Humphrey Yang: 3 Steps To Get Richer Than 99% of the Population by Age 40
Written by
Ashley Donohoe
Edited by
Cory Dudak
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If your dream is to become one of the top 1% while you’re still young, financial influencer Humphrey Yang has advised focusing on being different from the 99% rather than working yourself harder. Becoming rich isn’t just about earning a higher income than most people; it’s about strategizing to use that money wisely so it grows your net worth over time.
In a recent YouTube video, Yang broke down three steps that can help you get richer than 99% by age 40, which would mean a household net worth of around $4.7 million based on data he discussed.
Have Leverage
Yang said, “Leverage is what separates those who merely work hard from those who work smart and scale their efforts.” He then talked about four types of leverage for people during their working years. While you’ll need at least one to become part of the 1%, having more is even better.
The first is scalability. Yang showed a list of occupations that could earn you $1 million per year, such as managing director, portfolio manager and public company C-level executive. While it’s sometimes indirect, the work in such roles is connected in a way that supports scaling.
Yang discussed zero marginal cost of replication as the second form of leverage. This means that you make some product that you can reproduce and profit from without further costs. Examples include intellectual property, software and various forms of digital media and content.
The third type of leverage is equity, which allows you to earn based on a company’s growth. For example, you might have stock options, buy into a startup or look for good buys on the stock market.
Finally, Yang discussed networking as the fourth leveraging option. Sometimes, simply being around people can present exclusive opportunities that help you grow your income or wealth.
Make Your Money Work 24/7
According to Yang, you should invest much of your earnings rather than spend it, or put it in bank accounts with a low return. He mentioned potential options like the stock market, high-yield savings accounts, real estate and income-producing assets.
When it comes to stocks, Yang focused on going after average yet consistent returns versus using market timing strategies. For reference, J.P. Morgan noted a historical average annual stock return of 10%. Yang said this strategy could get you into the top 5% and closer to your goal.
Yang also said, “To get into that top 1% of people, we need to focus on investing, but also compounding the wealth and then let time work its magic.”
While you can expect more work at the beginning to get your first $100,000, compounding and leverage will later help make reaching the millions a smoother process. For example, if you invested $100,000 at a 10% return and kept contributing $4,000 per month for just 10 years, you’d have over $1 million at the end.
Achieve Income Sustainability
Yang said, “You need to build a system that allows you to generate high sustainable income over time.” This goes back to leveraging all you can while working, and benefiting from compounding your money for as long as possible.
Yang talked about some common traits of people who succeed in doing this. They’re often very educated and have a strong network, determination, experience and some luck. Plus, they’re personable and willing to take risks.
Finally, Yang offered some tips for achieving a sustainable income. First, you can build skills associated with high-earning jobs, such as sales, investing and software development. Another wise move is to have diverse income sources from jobs, investments, real estate and interest.
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