Want to learn how to become a millionaire by 30? Here’s my story on how I reached a million dollar net worth in my late-20s. It involved a lot of luck, a lot of effort, and a lot of risk. I believe all Financial Samurai readers will eventually become millionaires due to disciplined saving and savvy investing over time.
Now that I’m in my mid-40s, in retrospect, I should have taken even more risk. Taking more calculated risk is a key theme if you want to become a millionaire at a relatively young age. The second key theme to become a millionaire by age 30 is to own appreciating assets that work hard for you.
Thanks to elevated inflation, it takes at least $3 million to live the lifestyle of a real millionaire today. If you own assets like real estate, stocks, and businesses, inflation will start working for you. Don’t make life harder than it already is!
How To Become A Millionaire By Age 30: Financial Upbringing
Growing up in a middle class household made me strong. My parents always drove beaters and frowned upon ordering anything other than water when we went out to eat.
I knew my parents were not rich because their incomes were in the public domain as foreign service officers. As a result, I made a conscious choice in high school not to attend one of the two private colleges that had accepted me. Instead, I went to William & Mary, which cost $2,890 – $3,200 a year in tuition from 1995-1999. I needed to save money.
We were by no means poor. We just pulled up to parties in a paint-less 1976 Nissan Datsun alongside Audis, Mercedes, and BMWs for the four years we lived in Kuala Lumpur, Malaysia between 1986-1990. It was very mortifying as a kid.
I knew nothing of expensive shoes because I had none. My wealthier friend gave me his old Air Jordans 4s that were two sizes too large. I couldn’t even afford a camera or a Nintendo game system. We led comfortable lives, but didn’t have more than we needed.
I was always curious about my wealthier friends. Many of their parents were business owners. So one day I told my father I too wanted to be a businessman.
By the time I was 13 I was hooked on every single episode of “The Lifestyles Of The Rich & Famous,” narrated by Robin Leech. A million dollar house and a $40,000 sports car. What a life! I thought to myself in the 8th grade. Might as well give it a go. That’s when I started really hitting the books.
Millionaire By 30 Money Mindset
If you want to become a millionaire by 30, you must adopt a strong money mindset. Know that there is money everywhere for the taking. You’ve got to believe you deserve to be rich.
Further, becoming a millionaire by 30 is becoming more common rather than the exception thanks to inflation. After all, $3 million is the new $1 million today.
There are so many standard ways to become a millionaire. If you don’t become a millionaire by 30, you will eventually get there with enough time.
If you work for 40 years and save and invest just 20% of your after-tax paycheck a year, there is no doubt in my mind you will amass at least one million dollars. Compounding is a powerful force.
Maxing out your 401K for 30+ years will also most likely lead to over $1 million dollars as well. Historical stock and bond market returns plus company match are on your side.
We’ve got financial planners, personal finance blogs, television, books and even free financial tools to help you build and track your wealth. So many resources make building wealth much easier now than in the past. Let’s look at three reasons why becoming a millionaire by 30 is easier than ever before.
Three Reasons Why The First Million Could Be The Easiest
1) Tremendous energy.
When we first graduate from high school or college, we have a tremendous amount of energy to show what we can do after all our education. We’re hungry, motivated, and need to prove to others and to ourselves our worth. 60-90 hour work-weeks are no problem!
Unfortunately, so many of us piss away our youth. We buy new cars without following my 1/10th rule for car buying. Some of us get into expensive credit card debt. And a lot of us don’t to our elders and think the world owes us something. Forget it folks.
Nobody owes us anything. But we owe it to ourselves and to our parents who sacrificed all that time and money raising us to give life everything we’ve got.
2) Less dependents.
Most of us won’t have children by the time we graduate from college. As a result, we can focus 100% of our efforts on generating wealth by developing our careers or our businesses.
Compare ourselves to middle aged adults with two children, a mortgage, and aging parents to take care of. We are like finicky Ferraris on a starting line ready to blow away our older model competitors.
I’m now a dad to two young children. As a result, I’ve got to wake up by 5 am every morning to write before my children get up. Otherwise, nothing would get done on Financial Samurai. By the time 1 pm roles around, I’m exhausted playing with my kids. Take advantage of your youth!
3) Nothing to lose.
When we graduate with nothing, we have nothing to lose. Compare that with people with property, stocks, and other investments during economic downturns, and they have everything to lose.
With very little assets, we should be taking more risks. Now is the time to start a company, invest in that growth stock, take a new job opportunity, or move half way across the world on a hunch that good things might happen. If we don’t take risks while we are young, we certainly aren’t going to take them when we are old.
How To Become A Millionaire By 30
I had no idea I became a millionaire at age 28 until two years later when I did my first detailed net worth spreadsheet in 2007. It’s easier to achieve something when we don’t even realize what we’re doing.
I was too busy saving, investing, working, and trying not to blow my money on things that I didn’t need. I was one of those “Super Motivated Boyfriends” (SMBs) who were impossible to lock down.
