How to become a millionaire

[BeTheChange]

So I cracked out the old excel spreadsheet and did some analysis this weekend. It turns out getting to that infamous seven figure net worth is not as difficult as some people would have you believe. You don't need to wait till 70 to retire. In fact based on what I've discovered if you started taking this goal seriously straight out of college you could retire before 40 with a million dollar net worth. Getting there relies on two things:

1. Developing in demand skills early and pursuing a career in a field with some degree of stability and opportunities for advancement
2. Not being caught by the trappings of success and maintaining a frugal lifestyle

I would seriously recommend learning all you can about active investments.

I built a pretty advanced model. Based on:

• My current salary
• Expectations of salary growth (which are pretty moderate)
• Market knowledge of what I'm worth to employers' now and with [x] number of years of experience
• Current performance of investment properties (income only)
• Current and future spending - budgets and forecasts
• My savings rate
• Realistic rates of acquisition of additional investment properties and their performance (income only)
• Zero capital appreciation

I will be a millionaire (net worth) in ten years.

How do I get there? You might think I am some Wall Street investment banker or a Ivy League lawyer. But it's not the truth. I do ok. Have a stable job in a stable field but nothing crazy. The vast majority of my climb to that one million dollar number comes from investments.

Here is a partial breakdown.

• 10% of the $1m wealth comes from net income side hustle (extra contracts, business consulting from my bedroom, low overheads so all this income I pretty much keep)
• 20% of the $1m comes from my salaried job (After tax salary net of living costs and general expenditure including holidays and miscellaneous expenses)
• 30% of the $1m comes from net income (cash net of all costs including bills, repair & maintenance, mortgage repayments and taxes) from investment properties
• 40% of the $1m comes from adding back the capital repayments portion of the mortgage repayments

This is huge. 70% of that $1 million comes from using other people's money (rental income) to accumulate wealth.

That is the power of compound annual growth and starting early.

And the real beauty in all of this? Once a mil has been achieved you'll have enough income generating assets to where you won't even need to work.So if you wanted to retire at 40 you could.

 

[sazc]

These days you need $3 mil in the bank f you want to live off the interest, but I'm right there with you about strategizing to ensure that you are financially set - regardless of if you retire young or not. This way you always know you have that freedom within your reach.

 

[BeTheChange]

These days you need $3 mil in the bank f you want to live off the interest, but I'm right there with you about strategizing to ensure that you are financially set - regardless of if you retire young or not. This way you always know you have that freedom within your reach.

Anyone who has the work ethic and business acumen to accumulate $1m won't be thinking about "living off the interest". If you actively manage your investments it's easy to generate returns high enough to live a comfortable life, while working a fraction of the hours you'd work in a salaried job and still having your wealth accumulate.

And what's crazy is although it takes a while to hit a mil, due to compounding if you can keep up the returns you can basically triple your net worth in the space of 6 years...and that's IF you stopped working completely.

 

[BeExcellent]

It absolutely can be done. I did it in about 10 years and it would have been sooner had I listened better to a couple of millionaires instead of make a couple of bone head expensive errors.

Read my thread down the list about Success Starts Between Your Ears for some tools & attitudes. I started at about 36, reached the 1M net worth around 46 and am now paying down debt to maximize free cash flow (and further increase net worth).

In addition to the list you made above think carefully about what kind of property you buy. I buy property for cash flow and I like very low acquisition costs. Some of my rentals create a 40% annualized return. You get this type return in low end markets (which need not be slums if you know where to look.)

Do you want commercial, residential, development? I know a couple of lawyers who own trailer parks all over the US. They may as well print money.

So look at what you want to accomplish & how much you need to ante up...network and find investors. Guru & Legend are in investment properties and deal making. PM them. Feel free to PM me too.

You can do it. I am becoming unemployable as I continue, which has the wonderful side effect of more opportunities falling into my lap.

Abundance indeed!!! Success attracts more success!!!

 

[BeTheChange]

It absolutely can be done. I did it in about 10 years and it would have been sooner had I listened better to a couple of millionaires instead of make a couple of bone head expensive errors.

Read my thread down the list about Success Starts Between Your Ears for some tools & attitudes. I started at about 36, reached the 1M net worth around 46 and am now paying down debt to maximize free cash flow (and further increase net worth).

