I know what you are thinking.
Iâm either:
A: Trust fund baby (inherited thousands at birth and worked a few ice cream summer jobs to hit 7 figures by 20)
B: Won the lottery and already retired
Iâm proud to say that Iâve never gotten into either. My family are immigrants who not only didnât know a single vowel in the English language when they escaped from communist Europe in the 90âs, they didnât know how money worked in America, what jobs were available, or realize the extreme wealth divide that existed here.
This isnât a piece about secret tactics that will make you a millionaire overnight. Rich quick doesnât exist, especially those who win the lottery since more than 90% go bankrupt within a few months, overestimating how much power they have.
When it comes to generating money, your best friend is time. Time is your biggest asset, along with your mind because you can never buy it back. It is all about how bad you want something and how you use that urge to propel you. Begging or worrying wonât get you anywhere. Actions will. Sure you can generate x amount, but without a detailed analysis, long-term approach, consultation, and multiple lens point of view, you wonât get far.
I always read about how to become a millionaire by 40 or even 30 if you want to show off, but by 20, that requires a heck of a lot of work, preparation, parents and risk involved. It also seems impossible since kids focus on school until 19/20 years old and then finally are free from school a.k.a jail to venture out into the real world, besides quick cash from internships during winter and summer breaks.
There is no need to become a millionaire by 20 or 50. I just have something to look forward to accomplishing at 20.
These are the reasons I became one and why I wanted it:
-From age 10 I started working and knew that for financial independence at any age after college, I wanted more than stability, instead, extreme flexibility which means being a millionaire
-COVID perfect opportunity: got my time back, saved 80% of my income, and drilled down on my goals to achieve them with no distractions at school
-Not beholden to any debt or liable by the bank or govât for anything
-Inflation from housing to college to insurance, everything is getting more expensive. $3 today will be $1m next year.
-As an only child, Iâve always been independent and wanted to reward myself by working hard, setting up a realistic path forward
-Always loved working, never felt like a job, especially when you are young. Perfect time to meet new people and learn what books could never teach you
-Not rely on someone to provide me for my living, be my own boss on my own schedule letting money work for me not against me
-No fascination with money, just want it as lifestyle support and feeling good I earned it myself
-Could possibly retire early but doesnât seem like an option since Iâve never gotten tired of work, and Iâve worked in finance to engineering, and consulting already so donât worry folks, I know what the 70 hr workweeks are like
Depending on your situations and goals, you may have defense reasons for becoming a millionaire by 20, 30 or never. This is not a competition or a reason for you to get jealous about how Iâve gotten to this place. It is to help you strive for your own goals one day.
Now here comes the fun part, how did I actually get to the benchmark of getting on the cusp of becoming a millionaire in a few months to a year from now? It would seem virtually impossible to do it without any parental or governmental support through loans or grants to get up to this stage all on your own.
The 4 ways to do so is to invest, save, prioritize, and plan. There is no secret sauce. Every financial plan requires the same strategies and with the power of compounding, the longevity of time, and the power of being young, the odds are in your favor.
Best Investments That Guarantee Millionare Status
From age 10 or so, when I could comprehend numbers, the meaning of transactions such as buy and sell terms and what currency represented, I invested in several tools that I was fortunate enough to have parents that taught me. They provided me the tools and I earned the money. You couldnât have expected a 10-year-old to know what various funds are out there. All I know is that I wouldnât be talking to you right now if I were that kid who did.
Dividend Growth Investing
What is most appealing about companies that offer dividends is that they are extremely stable and reliable. Investing in companies that you use isnât going to cut it. Sure you use Japanese scented candles but that doesnât mean they are scalable.
Dividend-paying companies have plenty, too much at times cash flow and extra profit that they allocate it to give back to their shareholders. Itâs a nice gift on top of the percentage you get as a shareholder when the stock goes up.
At age 10, I directly poured my first paycheck into a real-life, not fake Barbie investing software. Robinhood didnât exist back then nor does the company I used 2 decades ago exist any longer. Once I started obtaining more side hustles as a lucrative tennis coach being paid $200-$500 per session in some instances especially at elite beach and raquet clubs, my hate relationship began with trading platforms becuase they were entirely based on gambling schemes. Although there wouldâve been virtually no risk for me due to my age and risk tolerance, I knew from the bat(pre-social media) they were too addictive for my style as my parents always taught me long term investing, no Las Vegas garbage is the best. So I resorted to open a Fidelity custodial investment account at 12. Since then Iâve managed this account and been fully in control as a sole owner at 18.
Custodial Credit Card and Investment Account
Along with a custodial investing account, boosting up your credit score and earning credit on a card is always a smart way to go especially if you are looking to purchase property and get a loan. Although Iâve always been opposed to debt, good or bad, my family has always purchased their properties in full cash. Having a mortgage is something not appealing, especially because it can be a sustainable amount of drainage per month and you donât feel free until youâve actually paid it off to the bank or government which could be a few decades later. But anyway, since I did purchase a small studio in the city I rent out, I had to have enough cash to purchase it which did not require a loan but instead a good credit score, especially when you are young!