Like most people believe, 30 is a big milestone. Ever since college I told myself I was either going to make it, know that I was going to make it, or be an absolute failure by 30.
The fear of being a failure at 30 with no job, no woman, no savings, no investments, and no world experiences made me so motivated to not mess things up. I felt I needed to become a millionaire by 30 in big cities like New York and San Francisco.
A painful two years of working 70+ hour weeks right out of college with difficult bosses also got me into overdrive to figure out a way not to work forever!
There was no fanfare when I discovered the seven figure milestone had been achieved. Just the realization that time passes more quickly as we age. I had to make the most of my opportunities since nothing lasts forever.
Keep Aggressively Saving And Investing
Years later, I’ve continued to grow my net worth with a variety of passive and alternative active incomes. My family is a great motivator to keep on going. The last thing my wife and I want to do is go back to work while our children are still young.
If you’ve been reading my posts from how to save for retirement and how to properly invest for your future, there’s no magic behind wealth accumulation.
Amassing wealth is about savings, discipline, perseverance, luck, an X Factor, and the belief that you too deserve to be wealthy. Eventually you will have more than enough so that you’ll either retire or keep on playing for fun.
After leaving the work force for good at the age of 34 in 2012, I decided to keep on playing by building Financial Samurai into the best possible personal finance blog I could. When people tell me I’m lucky, I agree! As a result, I’ve tried to re-create my luck by writing 3-4X a week every year since 2009.
After 14+ years of writing on Financial Samurai, I believe one important secret to wealth and success is grit. If you can demonstrate unwavering commitment with one thing for at least 10 years, I strongly believe you will succeed. Too many people quit way too soon or right before the going gets good. Stay committed!
If I started this site in my early 20s, I would have become a millionaire by 30. If you are young, please take advantage of your youth.
The Road To One Million Dollars By Age 30
To the best of my memory here’s how I was able to amass a million dollars by age 28. Today, my net worth is much larger thanks to the amazing bull market.
Age 22. Year 1999. Place Your Neck On The Chopping Block.
When I graduated from The College of William & Mary, the total amount of cash I had was roughly $4,000. I had saved some money from summer jobs temping and flipping burgers at McDonald’s for $4 an hour. I had just started a dream job in New York City at Goldman Sachs. It was go time!
My base salary was $40,000, which at the time didn’t feel too great. I lived in a studio with my buddy from high school for two years because we couldn’t afford something nicer.
See: Achieving Financial Independence On A Modest Income
As a result, I invested $3,000 in a dotcom stock called Vertical Integration Systems (VCSY). It turned into $200,000 within several months. Yes it was incredibly lucky, but it also took some analysis and guts. I just wish I had more money to invest!
The stock pulled back by around 25%, at which time I sold everything for around $155,000 and stayed out of the bubbliscious stock market for the next year and a half due to a job change in 2001. VCSY ended up being worthless a couple years later. $155,000 equals about $120,000 in after tax proceeds. The trade is detailed in the post, Don’t Stop Fortune Hunting.
Net worth: ~$160,000.
Age 24. Year 2001. Taking An Employment Chance.
After two years in NYC, I was recruited to join another firm in San Francisco. I only knew a couple people in San Francisco, but felt the promotion to Associate without having to go to business school and 100%+ guaranteed raise to an $80,000 base salary + bonus was attractive enough to take a chance.
I was coming from a top firm and had established some solid client relationships over the past two years. The economy was still dicey due to the dotcom implosion and there was a big chance I would not make Associate after my third year at GS.
It turns out my firm in NYC did indeed let go of many colleagues, and only about 25% of the people I knew from my entering class were still there two years after I left. It was a little scary moving all the way cross country, but it wasn’t like I was moving to the middle of nowhere. This was San Francisco, one of the most beautiful cities in the world. Besides,
San Francisco is six hours closer to Hawaii, one of my favorite places on Earth, so I figured what the hell. I saved 100% of each bonus, maxed out my 401(k), and saved a little more for my after-tax brokerage account.
Net worth: ~$260,000.
Age 25. Year 2002. Continued To Live Like A Student.
The first two years in NYC, I lived in a studio with another guy. We put up one of those Chinese Paper Walls to add more privacy. I didn’t care. I was living in New York City, the most alive city in America. I’d rather spend money going out and partying rather than on an extra bedroom.
When I moved to San Francisco, I spent even less on housing since NYC is about 30% more expensive. I found a two bedroom, one bathroom apartment at the edge of downtown for only $850 a person. I finally had my own room, yeah baby!
When you now make double what you were making a year ago, yet pay 25% less in rent, saving becomes very easy. I increased my after tax, after 401K maximum contribution savings rate from 50% to 65%.
Here’s a post I wrote later called, Home Expense Guideline For Financial Independence. It highlights how I lived in NYC and SF to maximize disposable income. The post also gives recommendations on how much money you should spend on rent/buying in your journey as well.
Net worth: ~$400,000.
Age 26. Year 2003. Conservative Investments Before & During The Recession.
