No this isnât about side-hustles and grinding all day on your Shopify store selling socks and random junk that serves no one.
Hitting the 7-figure mark may seem impossible to most, especially those who are swimming in debt, just graduated, earning minimum wage or without any formal education. Yet as someone who is self-made getting closer to this mark any day now, I can tell you itâs easier than it seems, even at 20.
As someone with no special talents, IQ and a daughter of immigrants, my chances arenât so high. Despite the robust online opportunities to earn more than a CEO of a C-suite firm that catapulted during the pandemic, the internet isnât necessarily increasing the number of new millionaires. I propose this is due to an abundance of choices, resistance and stimulation. Too much of anything is a bad thing and with millions of influencers and mock David Dobriks, entrepreneurship seems filtrated.
Yet itâs important to realize unless a new TikTok product debuts, everything will already be saturated. The population is only growing by the second and telling yourself to avoid the internet because there are already 3 billion people on it is ridiculous. After all, to earn more, you need an abundance mindset. The greatest thing we have is our unique personality, character, upbringing and perspective on things. No one is exactly the same, even identical twins.
With 80%+ of millionaires self-made, utilizing the internet is your best resource since 9â5 white or blue collar jobs starting out of school wonât be enough to get your time, mental energy, freedom and creativity back later on. Most millionaires start out with a job and grow that way but to really skyrocket, you have to produce something from your heart not work towards someone elseâs dream until death.
If you want to take the safe route, you need to allocate time and spend wisely to make it ahead- something millionaires capitalize on early in life.
There are only 3 things you can do with your earnings:
1: Spend it
2: Save it
3: Invest it
Majority of the crowd believes spending will bring them joy. Prudent spenders know true wealth is what money cannot buy.
From working during their commute to investing in themselves during their lunch-break, they treat time like their most precious asset. The less luxurious but most predictable way towards success.
The slow, boring and simple route is your best bet. Sadly most wonât wait that long. They want results ASAP.
Indicators
These days with the era of stealth wealth, frugality and WFH, itâs hard to tell who works where, how much someone is worth and what their chances are for success.
And thatâs a good thing, read here why revealing what you are worth is dangerous.
But there are pretty accurate indicators to tell if someone will make it which is all through education.
Education is one of the few things, besides your genetics that cannot be taken away from you. The diploma can vanish but the information in the noggin cannot.
To reach the 7 figure or beyond mark, you have to get used to saying no a lot and putting your head down.
When starting out your career, that can be a big no no, no pun intended, but in reality thatâs how you save up your time, your most precious asset and do what you can to get ahead.
Future millionaires donât waste their time spending money on Facebook ads and selling products on Amazon, they focus on impact and value because that will last. Sure, Amazon and Youtube can make you profitable but will it last? Thatâs hard to say. Earning lump sums forecast bankruptcy for most, especially lottery winners and basketball players.
Whether its through taking advantage of compounding effects in the market, setting up a Roth IRA at age 10, buying real estate at the start of a frothy bubble or investing in alternative investments for negative correlation and added diversification, there are endless options that donât involve something you hate doing.
People want to make their lives easier and better. That starts with creating something that may already exist but isnât replicable in the same way and delivers on a reputable promise.
All the millionaires and above I know have strictly focused on their goal when they can squeeze in time, consistently invest in development, ask for more, embarrass themselves, learn to fail hard and strive to get better every single day. They didnât start out with much, they took the sturdy path with a 9â5, juggled both career and side gig and run a marathon not sprint. Their debut came when they stopped searching for luck. They created it by taking action.