In addition to the list you made above think carefully about what kind of property you buy. I buy property for cash flow and I like very low acquisition costs. Some of my rentals create a 40% annualized return. You get this type return in low end markets (which need not be slums if you know where to look.)

Do you want commercial, residential, development? I know a couple of lawyers who own trailer parks all over the US. They may as well print money.

So look at what you want to accomplish & how much you need to ante up...network and find investors. Guru & Legend are in investment properties and deal making. PM them. Feel free to PM me too.

You can do it. I am becoming unemployable as I continue, which has the wonderful side effect of more opportunities falling into my lap.

Abundance indeed!!! Success attracts more success!!!

I agree. Success thinking and abundance mentality is paramount. I would never have started my side business - which is what provided me with the cash windfall to start investing in the first place - had I just been content with my current job and just getting by.

When you think big your mind is forced to develop means to achieve these goals

With that in mind, I set for myself for following declaration.

I will be a millionaire in net worth by my 35th birthday

I will be worth 10 million by the time I am 45.

Now let's get the ball rolling!

Would you advise focusing on a niche - e.g. just investing in property - or also look at alternative assets. I don't have any funds in the market and was considering educating myself on some stocks and investment strategies for the equities/bond markets too.

@guru1000 @legend9 @Tenacity Would be interested to hear your thoughts too.

 

[Tenacity]

So I cracked out the old excel spreadsheet and did some analysis this weekend. It turns out getting to that infamous seven figure net worth is not as difficult as some people would have you believe. You don't need to wait till 70 to retire. In fact based on what I've discovered if you started taking this goal seriously straight out of college you could retire before 40 with a million dollar net worth. Getting there relies on two things:

1. Developing in demand skills early and pursuing a career in a field with some degree of stability and opportunities for advancement
2. Not being caught by the trappings of success and maintaining a frugal lifestyle

I would seriously recommend learning all you can about active investments.

I built a pretty advanced model. Based on:

• My current salary
• Expectations of salary growth (which are pretty moderate)
• Market knowledge of what I'm worth to employers' now and with [x] number of years of experience
• Current performance of investment properties (income only)
• Current and future spending - budgets and forecasts
• My savings rate
• Realistic rates of acquisition of additional investment properties and their performance (income only)
• Zero capital appreciation

I will be a millionaire (net worth) in ten years.

How do I get there? You might think I am some Wall Street investment banker or a Ivy League lawyer. But it's not the truth. I do ok. Have a stable job in a stable field but nothing crazy. The vast majority of my climb to that one million dollar number comes from investments.

Here is a partial breakdown.

• 10% of the $1m wealth comes from net income side hustle (extra contracts, business consulting from my bedroom, low overheads so all this income I pretty much keep)
• 20% of the $1m comes from my salaried job (After tax salary net of living costs and general expenditure including holidays and miscellaneous expenses)
• 30% of the $1m comes from net income (cash net of all costs including bills, repair & maintenance, mortgage repayments and taxes) from investment properties
• 40% of the $1m comes from adding back the capital repayments portion of the mortgage repayments

This is huge. 70% of that $1 million comes from using other people's money (rental income) to accumulate wealth.

That is the power of compound annual growth and starting early.

And the real beauty in all of this? Once a mil has been achieved you'll have enough income generating assets to where you won't even need to work.So if you wanted to retire at 40 you could.

This is actually a good outline Bro, you also have good contacts in the I-Banking world so with a good combination of work and business models, you can acquire a lot of wealth.

But this thread does start up a good debate though, what exactly is a Millionaire? There are so many different schools of thought on this:

#1.) Theory One: One theory is that it's a guy with a net worth of a million dollars, after adding up all of his assets and subtracting his liabilities. But then with this theory brings a ton of separate debates on what "assets" should count? For example, some people will not count real estate that you use as a primary residence, while some will. Some people will not count pre-paid balances, while some will. Etc.

#2.) Theory Two: Another theory is that it's a guy with a million dollars in investable assets. So it's a guy with a direct access to a million dollars in capital and property.

#3.) My Definition: I personally believe a Millionaire is the guy with a Million dollars in net worth, after adding up every single asset (including his house value, pre-paid balances, business contracts, and even the value of social security as I believe social security is an asset) minus his debts which include both installment and revolving debts. So I would add up every single asset, where many other theories exclude certain assets.