60% of every paycheck and 100% of every year end bonus after 401(k) contributions went into long-term CDs that yielded 5-6% at the time. The reason why I invested in CDs was due to a job change and not having time to manage my portfolio in 2001, 2002, and 2003.
Furthermore, I was scared of another market implosion that would not only take down my investments, but also my bonus, and potentially my job.
My 401(k) was already 100% exposed to the stock market already. Today, my net worth is highlight diversified across real estate crowdfunding, real estate, bonds, stocks, private equity, and business equity.
A day after my 26th birthday, I decided that it was time to grow up and buy my own place. I was renting a $1,600/month one bedroom apartment in San Francisco and wanted a nicer apartment.
At the same time, I didn’t want to spend more than $2,000 a month on rent because the return on rent is always zero. I became very disillusioned with having a large chunk of money in the bank and started wondering what is the point of working more since I had more than I could ever have imagined.
At age 26, I was already thinking of “retiring” in Hawaii. Given my waning motivation to work as hard anymore, I decided to buy a two bedroom, two bathroom condo in a nice area of SF and live it up a little!
The combination of 5-6% compounded returns in savings over four years, a growing 401(k), growing after tax investment account, and another year of saving a larger bonus really helped.
You don’t have to be a great investor to become a millionaire. You just have to be a good-enough investor with the proper discipline and risk exposure.
Net worth: ~$550,000.
Age 26-27. Year 2004. Renewed Motivation To Work.
After putting down a 25% downpayment (~$140,000) for a $580,500 condo, my motivation to work skyrocketed because of a drained cash account. I prayed the housing market wouldn’t implode like the stock market did years earlier.
A year before my condo purchase I did a silly thing and bought a $78,000 Mercedes G Wagon (G500). The truck was sweet and I thought it was a great deal since it was selling for $150,000+ the year before since this small dealership in Sante Fe, New Mexico curiously owned the US import rights.
I drove the truck for a year and had to sell it for a $20,000 loss because it wouldn’t fit in my condo garage due to the height! What an idiot, but I felt buying the condo was the responsible thing to do. I traded way down to a seven year hold Honda Civic worth $8,000 instead. I was growing up but still had the thirst for nice cars.
Having A Mortgage Was A Big Motivator
The $435,000 mortgage put a fire under my ass to work harder and be the best performer I could be. At the age of 27 I was promoted to “Vice President,” a title that is normally bestowed on business school graduates three to four years out of school at the age of 32-33.
From there, my income took another large jump up to $120,000 + a larger potential bonus. I became one of the youngest VP promotes in my office.
Debt provided an unexpected side benefit for my career. From 2003 to 2005 my condo also appreciated to around $815,000, a 40% jump. Unfortunately, this increase was unsustainable as we all know. In fact, one of the biggest downsides to paying off your mortgage is the loss of motivation.
I felt this way in 2015 once this condo’s mortgage was paid off. However, once my son was born in 2017, the motivation to make money increased again.
Net worth: ~$800,000.
Age 28. Year 2005. A New Landlord And Millionaire By 30
At 28, I decided to finally buy a single family house in San Francisco for $1,520,000. Believe it or not, $720/sqft for a house on the north end of San Francisco was pretty good because many homes were selling for $900/sqft at the time.
I was sick of having neighbors above and below me. I wanted a yard, a deck, reprieve from the HOA meetings, and to be king of my own castle. The bad thing about my house was that it was on a busy street next to the busiest street in the entire city.
After I moved into my single family house, I turned my condo into a rental, but finally sold it in 2017 for 30X annual gross rent because I no longer had time to be a landlord after my boy was born.
My rental property equity was around ~$350,000 plus around $750,000 worth of CDs and stock investments for a total net worth of around $1.1 million. I knew I was doing OK, but I had no idea I was worth over $1 million at the time. I was too busy building a business at work, managing a rental, remodeling a new home, and figuring out how to keep things going.
Note On 401k Investments: I put away the max 401K pre-tax contribution since my first full year of employment. At the time, the maximum contribution amount was $10,000 a year. The maximum amount is now $19,500 a year for 2021 and will likely go up by $500 every 2-3 years.
If I take six years times the average $15,000 = $90,000. The average company match was around $15,000 a year since we had match + profit sharing, so add on another $80,000 = $170,000 in my 401K by the age of 28. But actually, I had over $200,000 given it did return more than 5% on average for six years.
One of my 401K options was a hedge fund, where I put a 60% of my allocation during the downturn between 2000-2002. The fund actually did well given they had a net short position, so my overall 401(k) was able to take the hits. In fact, if you max out your 401(k) consistently, you will likely become a 401(k) millionaire after 20 years of contributions.
More Thoughts On How To Become A Millionaire By 30
I strongly believe most people reading this article can accumulate a million dollars if they have the motivation, a good amount of planning, the right amount of guidance, and some luck.
I’m sure some of you will have your own doubts, while others will scoff at how little $1 million is. But here are my suggestions for those who want to become a millionaire by 30 or at a relatively young age.