Here are additional things Iâve found my 7 figure neighbors to colleagues, family and friends have drilled on with little to no effort:
-Understand they risk whatever they are willing to loose
-Diversification is key a.k.a never put all your eggs in 1 basket
-Never tie emotions to decisions
-Time = Money
-Thereâs never a right time for anything
-âBe fearful when everyone is greedy and be greedy when everyone is fearfulââââBuffet
-You arenât smarter than the market
-Whatâs certain is uncertainty
-History repeats itself- every 8â10 years a recession of some sorts
-Passive investing historically beats out active
-Remember more risk = more reward or all lost
-Look long-term and keep your goals to yourself
-Understand the tax system or never move up
-Aim for a passive investing approach through top-down instead of active bottom-up to leverage your time + brand
Simple but sweet. If you follow this plan for frankly any investment, thereâs a good chance you will outperform the market and your expectations.
Basics
If you want to start building wealth the real way that lasts, to save yourself mental sanity, donât compare yourself to others. Keeping up with the Joneses is a vicious cycle and doesnât serve anyone. Perception isnât reality. Realize that someone had to start somewhere. Maybe it wasnât the grandchild who did the work and instead inherited it all but the grandfather must have done it then and got lucky. Life isnât fair and none of us are smarter than the market so stay humble and follow your path.
Also donât fight the Fed.
Comparison is the theft of joy and once you start focusing on internal validation not external perception, your life will be easier and you can devote your attention to better things.
Just like athletics, majority of the game of investing is mental. It incorporates physical components of being agile, taming your emotions and being adaptive to the market while figuring out what you want down the line and staying focused.
Straight off the bat, if you want to grow your wealth that one day it can support you and your loved ones while also embarking on the FIRE movement in your early 30s, you have to focus on 2 main areas that eat into your lifestyle:
-Spend less
-Earn more
-Remember more debt = less savings
Both work in tandem and if one is off, the other one needs a lot to catch up on. In the finance world, everything counts and small progress by taking advantage of compounding and investing through the DCA (dollar cost-averaging) approach is your best friend.
Once youâve solidified a living with a steady paycheck and live modestly preferably following the 50/30/20 budgeting plan while simultaneously investing, then start with prioritizing diversification, getting into more aggressive trades like hedge funds, moving into PE or venture capital, setting up insurance and a 401k at work along with a ROTH IRA pre-college.
When it comes to what to invest in, everyone has their own style hence the name, personal finance yet what I can tell you is that there are distinct differences between those who are able to fully support themselves no problem or not. It starts with a boring genius strategy, you can read here what that entails.
After all, if you canât explain your investment thesis in a simple plain sentence, it most likely shouldnât be delved into.
Breaking Down Barriers
Sadly, According to the Federal Reserveâs Survey Of Consumer Finances, only about 53% of all US families own publicly traded stock in variety of securities.
I believe these are some of the main reasons why:
-Lack of exposure/education from family since school neglects it
-Belief that one must have a certain net worth/amount before investing
-Dangerous/volatile
-Not enough time
-No experience
Luckily, all of these complaints and excuses can be resolved with handy dandy education. After all the more education one has, the father they get in life. It is the best investment that pays dividends for a lifetime not in an hour!
Stocks and real estate are two of the most common asset classes that have historically built the most wealth for Americans and helped them rise the ranks with no degree or certified expertise required! What a bargain.
The median stock value along with the savings rate among households have risen during the pandemic yet is only shy of $40,000 equivalent to one year of tuition at Florida State.
Home ownership rates have also increased to 65.8% in 4Q2020 close to its peak but not as high as in 2004 before everything went downhill. Most Americans arenât even qualified to purchase a property. They spend far much and put 5% as the deposit instead of the recommended 20% down. Without a cash cushion, several kids, student loans and overdue credit card bills no wonder they are keeping themselves poor. Read here why more family members are getting expensive.
The average American is either too invested into real estate or doesnât diversify well amongst the rest of their assets. In 2008, 97% of median Americanâs householdâs net worth consisted of their primary residence! No wonder their net worth plunged by 39% in 2010 from $126k,400 to $77,300 according to the Census Bureua.Â
Having a balanced portfolio and reasonable home equity is key along with staying simple, prudent, living below your means and diversifying.
Stick with the long game. Through unwavering commitment and dedication eventually something will come your way.