Now while the Millionaire thing is good, my MAIN GOAL has always been to maintain an excellent Cushion Period. The Cushion Period is based primarily on: "If I stopped working and generating new income tomorrow, how long do I have to live on my current level of assets and emergency resources before I'm down to zero?"

I believe if your Cushion Period is at least 7 years, you are doing very well in life. My Cushion Period is currently over 10 years. This right here gives you so much peace of mind in terms of finances, that it's unbelievable.

 

[BeExcellent]

@l_e_g_e_n_d is who you want to hear from.

I agree with Tenacity and also use his 3rd definition of millionaire. Security funds are huge. I most like perpetual security. My assets create enough income that they can support me perpetually already. For me that is financial freedom. If all I had to support was me I'd already have mostly retired, but I have 3 kids who like to eat & will be college bound in a few years, so retiring mortgage debt is why I keep working in my industry. I wish to live at my current lifestyle even once I forgo my 6 figure salary and while I'm funding college.

Personally I have $0 in the financial markets at present. I actually pulled over $100K out of IRAs several years ago, took the tax hit, and bought for cash a number of income producing assets. These assets paid for their own tax penalty in the first year. Many financial professionals would cringe at this strategy but I have never regretted doing it. I'd rather have all available capital deployed now to create cash flow while I'm still young enough to enjoy it. I also have control over how those assets perform to a far greater degree than if my money stayed in the financial markets.

Having said all that I may eventually go back into the financial markets in an income producing mode once my portfolio is debt free and I want to further maximize passive income stream.

 

[guru1000]

My post will follow in a few days. It will include sound advice that could make anyone with an average salary a multi-millionaire (net worth > 2 MM) within 20 years, starting from zero.

 

[Tenacity]

My post will follow in a few days. It will include sound advice that could make anyone with an average salary a multi-millionaire (net worth > 2 MM) within 20 years, starting from zero.

I look forward to it, but remember it has to be something that a lot of people would have access to. Legend mentioned something about doing $100k plus real estate fix/flip deals, and that's not something that a lot of people have access to.

Tenacity's Suggested Path To Becoming A Millionaire

- Specialize in a skill that's in demand and either start your own business or work for a large employer within said area.

- Through promotions, etc., get to $60,000 per year starting at age 27 before taxes, live in a low/average cost of living area, and manage any family costs (such as creating kids) where your total annual expenses (with taxes) comes to around $45,000. This will allow you to put away $15,000 per year into investments.

- For the next 26 years, from age 27 to age 53, put $15,000 per year into an S&P Index Fund and Total Bond Index Fund, which should give you a collective CAGR of 6% per year over the 26 years. This would produce $1,008,827.26 in the Index Funds at age 53.

- In addition to this, let's say at age 53 your other assets (car, property, personal items, pre-paid balances, other bank accounts) come to around $150,000 in value, so that's a total of about $1.16 million in assets.

- Let's say your outstanding debt payments are about $60,000 in terms of remains of paying off your property (the bulk of the amount), car payments, and some credit cards. That leaves you with $1,100,000 in net worth, or a Millionaire in your early 50's.

I know, I know, everybody wants to be a Millionaire at 30 or 40 and I'm certainly not discouraging you from trying. Just be careful of taking on too many risky ventures and over-leveraging, which could completely blow up in your face and not only stop you from becoming a Millionaire in total, but cause serious financial problems.

My path is very much the Tortoise path, which is slow and steady baby. In the meantime, you will have a SOLID Cushion Period of at least 7 years which will keep you in a state of financial efficiency while you continue to build towards becoming a Millionaire.

 

[devilkingx2]

last time I saw a guide to being a millionaire quickly and young it was something like:

1. get the best paying job you can find (which implicitly means go into a field that actually has available jobs that can net you decent pay)
2. live like you make minimum wage anyway (meaning, forgo all expensive luxuries that eat up your cash)
3. pay off all your debt ASAP (and avoid accumulating any more than you have to)
4. save all the money you can once the debt is paid off
5. millionaire by 35

I read it a long time ago though so there's loads of details i'm leaving out there

 

[guru1000]

Read my thread down the list about Success Starts Between Your Ears for some tools & attitudes

Success thinking and abundance mentality is paramount. I would never have started my side business - which is what provided me with the cash windfall to start investing in the first place - had I just been content with my current job and just getting by.