1) Don’t mess around in high school and college or else you will have a hard time landing a good job that pays well.
Give yourself optionality please. There are thousands of straight-A, top 25 university graduates every single year. I was one of the thousands, and it’s hard to compete if you are not one of them because employers can’t respond or meet with everyone.
Many firms such as Goldman, Mckinsey, Bain etc have GPA cutoffs of 3.5 out of 4.0, with some at 3.7. If you don’t have connections then you just aren’t going to make the cut when there are thousands of applicants for only 60 spots. You can rage against the machine and believe grades don’t matter, but you are going to be wrong like donkey kong and most likely regret your immaturity.
Getting a job on Wall Street was like winning the lottery for a kid coming out of a non-target public school. I went through seven rounds and 55 interviews over a course of six months before getting the offer. I would not have been able to even get an interview if I didn’t get good grades or show initiative.
Your job income is the #1 main source of wealth for most people. Might as well focus on the highest paying industries that you think you’ll enjoy if money is what you want to make. It’s important to note that no way is a large income a guarantee for lasting wealth as many millionaire bankruptcies have proven.
2) Save until it hurts each month.
If the amount of money you’re saving each month does’t hurt, you’re not saving enough. Remember this Financial Samurai saying forever.
When you’re a college student, you’re poor. Hence, even if you graduate and only make $30,000 a year, I’m willing to bet that’s more than you’ve ever made in your life! Try to continue living like a student for years after you’ve found your first full-time job and save!
Stop making excuses why you need to buy a nice car and nice clothes. You’re a 22 year old recent college graduate for crying out loud. Build your foundation in your 20s and stop thinking you have a decade to explore, because you don’t. 10 years maxing out your 401(k) will likely result in a $200,000 portfolio in your early 30s.
The base you build in your 20s will provide tremendous returns for later on in life. If you stay consistent over the years, you will get there. Aim to save at least 20% of your after tax income every year, no matter what.
3) Work hard and know your place.
If you want to be a millionaire by age 30, you must work hard. Working hard takes NO skill. If you’re not coming in first and leaving last, you aren’t putting in your time.
I promise you that if you wake up by 5am every morning, work one to two hours before the rest of your peers and work another one hour after your peers have left, you will get ahead! Avoid career limiting moves that will severely curtail your future.
The reason why I was promoted to Vice President at 27, when the average VP promote is 33 is because I put in my dues. I generated millions of dollars in revenue, built a solid network of internal supporters, and was a workhorse by coming in by 5:30am everyday for my first two years and leaving at 7:30pm-8pm on average.
Sometimes I even left work at 10pm. Did I sacrifice some of my social life? Of course I did. But, I also partied hard many weekends goodness knows! Working hard doesn’t mean you can’t play hard and travel. You’re young remember? You’re energy is limitless!
4) Stop making excuses.
You can spend time crying why the world isn’t fair, or you can do something about your life. If you are reading this post, chances are you have clean water to drink, shelter, internet and a legal system that protects your rights.
There are millions of people in the world who are starving every single day. An equal amount who live in fear of dictators confiscating everything they own. Some immigrate to America for a better life, don’t even speak the language and crush it. What is your excuse? Abolish welfare mentality.
Spend 30 minutes every day by yourself in meditation coming up with a better business model for your company or for own business. Spend four hours every weekend in the office studying up on new things that will help improve your standings with your clients.
You can even start a blog and work an extra 30 hours a week online before you have a family and generate some healthy revenue if you wish. Let’s take advantage of the freedom our respective countries provide.
5) Consider both aggressive and conservative investment strategies.
When I was 22, I only had about $4,000 to my name. Regardless, I invested 80% of my money and it turned into a 50 bagger. Was I lucky? Hell yes! But, I did my research and was I willing to put my balls on the line to try and make some money.
I think it is very important to take more risks when you are young which is why I’m biased towards growth stocks over dividend stocks. With the proceeds from my VCSY China internet trade, I transferred my wins into long-term CDs and then ultimately into property.
When you are ahead, it’s very hard to walk away. As a poker player I know this feeling all too well. But it’s tantamount to invest a portion of your winnings in a safe haven. Lock it up. Protect yourself from yourself!
I didn’t take on the reckless mentality of betting the farm with my windfall since I was now playing with the “house’s money.” This was my money now damnit, and I wasn’t about to piss it away on some B2B stocks. Continuously diversify your income streams and build passive income.
Today, I like the combination of growth stocks and less volatile real estate investments.
6) Property is one of your best friends over the long term.
If you put 20% down on a property and it goes up 3% a year, that’s a 15% return on your cash thanks to leverage. Sure, you can get your face ripped off if you bite off more than you can chew. But trust me when I tell you that thanks to inflation, your debt payments will seem insignificant five years afterward.
Five years later, you will be happy every month when you get to charge a rent that is much higher than the interest portion of your mortgage. Property is my favorite asset class for young people to build wealth.
