GOBankingRates

The 5 Fastest Ways To Become Rich, According to Experts

7 min Read

EXTREME-PHOTOGRAPHER / iStock/Getty Images

Getting rich is pretty high on most people’s list of financial hopes and aspirations. After all, it will allow you to not only have more security when making financial decisions but also have more options such as retirement plans or if you want to start investing elsewhere. Any financial advisor would tell you your long-term personal finances and growth depend on more than just what you put in a savings account. 

Read: What To Do If You Owe Back Taxes to the IRS

How To Get Rich: 5 Ways

The problem with the idea of getting “rich,” though is that it takes a lot of time and effort. Get-rich-quick schemes are almost always nothing but a way to prey on those who are trying to earn more money while struggling financially. Unless you are born into a wealthy family and a large inheritance is passed to you, you will likely have to become rich through a combination of hard work and financial diligence. Here are five ways experts advise on how to become rich:

  1. Avoid or pay down debt
  2. Spend intentionally and minimize debt
  3. Invest in a diversified portfolio
  4. Work on your career
  5. Start a side hustle
Make Your Money Work Better for You

1. Avoid or Pay Down Debt

Debt, especially high-interest debt,  is not necessarily bad in all instances, but it is something to be avoided most of the time. For instance, student loans can be beneficial if the principal and interest rate are not excessive and they help you pursue a lucrative career.

“Some experts would contend that student loans are bad debt, but I disagree,” said Robert Johnson, chairman and CEO at Economic Index Associates. “I would categorize modest student loan debt as being ‘good debt.’ In my opinion, student loans get a bad rap.”

Again, the emphasis is on how you use them. Student loans can certainly be bad if the numbers don’t work in your favor. “There is no doubt that the system has been abused and that some students have accumulated a mountain of debt and have earned degrees that simply won’t provide the earning power to pay that debt back,” Johnson said.

Make Your Money Work Better for You

Johnson also emphasized that credit card debt is always bad debt and should be prioritized over student loans. Ariel Acuña, founder of independent wealth management firm LTG Capital LLC, recommended putting at least 20% of your paycheck toward debt if you have it.

2. Spend Intentionally and Minimize Costs

If you want to become rich, it’s important to minimize your costs and be more intentional with your spending. This is the second step because it should be one of the first things you do as it leads to saving money. Spending intentionally and minimizing your costs will require you to keep a budget.

In doing so, you can keep track of exactly how much you spend and where you spend it. Acuña recommends a checklist of how you will spend. “Develop a prioritized checklist for how you’re going to spend your paychecks when you receive them. This includes allocating money to debt reduction, savings, fun, emergencies, etc.”

Make Your Money Work Better for You

Your goal should be to minimize costs as much as possible so you can put that money toward building wealth. Jeff Burrow, president and lead advisor at Sierra Ocean, said you should “ravenously find ways to limit your lifestyle costs and save 25% of your income.”

3. Invest in a Diversified Portfolio

While there are limits to how much you can put into a 401(k) or IRA, those limits are high enough that many people are not able to reach them. And if you do, you can always invest more in a taxable brokerage account. Thus, if you want to become rich, you should invest as much as you can — there is no upper limit to that amount.

There are many different investment strategies, but most experts recommend putting most of your money in the stock market to get rich. Some recommend a smaller portion of real estate or even speculative investments. Burrow recommends a portfolio of 65% stocks, 25% real estate, and 10% speculative asset of choice.

Make Your Money Work Better for You

You will want to invest that money in a tax-advantaged account such as a 401(k) or IRA first. That will help you minimize your tax bill and thus increase your returns over time. If you manage to max out all tax-advantaged accounts, you can move to a brokerage account.

4. Work On Your Career

There is no substitute for higher income. As they say, there is only so much you can cut in terms of expenses, but there is no limit to how much your income can increase, at least in theory. “Ensure that as you advance in your career/business/main occupation, you always save more than you spend as you earn raises and increase your gross income,” Burrow said. “Lifestyle cost creep will absolutely wreck a plan to get rich as quickly as possible.”

Of course, increasing your income will be contingent upon the job you have. Those working hourly jobs, for example, may have minimal leverage to increase their income. But if it is possible for you to move up the corporate ladder, that can be a powerful way to become rich as you will be able to save and invest more.

Make Your Money Work Better for You

5. Start a Side Hustle

The idea of a side gig or extra work is nothing new, but if you have some extra time and you can pick up some extra work for a few hours a week, that can be a powerful way to increase your income. Gig economy work such as Uber and TaskRabbit make it easy to find flexible work. And there is no shortage of lists of types of side hustles to be found online.

Finding a side hustle is sometimes easier said than done, but this can be extra money that you can continue to invest further. “Immediately go try and find two to three side hustles that can boost your take-home income. Save as much of that as you can,” Burrow said.

Final Take To GO 

In reality, there are arguably no secrets to becoming rich. Time-tested approaches are generally your best bet, and our experts confirmed that. Whether it is putting money into retirement accounts, investing in stocks and bonds or just paying off your debt, there are many small steps you can take now to become rich. 

Make Your Money Work Better for You

FAQ

Here are the answers to some of the most frequently asked questions about the ways to become rich.
  • How do I start getting rich?
    • There are many steps you can take to start getting rich. Here are five ways experts would advise you take to grow your wealth:
      • Avoid or pay down debt
      • Spend intentionally and minimize debt
      • Invest in a diversified portfolio
      • Work on your career
      • Start a side hustle
  • How to become rich in five years?
    • Though there are no guarantees for making money in a certain timeline, many financially advisors would give the following pieces of advice on how to get rich quickly:
      • Develop your financial literacy by investing in your education.
      • Spend less to save more
      • Invest any extra money you make.
      • Invest in real estate or investment properties
      • Build a diversified portfolio of stocks and shares.
  • How to be self made millionaire?
    • Becoming rich or even a self made millionaire takes both strategy and work. However many experts would say to first start by doing something you love, because if you have a passion for it the work and success will come more easily. Here are some other tips:
      • Make sure you are investing as much as you can in a diversified portfolio.
      • Build a budget so you can stick to better savings and spending habits
      • Invest in property or real estate that you can rent.
      • Make sure to pay down any existing debt you have.
      • Invest in yourself by furthering your education to grow in different career paths.
Make Your Money Work Better for You

Bob Haegele contributed to the reporting for this article.