We’ll begin here. What came first the chicken or the egg?

Existence begins the egg. Within the egg exists a future spectrum of random potentialities which may follow. What exactly determines what this egg will develop into? Will the creature whom arises from this egg become great--or--a circumstantial slave, faltering into an endless pool of failure and despondence? Is the financial success of the creature solely a product of luck and circumstance; that is, being in the right place, right time, right market? Are there limitations outside of the egg which categorically curse the creature irrespective of its unlimited potentiality to a damned corporeal existence—or can this creature transcend its ostensibly "debilitating" environment?

At one point, the creature awakens. Only now the creature, no longer an egg, needs to be nourished with a deeper consciousness, as to develop and understand its enormous potentiality. It may develop this deeper consciousness and decide it wants something greater than and for itself and others to be created within its corporeal existence and environment. Then spawn from the seemly random challenges we call "life," it gains a transcendental consciousness, a deeper awakening of myriad opportunities which already surround it, whereas it is ripe and ready to capitalize upon and reach this potentiality.

Post on mental paradigms will follow in the next few days, followed by the concrete financial strategy in how to grow a multi-million dollar net worth. While some here might agree and like what I share, 99% of you will neither use nor capitalize on this knowledge. Not because you don’t want the best for yourself; not because you can’t access the networks and markets that I will share; not because you cannot position lucrative investments at the right place and time; not because you cannot raise or save the capital needed to get started--but simply because your mental paradigms of the greatness that could befall upon you have not been awakened … yet.

 

[devilkingx2]

We’ll begin here. What came first the chicken or the egg?

the egg because the chicken's predecessors also hatched from eggs and therefore the first chicken hatched out of an egg

 

[BeExcellent]

The biggest thing I've discovered along the way...is * I * am what limits me. In my mind this is incredible news!!!

But that means too that I have to clobber whatever perceived barriers I have put up.

They are imaginary but real when treated as real.

This is empowering news indeed!

 

[PrettyBoyAJ]

We’ll begin here. What came first the chicken or the egg?

Existence begins the egg. Within the egg exists a future spectrum of random potentialities which may follow. What exactly determines what this egg will develop into? Will the creature whom arises from this egg become great--or--a circumstantial slave, faltering into an endless pool of failure and despondence? Is the financial success of the creature solely a product of luck and circumstance; that is, being in the right place, right time, right market? Are there limitations outside of the egg which categorically curse the creature irrespective of its unlimited potentiality to a damned corporeal existence—or can this creature transcend its ostensibly "debilitating" environment?

At one point, the creature awakens. Only now the creature, no longer an egg, needs to be nourished with a deeper consciousness, as to develop and understand its enormous potentiality. It may develop this deeper consciousness and decide it wants something greater than and for itself and others to be created within its corporeal existence and environment. Then spawn from the seemly random challenges we call "life," it gains a transcendental consciousness, a deeper awakening of myriad opportunities which already surround it, whereas it is ripe and ready to capitalize upon and reach this potentiality.

Post on mental paradigms will follow in the next few days, followed by the concrete financial strategy in how to grow a multi-million dollar net worth. While some here might agree and like what I share, 99% of you will neither use nor capitalize on this knowledge. Not because you don’t want the best for yourself; not because you can’t access the networks and markets that I will share; not because you cannot position lucrative investments at the right place and time; not because you cannot raise or save the capital needed to get started--but simply because your mental paradigms of the greatness that could befall upon you have not been awakened … yet.

Awesome stuff. Look forward to the next posts.

 

[BeTheChange]

It absolutely can be done. I did it in about 10 years and it would have been sooner had I listened better to a couple of millionaires instead of make a couple of bone head expensive errors.

Read my thread down the list about Success Starts Between Your Ears for some tools & attitudes. I started at about 36, reached the 1M net worth around 46 and am now paying down debt to maximize free cash flow (and further increase net worth).

In addition to the list you made above think carefully about what kind of property you buy. I buy property for cash flow and I like very low acquisition costs. Some of my rentals create a 40% annualized return. You get this type return in low end markets (which need not be slums if you know where to look.)

Do you want commercial, residential, development? I know a couple of lawyers who own trailer parks all over the US. They may as well print money.