I sometimes feel guilty raising the rent, but remind myself, I was the one who took the risk, put down the downpayment, and nobody forces anybody to rent my place. Real estate is my favorite investment asset class to build wealth. The condo I bought on my 26th birthday for $580,000 was fully paid off in 2015 at the age of 38. A neighboring unit with the same layout sold in 2017 for $1.36 million.
I’m now investing in real estate crowdfunding to take advantage of lower valuation properties with higher cap rates in the heartland of America. I want to invest in the next San Francisco Bay Area over the next 20 years, and lower cost of area cities like Memphis, Austin, and Salt Lake City look attractive to me.
My two favorite real estate marketplaces are Fundrise for their eREITs and CrowdStreet for their individual commercial real estate investments in 18-hour cities. There is opportunity to be had due to the coronavirus pandemic in 2020. Both platforms are free to sign up and explore.
After explosive stock market gains during a pandemic, money is likely going to flow into real estate. Mortgage rates are at all-time lows, corporate earnings are rebounding, and all of us are spending more time at home. As a result, the intrinsic value of real estate is going way up.
The value of rental income has gone way up as well. The reason being is that it takes a lot more capital to produce the same amount of risk-adjusted income. Real estate and technology sectors tend to do best in a rising interest rate environment.
7) Pretend you are poorer than you are and show few signs of wealth.
Stay humble despite amassing a fortune. Don’t show off or waste money on things you don’t need. Make people believe you are younger and poorer than you really are. I drive a 13 year old car and wear t-shirts, jeans, and a baseball cap most of the time. Once you’ve accumulated your war chest, practice Stealth Wealth.
I would say at least 80% of the millionaires I know are very low key. You can’t tell they have a lot of money except for when you get to their house. The only people who want attention are those who are insecure, not not really rich.
8) There are more ways than one to rub a furry koala.
You can make big bucks through a day job or by starting your own online business. Better yet, you can do both. While I was working in finance, I launched Financial Samurai. I worked on it before I went to work and after I came home.
Since starting this site in 2009, Financial Samurai now generates enough revenue to provide comfortably for a family of four in San Francisco. In fact, FS started generated enough for us to live well starting at around 2013. You just never know until you start something new.
To become a millionaire by 30, you must work on your X-Factor. Your X-Factor is what will bring you more wealth, happiness and joy. But the key is to work on your X factor long before you need it!
9) Office politics counts.
In order to get ahead, you’ve got to play the game by building as many company allies as possible. I don’t know many people who like to sell themselves internally to their colleagues and bosses. People think that all it takes is good work to get recognized, paid, and promoted. This is absolutely false!
You must sell yourself internally as much as you sell yourself externally. I believe you need to sell yourself 50% internally and 50% externally. Don’t think just because you’re bringing in business that you will automatically get paid and promoted. You must build a support network of powerful people at your firm. Once you have someone with significant power on your side, your entire career gets that much easier.
10) Regularly invest in yourself.
Your greatest money making asset is you. Don’t cheap out on education or consulting. Education is worth more than any material thing you can buy. My studies in college and grad school taught me how to market, negotiate, communicate, analyze investments, and influence.
Thankfully, you can now learn most everything for free thanks to the internet. It’s hard to recognize value when you can’t touch it. However, I promise you that knowledge and education is worth more than everything else.
11) Diligently keep track of your progress.
How much you keep is even more important than how much you make. There are people who make millions of dollars and end up broke years later. The simple reason is because they had no idea where their money went. Perhaps they made some ill-timed investments.
Maybe their risk exposure didn’t align well with their risk tolerance. Or maybe they simply just spend too much. Everybody should leverage Personal Capital, the best free financial tool online. With Personal Capital, you can track your cash flow, analyze their investment portfolios, and calculate their financial needs in retirement.
12) Regularly turn funny money into real assets.
We will regularly go through boom bust cycles. The key is to consistently turn that funny money you made in the stock market into something real. Do not stay all-in all the time when you have a nice windfall.
So many people have ended up losing all their money in the 2000 crash. Then came the 2008-2009 crash. Most recently was the March 2020 crash. Boost your wealth by using your windfall gains to buy a more stable asset like real estate or fine art. If you do, your chances of becoming a millionaire by 30 will increase.
With stocks at all-time highs again, I’m taking about 10% of my winnings and spending it on a better life.
13) Consistently recognize your luck
To become millionaire by 30 requires a ton of luck. If you start believing all great wealth is mostly due to hard work and skill, you decrease your chances of becoming a millionaire. The reason is because you may start taking your opportunities for granted. You also start getting arrogant.
Not everybody has equal opportunity. For example, people’s chances of becoming a millionaire are different by race. Stay humble and hungry.
14) Invest for the long run
Your first million really isn’t the easiest now that I’m much older. Once you accumulate several million dollars, you will find it much easier to make another million dollars in net worth.