Plus for many of my finance internships, they checked my credit score to see if I managed my own money properly since as teens, we get a bad wrap, the classic stereotype is cast upon as if all 18-year-olds are careless, addictive TikTokers and 11-hour sleepers. If you know me, Iâm the complete opposite but firms canât trust that so they check my credit score for non-teen proof.
If you canât manage your own money right, they donât want you managing billions in assets for their clients.
Never hurts to have a good credit score. All you need to do is buy things you need, pay it off and repeat. Donât go overboard with anything and your life will be 10x easier.
Custodial Investment Account Return: $6,550 a year at 8% a year for 20 years = $323,730
529C College Savings Plan
The largest expense you will incur as a child is paying for college and is the most common way adults get into debt and stay in it struggling for the rest of their careers attempting to pay it off, sacrificing the other parts of their expenses. Itâs a sad truth that could be fixed by these billion-dollar companies (colleges) but they like to treat us poorly after all.
Donât worry, Iâm not going to argue if school is the best investment since you could probably learn more on your own if you had the same level of motivation as a teacher and save thousands in the process. I was really fortunate to receive a full free 4 years at NYU so I donât have to end up using any of my funds from my 529C plan that my parents started for me since birth and contributed my earned money in 2010 which ended up earning north of 700k in todayâs money. You can learn about how I got a 4 full-ride here.
Yet the only downside to that and unfortunately there are always downsides to free things, I didnât know I would be getting this incredible scholarship that would save me south of a quarter of a million dollars for college by my senior year of HS. I wasnât mentally prepared to pay that much anyway especially since I now see what Iâm actually paying for. As a result, we had to pay penalties on withdrawing half a million, since I intended on being a doctor and majority of medical students go into debt, something I wanted to avoid so I needed a thick cash cushion to back me up. Clearly, Iâm not in the medical field no longer. Regarding the penalties, they werenât too hefty and as a result, I was able to reinvest that chunk of change back into the market for gains instead of college following my 80/20 rule of 80% stocks, 20% bonds.
529 Plan Returns: $30,000 a year at 3% a year for 18 years followed by two years of 3% compound growth = $767,567
Investing In Yourself
Compared to my friends in middle school, I was the bookworm. During recess to lunch, you would always see me with my head dug into a book, and alas, that lead to me educating you all today, running a few businesses, generating side hustles, owning my first piece of real estate and having more time than ever to use that knowledge to open doors for me and meet new people.
The best investment you can make is for yourself. Most people donât have the attention span and never realize the potential for making mistakes, learning new things, getting outside of their comfort zones, and taking the time to educate themselves until they become a bit older and see the massive ROI.
The internet is your oyster. Take advantage of YouTube, free courses, syllabi from other schools, and even this platform because there is only upside to educating yourself, of course if itâs on appropriate and reasonable topics.
Work As Play
My number one pet peeve in life is getting bored. I know. Not always a great one especially since I deal with burnout, workaholism, and all the terms associated with feeling drained after a long day but the truth is, although I get exhausted, I love every minute of it!
Itâs my choice and thank goodness for the internet these days becuase without it, books just wouldnât keep me occupied this long anymore. The reason I keep working and do it regardless weekends or not, I never treat a job like a task. I tried to find my own career paths and create jobs as soon as possible so I could be my own boss and not fall into the trap of working $3 an hour way below minimum wage to flip burgers or wait tables. We all deserve what we work for and it is unfair to lower-income families and the bottom 1% in our country that still cannot make ends meet working 4â5 blue-collar worker jobs. Once you find a job that will pay you for your expertise not time, that is golden and when they pay you when you arenât working as well.
Some jobs that I had a blast in and never wanted to leave until I chose to do so include:
-Tutoring
-Picking up and racking leaves
-Modeling for businesses
-Running, designing, and coding a website
-Selling Pokemon cards and Rubix cubes to classmates
-Cleaning cars
-Delivering groceries
-Teaching tennis
-Helping swim
-Teaching CPR
-Babysitting
-Audio Impressions
-Guest posting for other people
I wouldnât recommend getting an allowance or doing chores in your household because then the money just circulates and doesnât actually grow or be a part of your own portfolio, still technically owned by your parents until it leaves the family. Depending on where you live, some of these options wonât be available to you or harder to find, for example, cleaning cars or mowing the lawn are limited in the city but in that case, get creative. Do some side hand modeling or back up noises for movies! I did these in middle school and I made more than what I could make in a month at Stop & Shop registers! All of these techniques I simply thought of. To be ahead, you have to think ahead.
There was no mundane mopping floors for $2 an hour or Mcdonaldâs insight which made me really relieved. The more creative you can get, people capitalize on it.
After all, the only person that can be the best at what you can do is you!
ROTH IRA
The ROTH IRA is unlike any other money-making machine in history because it takes advantage of one superpower: compound interest. This means you earn interest on top of your already earned income generated in this plan. Since this is a guaranteed way to generate more and become a millionaire by retirement, my parents opened one up and started contributing as soon as I was 1! I was really fortunate to have parents that instilled financial literacy in me and worked on Wall Street so they knew what personal finance involved and shared the benefits to their child. And since Iâm an only child, they were able to allocate as much money as to me as they wanted to to make my life the greatest. If I had siblings, maybe they wouldnât have started my 529C plan as early or the budget wouldâve been more tight for a less great childhood. Less is more in this case!