So look at what you want to accomplish & how much you need to ante up...network and find investors. Guru & Legend are in investment properties and deal making. PM them. Feel free to PM me too.

You can do it. I am becoming unemployable as I continue, which has the wonderful side effect of more opportunities falling into my lap.

Abundance indeed!!! Success attracts more success!!!

What kind of "bone head expensive errors" are you referring to?

 

[PrettyBoyAJ]

@guru1000

When is the next post?

 

[guru1000]

@guru1000

When is the next post?

Been out of focus of late. Yes, this could even happen to us "Gurus." Will post soon.

 

[BeExcellent]

What kind of "bone head expensive errors" are you referring to?

My 4th investment property was (is -I still own it) a small historic apartment building. It has 13 units, 9 studios, 3 1 bedrooms, 1 2 bedroom. It's Spanish eclectic with the Ludowici green tile roof, wrought iron balconies, terra cotta architectural details and stained glass. It was originally built in the early 1900s and extensively restyled into Spanish style in the 1920s. It's 9000 sqft under roof. My mentor told me not to buy it. 1929 or earlier construction means 1929 systems. Systems are very expensive to repair/overhaul. Ask me how I know.

It was also full of drugs, hookers, deadbeats and deferred maintenance. It had developed a bad reputation and was a blight for a whole historic neighborhood.

None of that scared me. It should have. Two weeks after I closed the cops picked up a big drug dealer on my property. They picked him up for aggravated rape (not of me, lol). I was naive & determined & had an answer for everything.

I was handling this project from 1000 miles away. Forgot to mention that part.

Thank heavens I earn a solid 6 six figure income professionally because that place would have bankrupted a lot of people. But I had the financial strength to carry it. And the iron will to solve the problems it presented.

But it's also somewhat functionally obsolete (400 amps of power for the whole place.). You cannot run 13 units worth of major kitchen appliances, microwaves, blow dryers, stereos, TVs and computers on a 400 amp master service. Ask me how I know

So I bought the place, thinking I got good terms (Actually I did) and I've since put more $$ cash into the place out of my own pocket than it originally cost me (meaning I have cash amount greater than what I borrowed invested in the building.). About 150% of what I borrowed. Cash.

My investor laughs at me about it. He told me not to buy it but I didn't listen. I knew everything you see. Only I didn't. So we always have a good laugh. I was an idiot know-it-all.

I divorced my ex husband. I can't divorce this building, lol. But let me tell you, I've gotten a college education in real estate from it. I survived and learned what the hell NOT to do.

But if I took the 100s of thousands of dollars I borrowed and the additional 100s of thousands of my own cash and had that decision to make over again...I'd already be utterly unemployable. I'd be financially free already. As it is I'm close anyway.

It's does offset quite a bit of other income and I had the financial strength to carry that albatross and support my family and build out the rest of my portfolio (which grosses now more than my professional income) so I managed to double my income after this error but I also realize had I not made that error I'd be that much further along.

Let's just say I listen carefully now when millionaires talk business with me. I'm only a baby millionaire & realize I have lots to learn.

I still ascribe to "Go Big or Go Home", but I'm smarter because I've made some expensive mistakes. Meaning I have "experience".

HOWEVER...

It's smarter to learn from someone else's mistakes than to go make them all yourself to be sure they were really mistakes...but I was pretty hard headed.

But hard headed has a silver lining. Hard headed people are not quitters. I knew I screwed up royally in the first year. I couldn't sell. So I had to figure it out, get creative. I also had to make other good investments to offset this bad one, and I've done that in spades. No way would I quit.

And that building isn't totally out of the woods yet. But it was featured on the Holiday Homes tour last Christmas...there was a line out the door to see it. I have a long term exit strategy in place that I will execute once the rest of the portfolio debt is paid down.

I'm going to outlast, overcome and emerge victorious in the end.

And I feel proud when people commend me for single handedly running the criminals and crime out of there. The neighborhood has improved in value and the business people & law enforcement appreciate what I've done.

But it was still bone headed to buy the silly thing. That's ok. In the end those lemons will make sweet lemonade.

