Hello Loyal Readership,
We got a lot of positive feedback about our Ten Steps to Become a Millionaire, so we thought about a few other items that could be included and created a part two! So you want to be a millionaire?
Follow these steps:
Own it and do it. Take responsibility for making it happen. Contrary to popular belief, most millionaires are self-made and 79% did not receive any inheritance of family wealth.
Start saving and investing towards it TODAY – if you assume a 7% annualized rate of return, you will need to save the following amounts to have $1M by age 65:
Age 25 - $400 per month
Age 30 - $580 per month
Age 40 - $1275 per month
Age 50 - $3200 per month
Obtain a Bachelor’s Degree – it’s not fully necessary, but statistics show that education helps. It’s true that some high school and college drop outs make it really big, and kudos to those people! However, this is the exception, not the majority. 88% of millionaires have a college degree (compared to 33% of the general population). Also, 52% have an advanced degree (compared to 12% of the general population).
Pick your career wisely – Certain careers have statistically showing a higher chance of translating into becoming a millionaire – accountants, actuaries, engineers, doctors, lawyers, zoologists, professors, and sales professionals. This is not to say that you cannot become a millionaire outside of these careers, but you may have a higher probability to do so in the above careers.
Work, over a long period of time – Yes, the vast majority of millionaires go to an actual job every day for 28 years before they hit the millionaire mark.
Save into your 401k – find a job or career that offers the opportunity to save into a 401k with a match, and take advantage of it right away. 80% of millionaires invested in their 401k.
Don’t carry credit card debt – if you spend more than you earn, you will end up with credit card debt that will compound against you with high interest rates and make it near impossible to become a millionaire. Spend less than you earn and save more. Most millionaire never carry credit card debt.
Save into tax-deferred vehicles – This gives you a tax benefit that makes it easier to become a millionaire. Use things such as 401ks, IRAs, Roth IRAs, and cash value life insurance.
Become friendly with stocks and equities – One needs to earn close to a 7% annualized rate of return over time to become a millionaire. Holding cash earning 0-2% or bonds earning 0-4% will make it much harder to become a millionaire.
Be disciplined with investing – Stop messing around with fads (ie. Day trading, meme stocks, crypto, NFTs). These can feel and sound exciting, but these are not too much different than gambling and you are more likely to strike out with $0 than hitting the home run and making millions. Most millionaires invest consistently, with a disciplined and diversified long term portfolio. This focus on the long term is more boring, but it is what works more often. Embrace the boring!
Accept volatility – the stock market is down about 1 in 4 years. Market corrections ( a drop of 10% of more) happen every year or so. Bear markets (a drop of 20% of more) happen every 5 years or so. Accept this and look at as an opportunity to buy low and take advantage of the short term discount!
No excuses, do it, now! - You can decide if you want to become a millionaire or not. Take action today. Start saving in an account today, ignore the noise, make it happen.
Sources: Entrepreneur and Business Insider
