How $100 a month can make you a millionaire

But you can become a millionaire in 40 years by starting with as little as $100 a month and staying focused.

Here's how:

• From ages 25 to 30, you save $100 per month, for a total  of $7,085.08, assuming a rate of  return of 6.8 per cent per year, compounded monthly. For the next five years, from 30 to 35, you save $250 per month. Your total at the end of this period is $27,557.40, again assuming the same rate of  return.

• From ages 35 to 40, you save $500 each month, and your savings will reach $73,716.30. For the next decade, ages 40 to 50, you save $750 per month, and your total at the end of this period is $269,297.19. Then, from ages 50 to 65, you save $1000 per month. That brings your total savings to $1,028,531.61.

This assumes the savings is done inside a tax-free vehicle such as a Registered Retirement Savings Plan (RRSP), or a Tax-Free Savings Account (TFSA) (assuming that you have accumulated enough contribution room), so the profit is sheltered from income tax. It also assumes a rate of return averaged over many years. Over that entire 40-year span, your actual return would be better some years, and worse for others.

A 6.8 per cent rate of return may also seem high, but TD Economics is using this number looking forward as the interest rate for the purposes of this exercise - and to make a point.

I was able to save much more than $100 a month in my mid to late 20s, and I ended up with a good nest egg in my RRSP. I'm  glad I did because it's very difficult to save during the baby and day care years. There's no way I would be able to put away $500 each and every month now, though I hope to return to that kind of aggressive saving when my kids are a bit older.

It's unlikely many people have the discipline to save $1 million this way. But, Barbara Timmins, a spokesperson for the bank, says the million dollar example is meant to inspire young people to start saving and show the power of compounding.

"It's intended to demonstrate how much their money can grow if they start now," she said.