 

[guru1000]

My 4th investment property was (is -I still own it) a small historic apartment building. It has 13 units, 9 studios, 3 1 bedrooms, 1 2 bedroom. It's Spanish eclectic with the Ludowici green tile roof, wrought iron balconies, terra cotta architectural details and stained glass. It was originally built in the early 1900s and extensively restyled into Spanish style in the 1920s. It's 9000 sqft under roof. My mentor told me not to buy it. 1929 or earlier construction means 1929 systems. Systems are very expensive to repair/overhaul. Ask me how I know.

It was also full of drugs, hookers, deadbeats and deferred maintenance. It had developed a bad reputation and was a blight for a whole historic neighborhood.

None of that scared me. It should have. Two weeks after I closed the cops picked up a big drug dealer on my property. They picked him up for aggravated rape. I was naive & determined & had an answer for everything.

I was handling this project from 1000 miles away. Forgot to mention that part.

Thank heavens I earn a solid 6 six figure income professionally because that place would have bankrupted a lot of people. But I had the financial strength to carry it. And the iron will to solve the problems it presented.

But it's also somewhat functionally obsolete (400 amps of power for the whole place.). You cannot run 13 units worth of major kitchen appliances, microwaves, blow dryers, stereos, TVs and computers on a 400 amp master service. Ask me how I know

So I bought the place, thinking I got good terms (Actually I did) and I've since put more $$ cash into the place out of my own pocket than it originally cost me (meaning I have cash amount greater than what I borrowed invested in the building.). About 150% of what I borrowed. Cash.

My investor laughs at me about it. He told me not to buy it but I didn't listen. I knew everything you see. Only I didn't. So we always have a good laugh. I was an idiot know-it-all.

I divorced my ex husband. I can't divorce this building, lol. But let me tell you, I've gotten a college education in real estate from it. I survived and learned what the hell NOT to do.

But if I took the 100s of thousands of dollars I borrowed and the additional 100s of thousands of my own cash and had that decision to make over again...I'd already be utterly unemployable. I'd be financially free already. As it is I'm close anyway.

It's does offset quite a bit of other income and I had the financial strength to carry that albatross and support my family and build out the rest of my portfolio (which grosses now more than my professional income) so I managed to double my income after this error but I also realize had I not made that error I'd be that much further along.

Let's just say I listen carefully now when millionaires talk business with me. I'm only a baby millionaire & realize I have lots to learn.

I still ascribe to "Go Big or Go Home", but I'm smarter because I've made some expensive mistakes. Meaning I have "experience".

HOWEVER...

It's smarter to learn from someone else's mistakes than to go make them all yourself to be sure they were really mistakes...but I was pretty hard headed.

But hard headed has a silver lining. Hard headed people are not quitters. I knew I screwed up royally in the first year. I couldn't sell. So I had to figure it out, get creative. I also had to make other good investments to offset this bad one, and I've done that in spades. No way would I quit.

And that building isn't totally out of the woods yet. But it was featured on the Holiday Homes tour last Christmas...there was a line out the door to see it. I have a long term exit strategy in place that I will execute once the rest of the portfolio debt is paid down.

I'm going to outlast, overcome and emerge victorious in the end.

And I feel proud when people commend me for single handedly running the criminals and crime out of there. The neighborhood has improved in value and the business people & law enforcement appreciate what I've done.

But it was still bone headed to buy the silly thing. That's ok. In the end those lemons will make sweet lemonade.

I'd say this experience has given you a PhD in real estate, but more importantly has opened up the possibility for you to partner up with investors (you with the experience, the investors with deep liquidity/net worth--both of which large commercial lenders require, especially experience driven in 5MM+ loans) to sink your teeth into larger commercial buildings (100 unit+), which we will discuss in greater detail later in this thread.

I'd consider it a blessing. And I'd wager at the end, considering all the tax writeoffs, cash flow, and appreciation over the next 20 yrs, even with this "mistake," you'll end quite well.

 

[BeExcellent]

I'd say this experience has given you a PhD in real estate, but more importantly has opened up the possibility for you to partner up with investors (you with the experience, the investors with deep liquidity/net worth--both of which large commercial lenders require, especially experience driven in 5MM+ loans) to sink your teeth into larger commercial buildings (100 unit+), which we will discuss in greater detail later in this thread.

I'd consider it a blessing. And I'd wager at the end, considering all the tax writeoffs, cash flow, and appreciation over the next 20 yrs, even with this "mistake," you'll end quite well.

Well introduce me. I see opportunity everywhere