I’m a Self-Made Millionaire: The 3 Best Investments I Made in My 20s
Written by
Laura Beck
Edited by
Amber Barkley
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Smart investing during your 20s is like planting seeds that will one day bloom into a prosperous future. Though the full fruit may not be realized for years, the self-made millionaires who get started early and stick to their plan are setting themselves up for future riches.
GOBankingRates spoke to Brie Schmidt, the owner and managing broker of Second City Real Estate, who embarked on her real estate investment journey in 2011. What strategic choices did she make early on that allowed her to accumulate wealth and success?
House Hacking
In her 20s, Schmidt embraced a strategy known as “house hacking” that became the foundation for her wealth and career. This approach involves purchasing a multi-unit residential property, living in one of the units and renting out the others to cover most or all of the mortgage payment.
“This investment type is ideal in your 20s to build long-term wealth accumulation while you have the ability to live in the cheapest unit and receive a greater profit from the others,” said Schmidt.
Schmidt would use the rental income from the other units to offset her mortgage payments. Loan programs, like the 5% down conventional mortgage, enabled her to get started with a relatively small amount of capital upfront. After completing a one-year occupancy obligation, Schmidt could move out and begin the process again with a new multi-unit property.
You can have up to 10 of these owner-occupant loans in your name, each being paid down by your tenants’ monthly rent checks.
“This gives you the ability to continue to build a portfolio of rental properties where the tenants pay down the mortgage, and in your 50s, the loans will be paid in full, and you could live off the rental income,” said Schmidt.
By house hacking, a young person can essentially live for free or earn a little extra income each month. More importantly, they are building equity in an asset that is likely to appreciate over time. As their tenants’ rents increase with inflation, the owner’s mortgage payments remain fixed, creating more and more positive cash flow over the years.
Many self-made millionaires continue purchasing new properties and house hacking for decades, creating a sizable real estate portfolio that now generates tremendous passive income and equity.
Explore and Travel
Many of the most successful young investors spend a portion of their funds exploring the world through travel. Though it may seem like a frivolous expense at the time, this investment in experiences and perspective often pays dividends throughout their careers. Schmidt prioritized exploration and personal growth like this over following a conventional path.
“Your 20s should be about exploration and trying new things before you have a family to support,” said Schmidt. “Take the trips and time off work. Stay in the hostels and get lost in a new city. You don’t need to have the rest of your life figured out in your early 20s; this should be the time to try new things and fail. Figure out what you are passionate about, and build a life around that. It only gets harder to make a career change or take a few weeks off work to check something off your bucket list.”
Schmidt’s investment into broadening her perspective through travel paid off. She gained priceless insights, which she could then apply toward crafting her dream career and lifestyle. Through travel, people gain exposure to diverse cultures, foods, languages and ways of thinking. This can spark curiosity, build empathy and reveal unseen opportunities.
Educate Yourself
Schmidt also viewed her 20s as a critical period for investing heavily in self-education. She embraced it as a journey of perpetual learning and expanding.
“Education is more than credit hours and coursework,” said Schmidt. “This is the time to read books and listen to podcasts and develop yourself as a person. The ability to self reflect and achieve ongoing personal growth are skills not taught in school. It is important to learn these things early on and develop yourself to set the foundation for marriage and raising children.”
Some self-made millionaires study fields directly applicable to their businesses or investments, like finance, marketing or technology. No matter the approach, continually upgrading your mind through education provides invaluable returns throughout your career and life.
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