Some logistics. For the ROTH IRA, the max you can put in is $6k or else everyone would be putting their entire savings in since it is guaranteed growth better than the stock market.
Roth IRA Returns: $6,000 a year at 8% a year for 20 years = $296,537
Create Your Own Business/Work For Yourself
A business doesnât mean a multi-billion dollar bulge investment bank that was bootstrapped by a few middle school friends. That never happens and the larger the business, the older the founders are. When you are young, you only know so much since you are throwing stuff at the wall and seeing what sticks. You havenât gone to college or business school or done intensive training so donât beat yourself up for not founding a bank that is rarely established anyway these days.
Ideas are limited anyway. It seems like all of them are taken. A phone, good drink and hotel booking app. What else could life offer? 2020 was a record year for IPOs at 480 new listings. All of those ideas arenât mindblowing or crazy unique either. They all serve a need that people the same problem with and someone just capitalized on it and drilled their way to it.
But since we are on the topic of business making, these are real businesses that you can start as a child that donât require much capital up front and the key here isnât the job, itâs saving and starting earlier because nothing beats the ROI of time:
-Lemonade stand
-Delivering groceries
-Waiting tables
-Cleaning up dog poop
-Working at Wendyâs
-Dishwasher at Chipotle
-Royalties from your intellectual property such as a blog, YouTube channel, patent or gadget you made one random Saturday
Own Real Estate
Rental income is the top income source millionaires prioritize since it is reliable, passive, up to you on how much work you want to put in and always appreciates in value, unless it was 08â09. You donât need to buy a mansion to live off of your rental income. I bought a studio for 200k with my money saved from various summers, winter break jobs, babysitting and now renting it out to Millenials who are working in the city. Especially now, there is no better time to take advantage of the real estate market when interest rates and mortgages are at all-time lows and the average home price rose by 8% YoY last year with the boom of WFH. Companies are realizing that efficient work can be done anywhere.
Gifts
Becoming a millionaire on your own is tough. You must need help from your parents to support you and get the ball rolling. Iâm thankful my parents taught me the best investment of all: investing in yourself through education outside of school. Good thing I didnât rely on the education system to make me a millionaire because the average student is -$80k in debt.
My parents contributed the maximum gift tax exclusion amount to my 529 plan each year prior to college. For 2021, two parents can contribute a combined $30,000 which adds up quick!
Stealth Wealth
The earlier you realize that there is no point in trying to impress others with your style, personality, titles or address, you start making more, living a financially free life, and loving yourself more.
The only person you need to impress is yourself. Children who learn the value of education, kindness, and relationships are proven to be more successful and less arrogant in their future. This naturally brings about more opportunities and ways to turn into a millionare. This starts with good groundwork parents should solidify for possessing the right type of behavior. We learn the most from our parents when growing up and thatâs when our brain changes the most.
We become our parents in most instances as well so make sure if your parents are planning on having a child or if you are one yourself, that should be the most important lesson to teach, besides eating your broccoli and no picking your buggers.
Best Kept Secret
So is this actually realistic? Well according to this plan, it sure is. Parents are truly the secret to becoming a millionaire because they will set you up on the right path to continue growing your assets and preserving wealth starting from birth.
My parents helped me with everything from opening and setting up all the accounts referred above to developing relationships to help me navigate the scary world of recruiting, teaching me how to invest in learning, the qualities that make a hard worker and a person full of humility and where and where not to spend oneâs money. And I applied those skills to earn the money.
Not all parents are educated like this but the beauty of learning is that it never stops! They will learn along the way as well. When you have a child, this is your top responsibility for your child to make sure they thrive in this world.
The best way you can become a millionaire quickly, but not overnight is in taking advantage of compound interest through the ROTH IRA because that is a guaranteed money-making machine.
I sound like a YouTube drop shipping dude but no joke. It is the best way to make free money. The only thing that could go wrong is that you spend it stupidly which happens more often than you think.
The 529C plan will make up most of your childâs millionaire status by the time you hit 20, as much as 800k in my case because even with a ROTH IRA, the childâs earnings have to be part of the contributions and since children donât start working until age 10 or 11, unless you get an allowance in which case is just filtered money, the 529C is the best fund.
Most likely if you are a millionaire, your parents are as well, unless you are really selfish and donât want to share the profits. When I was younger, I saw all of the elite prep kids in my neighborhood go to boarding schools that equate to a four-year college per year because they value education, diligence early on and they knew the power of time. They also had 1 thing in common: being entrepreneurs. Having a day job just wonât make you rich, unless you are a partner at an investment bank working 80 hours per week. Itâs also a life that most donât want either.
Whether or not your goal is to make x amount by x age, these skills are essential to get out of debt, boost your credit score, feel more financially independent and live a life that is not beholden to money. The feeling of having money control every decision you make is a frightening one. Establish these techniques and get out of your comfort zone to live the life you truly deserve. Everyone has an equal opportunity once educated.
I hope you learned something.