If you’re a young person who aspires to join America’s 5.3 million millionaires in time for your 30th birthday, congratulations if nothing else on your ambition alone. It’s no easy task, but many people have pulled it off — some have even become billionaires in their 20s.
If there were a foolproof formula, everyone would be rich. There isn’t. But the following is a general list of steps to guide you to untold riches while you’re still young enough to enjoy them. The list presumes you’re already following the basics of budgeting, living within your means and spending according to a plan.
The first step is knowing what you’re up against — and presuming you start earning at age 20, the math is unforgiving.
“You need not just a high income but also a high savings rate,” said Brian Davis, a real estate investor and founder of SparkRental, which helps middle-class people attain wealth and early retirement. “It takes around $4,900 invested per month at a 10% return to reach $1 million in 10 years.”
2. Invest In Yourself and Build Sellable Skills
Millionaire math shows that you need an income that’s well above average — and you have to learn a lot to earn a lot.
“Education is a crucial step, not just in the formal sense, but also practical knowledge acquisition,” said Dennis Shirshikov, professor of finance, economics and accounting at the City University of New York and the head of growth at real estate investing site Awning. “The wealthiest individuals have a diversified skill set, which opens a plethora of opportunities. Look into coding, finance, digital marketing or any field with high demand and high pay. Look at Elon Musk, who, while studying physics and economics, also learned programming. He sold his first piece of software at the age of 12.”
There’s almost no scenario where you can pull it off alone. You’re much more likely to get rich if you’re surrounded by talented, ambitious and inspiring people.
“As the saying goes, your network is your net worth,” said Shirshikov. “Build strong relationships with people who can offer you opportunities, guidance and partnerships.”
Here, too, you can follow the examples of young millionaires who came before.
“Bill Gates and Paul Allen, childhood friends, co-founded Microsoft,” said Shirshikov. “Their combined network was vital to Microsoft’s success.”
The 10% from the original calculation roughly represents the stock market’s historical rate of return. But that often-cited number is annualized over decades. A single bear market in your 10-year timeline can foil your millionaire dreams.
Therefore, investing in a down payment for a property might get you to seven figures faster than investing in the stock market.
“Start by looking at multifamily units like duplexes, triplexes or quadruplexes,” said Garett Polanco, chief investment officer of Independent Equity. “They’re often not dictated by market pricing.”
You can also pursue high returns with midrange risk through private equity investments in fractional ownership of apartment complexes and other commercial properties.
“I don’t see the risk as any higher than the stock market, but the returns are often 15%-30%,” said Davis. “After all, a 200-unit apartment complex in Dallas might dip 5% in value in a bad-case scenario, but it’s certainly not going to lose 100% of its value the way a stock can. Apartment complexes generate measurable revenue and have inherent value.”
Another benefit of multifamily homes is that they can eliminate housing costs while delivering returns if you’re willing to live there.
“With a low down payment loan like an FHA loan, you can buy a multifamily home and live in one unit while renting out the others,” said Polanco. “The rent you collect can cover your cost of living or drastically reduce it, while also building an asset. The lender will use 75% of the rental income to help you qualify. Just start the process, and you’ll learn as you go.”
Even if you only break even without profiting, you’ll build equity every month that counts toward your eventual $1 million net worth.
In most cases, the money you’ve saved from house hacking, the capital you’ve gained from investing and the knowledge you’ve picked up along the way still won’t be enough — unless you pour it all into an entrepreneurial endeavor.
“Attaining a seven-figure net worth by age 30 is a lofty goal, but I think one of the most practical ways to go about doing so is by starting a business,” said Drew Feutz, certified financial planner and founder of Migration Wealth Management in Avon, Indiana. “There are two ways to be paid from a business — current cash flow and future sale. I think that intentionally building a business with the end goal to sell by setting up repeatable systems and processes is one of the more practical ways to attain a seven-figure net worth by 30.”
But what kind of business?
“Create something revolutionary,” said Raymond Quisumbing, a registered financial planner with Bizreport.com. “Look for something with which most people have a problem now and think of a solution. This is where businesses begin and eventually grow into successful enterprises.”
Just remember, starting a business is often an all-or-nothing investment.
“Though risky, it has the potential for immense returns,” said Shirshikov. “The key is finding a market gap and figuring out how to fill it.”
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