate of return annually.

Not only is the first scenario much more realistic and digestible for a family budget at a mere $225 per month, but the actual money you�ve paid in is dramatically less. In the first scenario, the total capital paid into that $1 million nest egg is a mere $162,000. For the second it’s $435,000, and for the third it�s $667,500.

In short, compound interest from early investing can not only make you money — but save you money paid into your 401k or IRA, too. It�s a win-win.

So what are a few investments for today�s young bachelors and bachelorettes to mull for that monthly investment of $225? Here are three to consider:

Vanguard Target Retirement 2050 Fund�(VFIFX)

So-called �target-date� retirement funds are great options for young investors because the risk level of your investments is automatically adjusted for you over time — without the need for younger investors to move money around on their own or perform exhaustive research. The Vanguard Target Retirement 2050 Fund�(MUTF:VFIFX) is perfect for 20-somethings looking 40 years or more until retirement because it is aggressive at first and gradually becomes conservative as the retirement �target� of 2050 approaches.

The big downside, of course, is that if you plan on retiring early or late, this cookie-cutter approach might not suit you. You have to be comfortable with the �target� of this fund when you buy in, since that ultimate goal drives all the decisions.

Also, the VFIFX mutual fund is a �fund of funds,� meaning it actually is comprised of other mutual funds and not individual stocks or bonds. There is a risk of redundancy this way — or a �too many cooks in the kitchen� approach — because there are many managers for these disparate investments. Then again, if all those folks are doing a great job, it might be in your best interest to share in the success of a few different strategies.

The fund has a minimum buy-in of $1,000, which is the lowest in the business. Read more about Vanguard�s fund here.

Schwab S&P 500 Index Fund (SWPPX)

If you are planning decades ahead, it�s probably because you believe in the wealth-building power of the stock market. That is, that in 40 or 50 years from now there will be a significantly higher value for most stocks — and that picking individual winners is less important than just riding the rising tide.

But which so-called �index� fund should you buy? Fidelity has a number of great broad-market funds with low expenses, for example — but a $10,000 minimum investment is required. Not exactly accessible to 20-somethings.

That�s why Charles Schwab has a real winner with its Schwab S&P 500 Index Fund (MUTF:SWPPX). The minimum buy-in is $100 for your initial purchase. And with an expense ratio of a mere 0.09%, it�s not like your funds will be eroded by costly management fees, either.

Tracking the market is maligned by some as a lowbrow way of investing. But in 40 years the S&P is up 1,110% — meaning that $100 buy-in would be $1,210. That�s pretty powerful. Imagine if you continued to invest across your early years, too, with $100 here and $100 there to supplement the fund.

Fidelity Small Cap Discovery Fund (FSCRX)

If you want to get a little more pop in your retirement fund but don�t mind taking on a bit more risk or paying a bit more in fees, the Fidelity Small Cap Discovery Fund (MUTF:FSCRX) is a great choice.

This investment seeks out the top small companies that have big-time potential. Unlike a big fund that contains S&P 500 components, the companies in the Fidelity Small Cap Discovery Fund likely are stocks you haven�t heard of — yet!

The profit potential of this fund is obvious. Think about the money you�d be sitting on if you could have invested in Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT) way back when they were small-time companies. Of course, the reverse also is true — that some of these small companies will struggle along and eventually fail.

The expenses are bigger on this Fidelity fund because the manager�s research and active role is much more important than an index fund that just moves in lockstep with the market. But manager Chuck Myers has been running the fund for more than five years — since March 2006 — and has a track record to back up his leadership. With an annualized return of more than 7% for that period while the Dow Jones is largely flat, you can see the power of this strategy.

The downside is that when the Small Cap Discovery Fund falls short, it likely will hurt. And a $2,500 buy-in also makes it out of reach for many small-time investors just out of college. But if you can scrape together the cash and can handle the volatile ride, FSCRX could be a great mutual fund for early investors during the next few decades.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks or funds named here. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.