Becoming a multi-millionaire has more to do with luck rather than skill. We can say we worked hard to achieve our success. But if you really look deeply into your so called self-made success, you'll realize that a large reason was mostly due to luck.
Heck, being born in America or being able to live and work in America makes you lucky since you've 4.5% of the world's population gets to do so. We've got thousands of people by the day trying to come to our great country but can't.
Too many of us deemphasize our luck and overemphasize our skills. I'd like to break this cycle by sharing my own wealth progression timeline. I estimate that 80% of the reason for becoming a millionaire was due to luck.
Luck's Role In Becoming A Multi-Millionaire By 40
I went from $4,000 at 22 to $1,000,000+ by 28. But over the next 12 years, I went from $1,000,000 to $10,000,000+. I now believe $10 million is the ideal net worth to retire. At $10 million, you can comfortably generate between $200,000 – $350,000 in low-risk income to live a great life.
Here are the reasons why I was able to become a multi-millionaire by 40.
Luck In My 20s
- Luck. Got through 55 interviews over 7 rounds to land a job in investment banking at Goldman Sachs. Someone like me from a state school (William & Mary) had no business getting this job, but I got on a 6am bus to go to a career fair one Saturday and one thing led to another. Base salary was $40,000, so that kinda stunk, but my experience taught me how to invest, network, sell, and build relationships.
- Luck. Invested in VCSY in 2000, a Chinese internet stock that climbed 50X in six months. Turned $3,000 into $170,000 and sold at $155,000 when it started collapsing. The stock went to nothing a year later. At the time, I only had about $4,000 to my name, so this investment was a significant leap of faith. It is because I was working on the Asian Equities desk at Goldman Sachs that I found this name. Once I told my friends, the interest in the name erupted.
- Luck. A headhunter called my VP to see if she wanted to work for a competitor covering West Coast clients. She said no and handed me the phone because I covered West Coast clients out of NYC! One thing led to another, and I got a new job after 2 years with GS as an Associate with a raise. Over the next two years, 90% of my GS analyst class got let go.
- Rational decision making. After arriving in San Francisco for my new job, I decided to live like a pauper for a year and a half because I didn’t know anybody and didn’t know where to live. In 2003, at the age of 26, I put down $120,000 and bought a 2/2 condo in a nice part of town for $580,500. I figured, best to turn funny money (VCSY profits) into a real asset. Today, the condo is a paid off rental generating $4,300 a month and worth ~$1,300,000.
Became A Multi-Millionaire Through Real Estate
- Went all-in again. At age 28 in 2005, I bought a single family home I didn’t need on the north side of San Francisco for $1.52M. The $300,000 downpayment took ALL the cash I had. I needed a $50,000 bridge loan because it was December, and bonuses weren’t paid until February the next year. Things were good for a couple years until the financial crisis happened. I was sweating bullets with my $1,200,000 mortgage. So I rented out a room for several years.
- Super lucky. I tried to sell the house I bought in 2005, for $1.7M in 2012. NO TAKERS after 30 days. It was embarrassing, so I took it off the market. My agent said a couple people were willing to offer $1.5M, and I said heck no. I wanted to sell because I had just left my job and we had just recovered from the financial crisis. I needed to lock down costs. In the end, I ended up selling the house for $2.74M in 2017 after my PITA tenants gave their notice. I couldn’t believe how sentiment turned so positive just five years later.
Stocks Went On A Huge Run
- Luck. Ever since 2009, the stock market has generally gone up, up, and up. To be able to save aggressively, invest aggressively, and not lose my job during the downturn was extremely lucky. The bull market served as a huge accelerator to allow me to leave full-time work by age 34 in 2012. Originally, I was thinking I'd have to work until 40.
- Pandemic luck. Despite a scary 32% decline in stocks in March 2020, stocks rebounded quickly and are now sitting close to all-time highs. I was able to buy some stocks near the bottom that provided a solid return. However, it is mostly by staying the course that has resulted in another $1 million in stock gains since the pandemic began. Who would have thought stocks would do so well?
Building An X-Factor
- Unwavering consistency. Real estate has made me over $3 million, but it is Financial Samurai, my personal finance site that has done the most for my net worth growth. I started the site in 2009 during the middle of the financial crisis. It was my X-Factor. I made a promise to publish 3X a week for 10 years in a row. I figured, if I could stay consistent all these years, the site would grow, allow me to leave my job, and earn me some online income and equity in the process. 10 years later, it has done just that. A couple of my peers just sold their websites for $6M – $7M in 2018, but I plan to keep going because running Financial Samurai is fun!
- Extremely lucky. Life is much, much easier when you can live it with someone you love. I first met my wife in college and we've been together through the ups and downs ever since. She has been my key support system and greatest cheerleader in allowing me to take risks and go on crazy adventures. I still remember asking her to wake me up at 5am for my first day on the job back in 1999! Today, my wife is critical in ensuring the Financial Samurai runs smoothly on the back end.
Don't Take Your Good Luck For Granted
So much of my wealth has been created through luck. Without luck, it would have been hard to become a multi-millionaire at a relatively young age. The key was not taking my luck for granted and continuing to save and invest aggressively, as if my luck would run out.
I got crushed during the financial crisis (-35% net worth) and made a poor investment in a Lake Tahoe property in 2007. I thought I was getting a good deal for 10% less than the previous sellers bought it for a year earlier. But it proceeded to go down by another 40%!
It’s hard to keep the faith, but you must during the most difficult times. The best thing we can do is learn from our mistakes and get better.
If you continuously put yourself out there, sooner or later good things will happen!
For example, on March 18, 2020, I wrote the post, How To Predict The Stock Market Bottom Like Nostradamus. And wouldn't you know it, the S&P 500 bottomed several days later near my estimate price.
Always Build Passive Income To Become A Multi-Millionaire
Given all the luck that was involved so far, it's only naturally to assume my luck will run out. As a result, my wife and I continue to save and invest aggressively.
Specifically, we are reinvesting 100% of our investment income and saving 80% of our active income from tennis coaching, Financial Samurai, and some part-time consulting.
This may seem extreme to continuously save so much after reaching a $10+ million net worth. But aggressive saving is what we've done for 20 years and it feels good to us. We've got kids to raise and aging parents to take care of as well.
Below is a snapshot of my various passive income investments to hopefully hold us over during the next recession. I’m focused on building my Alternative Investments, since I have more control over their outcomes.
Favorite Way To Build Wealth
Real estate crowdfunding is the investment I’m most excited about today. With inflation on the horizon, investing in real estate is one of the best asset classes to help you become a multi-millionaire. I reinvested $550,000 of my SF rental house proceeds in lower cost areas of the country with much higher cap rates (2.5% vs 10%).
I’ve got a total of $810,000 invested in real estate crowdfunding and plan to slowly build a larger portfolio for passive income because I no longer have time managing rentals as a stay at home dad. Fundrise is my favorite platform because they have the most vetted deals and are the creators of eREITs.
Remember, you only need to get rich once. Once you’ve achieved a level of wealth where you never have to work again, focus on capital preservation. Always turn your luck into real assets.
The last thing you want to do is return to the salt mines and start all over again! Once you are a multi-millionaire, your mission should be to stay a multi-millionaire forever.
Fight on,
Sam, Financial Samurai