Therefore, your key is to grow your capital to a sizable amount and make continued risk-appropriate investments. For example, if you have five million dollars in invested capital in the S&P 500, and it goes up 20%, you’ve just made one million dollars without doing much work.
15) Keep on reading and learning about money
Millionaires are voracious readers. We’re always learning in order to continuously grow our finances in a risk-appropriate manner. There is always opportunity!
If you want to dramatically improve your chances of being a millionaire, read my instant Wall Street Journal bestseller, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. The book is jam packed with unique strategies to help you build your fortune while living your best life.
Buy This, Not That is a #1 new release and best seller on Amazon. By the time you finish BTNT you will gain at least 100X more value than its cost. After spending 30 years working in finance, writing about finance, and studying finance, I’m certain you will love Buy This, Not That
Align Your Beliefs With Reality
One cannot downplay the importance of luck in becoming a millionaire by 30. I have been fortunate to have two loving parents, an incredible spouse, and a brain that works most of the time.
If you’re born in America, please take full advantage of all your opportunities. Despite having a deficiency in higher level math, uninspiring SAT scores, and a run in with the law as a teenager, I made up for my weaknesses with plain old work ethic and relationship building. It also helps to be an undying optimist as well.
You can’t complain about not having wealth if you decide not to pursue wealth. That’s a mental misalignment. The desire for wealth shouldn’t be viewed as evil. It should be viewed as natural for anybody who wants to live a better life. Who doesn’t want to b a millionaire to take care of his or her family and parents? Further, by being a millionaire, it’s easier to give back to the community.
As soon as we align our realities with our beliefs, we become congruent and happier with ourselves and our outlook.
Good luck on your journey to your first million! Becoming a millionaire by 30 is a great accomplishment. Once you get there, that’s when the real fun begins.
Become A Millionaire Through Real Estate
Real estate is my favorite way for the average person to become a millionaire. Using other people people’s money (a mortgage), you can buy a real estate that tends to appreciate in value over time. Meanwhile, inflation whittles down the cost of debt. This one-two combination helps create a significant amount of wealth over time. Let inflation be your friend, not your enemy!
Roughly 40% of my net worth is in real estate. Further, real estate accounts for roughly half of my estimated $300,000 a year in annual investment income. One irony of real estate is that because it is less risky than stocks, investors can actually end up making much more from real estate.
I think the best strategy is to ow your primary residence to at least get neutral real estate. Then diversify by buying rental properties in your city, public REITs, and commercial real estate.
Take a look at my two favorite real estate crowdfunding platforms:
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eREIT. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For the average investor, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build your own commercial real estate portfolio.
Both platforms are fee to sign up and explore. I’ve personally invested $810,000 in 18 real estate crowdfunding projects since the end of 2016. My goal is to diversify, take advantage of real estate arbitrage, and earn income 100% passively as a busy father of two young children.
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Sam,
Very impressive. I actually didn’t start my wealth building until I was in my early 30s. If you have a chance in future posts it would be great to get a sense of what your thoughts might be on what strategies are most effective for building wealth.
Thanks,
James
Hi James,
I really think real estate is the best way for most people to build wealth over the long run. It’s less volatile, provides utility, more controllable, and puts management in your own hands.
https://www.financialsamurai.com/2012/10/16/real-estate-is-my-favorite-investment-asset-class/
Here is my latest passive income streams post: https://www.financialsamurai.com/2013/09/23/how-to-build-passive-income-for-financial-independence/
Regards,
Sam
I absolutely love this article! I am 27 and is constantly talking to my wife about a break through. Yep, did the whole college thing…. Graduated, and started working…. I’ve two 401k’s and the one from my previous job is in a Roth 401k aggressive portfolio. Still trying to figure out if I want to move it…… I don’t know much about the stock market, as IT is my get up. I do have a little PC business working out of home and it does bring in some income, just getting the business is the biggest thing.
Reading your articles just motivates me even more! Work hard now, play hard later.
My 2 cents.
I’m catching up on reading comments again and wanted to note something that may be obvious, but your humble style de-emphasized it. Your building a 7 figure net worth in your 20’s, with just about 6 years working is astounding. My guess is that only 1 in a 1000 do this. Good work, and I do mean WORK.
At age 27 my net worth is around 30k. I decided to pursue acting as a career so my income is extremely variable and limited. The fact that I’m not in debt and have as much to my name as I do makes me proud. But reading stories like yours motivates me to work harder and find new and innovative ways to save, invest, and grow.
Hi Stefanie, nice job not being in debt and best of luck with the acting career. If you make it big, please invite me to be your date to the next grand soiree OK? Cheers
This site is great. I really want your input on my situation. I am 26 right now and have $33K in my 401k in a basic mutual fund and the other half I am attempting swing trading. My personal savings account is at $46,300. I am looking for another used car since my jeep died and probably going to spend $7000, exactly the rule for my income $75K with my bonus. I had diverted more of money to my savings account so I can buy a small business in the future (age 30 is the target date). I just paid off all of my undergraduate debt.
I am currently going for my MBA part time paid for by my employer. I refuse to pay any expenses out of pocket for tuition even if it means taking 4 years to complete. Question is, how do you think I am positioned right now? I did graduate in 09 when the economy bombed completely. I am trying to look at additional ways to grow my savings. I as considering leaving the bulk of my savings, the core $40,000 in low interest secure investments like CDs. I was then going to place any additional dollars saved in Jan into aggressive investments like stocks. think that makes sense?
I really want to take advantage of the next 3 – 4 before I am in my early 30s so I can grow a nice capital cushion. I am not as far ahead as you are when you were my age.
Hi Jon,
I think you are on a fantastic track to financial freedom.
If I was in your shoes I would do all the research I could on investments other than savings and CDs at this point in time. $40,000 in absolute savings is a lot, and it is also a large part of your net worth. If the stock market pulls back do to an exogenous variable like a Syrian raid by the US, is start mobilizing those funds.
Good luck!
Sam,
I’ve read your blogs for some time, in particular the one which you try and give some guidance to where the “above average” worker should be re NW by certain ages (https://www.financialsamurai.com/2013/03/11/the-average-net-worth-for-the-above-average-married-couple/).
I couldn’t identify more with you. I too came into the workforce with no money, but came from a loving family, and using my brain, and discipline, and hard work reached roughly $1.3MM by age 36. I too had a run in with the law in my 20’s, and it made me even more thankful to be focused on building NW vs Building a playboy reputation.
I enjoyed watching my friends go out all the time and complain about not having any money and getting into trouble, while I spent my free time at the office, or bettering myself with Language, MBA, and additional work training all paid for by my employer.
Now i’m married, and have 2 young children and i’m 38, and wondering if i’m too old to finally quit being a W2 worker, and go out on my own. I fear the energy i once had has been magically transferred from me to my kids and i’m more conservative and tired now than i ever was.
Knowing what you know now about yourself, would you say you’d be equally proud of yourself if you were still gainfully employed and never went out on your own? I’m afraid i’m going to end up not realizing that dream and will be relegated to realizing a good NW, but not a potentially great NW. Any thoughts?
Keep up the great Blog! I think you’re changing lives.
Bud
Hi Bud, great job getting to $1.3m!
I’m not sure if you are ever too old to go out on your own if you’ve got a great idea. I would incubate and launch the idea for at least a year while you’ve got your W2 income. I did it for three years (the last year was where I really focused) b/c I was too afraid. But, I’m glad I did in the end.
My energy is absolutely fading, and I felt if I don’t do it now before kids and before 40, I don’t think I’d ever do it.
I think if I was still working, I would ALWAYS be wondering what if. Now that I know, I have no regrets… but if I had failed at achieving my income goals… maybe it would be another story. But at least I would also put to rest my desire to be an entrepreneur.
Best to you!
Sam
@Real Person
I’m 27 and have a net worth of about 5k, in a low paying job where I struggle to save more than 10% after tax as much as I try. But I don’t see why 90% of the population are not catered for. There are lessons here for everyone. You may disagree with a lot of it, but if there are even one or two things you can pick out that may help you, isn’t that better than nothing?
I agree with you, Brendan. People love to pick apart these kinds of posts because they don’t apply 100% to their own lives. That’s what cop outs do. They look for excuses or reasons why they can’t do the same thing. I mean, OF COURSE someone else’s life experience isn’t going to apply 100% to your own. Duh. Take the parts that work for you and discard that parts that don’t. The common threads seem to be the same: 1. Prioritize saving. 2. Work both hard AND smart. 3. Earn at least an average income, and preferably better than average.
Heck, I probably won’t hit $1M until I’m 55, but so what? I like reading posts like this and hearing other people’s experiences.
Thanks MysticalTyger. Stories are personal and will never be one size fits all. In a large way I’m relieved to write this post so I never have to write it again.
And it’s really the journey that’s most rewarding, not the end result. The feeling of accomplishment is fleeting.
Brendan, just your attitude alone is going to take you far. I’ve seen people over the years shift their attitudes and proceed to accomplish more than they ever thought possible. Good luck!
Damn this post is motivation. I’m 29 with a 516k net worth. Granted we have a few differences.. I have a wife, kid, didn’t focus until 2 years ago. However, that’s no excuse.. I should have focused a bit more to push for the higher net worth by 30. Hmm.. what was your net worth at 40 sam? Maybe I can catch you by then.
Hi Dom, 500k is darn good.
Might write a post in 4 years about NW at 40. But with the way I delayed this post for 8 years, we might have to wait for 12 years!
By and large I agree with what you are saying. But Sam also patiently kept his lifestyle in check while he made big gains which is neither hard work nor plain luck.
I’m going to write a follow up post on whether people find it easier to keep a lower key lifestyle when making a lot of money or an average amount of money. I’ll talk about temptation.
I think it’s safe to we all grow up during our formative years in unique times and places.
It’s apparent that you had the opportunity to work at GS as I did at MSFT. Of course, the latter did not bear such gracious financial fruit. And of course the butterfly effect of apt stock investments during the dot com bubble as well as IB’s annual bonuses that are several multiples of salary aren’t common events in most people’s careers.
In tech, of course, the lotto effect takes hold as some eye pre-IPO companies. But I think it’s fair to observe that the vast majority of people need to take a different route to financial security and success.
Because you had several unique circumstances that you maximized, it’s now possible to not invest aggressively, exiting investments when 10-12% gains are garnered.
Whereas here and now, most people need advice on how to invest in a generalized way that will yield them superior returns with risk well contained that stands the test of time. That is not reliant on finding the next magic stock. Or a big bonus. And can weather through 30% peak to trough dives in the market.
Otherwise this biography is a backward looking document that suggests hard work is uber important but also plain good luck, the latter of which is usually outside of one’s control
Any thoughts during your career of joining a Google, Apple, eBay or other companies? Anybody smart enough to get a job at MSFT is able to get a job at such places no?
I attribute a lion’s share of any financial success I’ve had to luck b/c I’m certainly not smart, and I have a work ethic that needs improvement.
“One cannot downplay the importance of luck in building wealth. I have been fortunate to have two loving parents and a brain that works most of the time. If you’re born in America, please take full advantage of all your opportunities.”
I’d love to hear your story and net worth progress. Thx
A few months ago, I alluded to this when I commented on your post of finance strategies that can bound risk by investing across contrarian large, small, mid-cap asset classes that would yield double digit returns while also tranching 1-2 years worth of emergency funds in bonds, dividend funds, and liquid cash. This is premised on fact that all markets will eventually reflect the real macroeconomy, and all that matters when said and done is focusing on core macroeconomics than watching CNBC gossip.
Interesting enough, a bunch of finance PhDs got bored with regressing financial datasets and decided to take a stab at macroeconomic finance. And here’s their conclusion, as reported recently by the Financial Times: “Investors can massively outperform big global stock market indices simply by analysing publicly available economic data, according to academics in the UK and US.
A strategy based on going long on an index when macroeconomic conditions are improving and shorting the market when conditions are deteriorating would have delivered an average annual return of 14 per cent between 1997 and 2011, the academics claim. In contrast, a static position in the same indices would have delivered returns of essentially zero, assuming the same level of risk.” https://www.ft.com/intl/cms/s/0/e07e17fa-fab4-11e2-87b9-00144feabdc0.html#axzz2cYRgx8gp
Anyway, to answer the question at hand.
I alluded to this in my posts a few months back, but early on in life, my goal was to have 40 million by 40. I figured riding the dot-com wave would accelerate that feat. What happened instead is my dad and grandmother got stricken with heart disease and surgery around the same time. My grandmother did not survive a 2nd angioplasty. And my dad had an extended bout with heart surgery and heart disease. My god grandmother died too, and within two years my god grandfather died of stomach cancer, a 6 foot man once now down to the bone suffering and seeking to be with his loved one that he took for granted in life.
Thus my priorities changed. I would give up all the money at my disposal if I could have saved them one or all.
So rather than going to another tech co., I stayed at Microsoft and spent much of my 20s learning many life lessons that all people learn sooner or later in life, dealing with mortality, death, and suffering. I’m 38 now. It’s circumspect for me to observe that many of my childhood friends now are just beginning to grapple with such issues. I did do the dot-come thing before Microsoft, made it during the 2nd half of eToys for example, but frankly one realizes fate dictates what first things is first.
Fortunately we live in the USA and not Uganda, and the choices afforded to us are truly bountiful, at least for those of us whose parents sacrificed providing us a leg up at least with educational opportunities so we had at our disposal choices, ideas, and critical thinking and decision-making that would serve us well throughout our lives.
My wife and I now have a 2.5 year old who at 10 days old had heart surgery and thus developmentally delayed. Because of our station in life, which I sacrificed given my experience during my 20s to give our son the best care possible, he was flown down to Stanford to have the world’s best pediatric heart surgeon repair his congential heart defect. Because we had prolonged stress for 2 years, I also developed liver problems that led to a botched biopsy resulting in 6 pints blood internally bled out which I almost died. That was 7 mos. after my son’s surgery 2.5 years ago. And just a month ago, I had a bad case of sepsis where I almost died again arising from a bad liver and immune system that simply could not handle the boatload of gram positive bacteria that encultured over the summer infecting both my calves.
Now my biography has a lot less smoother arc then yours. Shit happens in real people’s lives. While the 20s took a lot out of me, I also had a Chinese grandmother who married to a army general called the shots instilling in me values and mettle that has served me well. We are worth 1MM today, and frankly without the opportunity cost of life, I would no doubt have landed 10MM by now. But I would not change a thing, to be there for my loved ones at their last moments on earth, to let them know they are loved and cared for. I would never exchange that for magnetic blips in the cloud that supposedly designate my net worth.
Thus I would differ my thesis asserting it is your life experiences and knowledge that afford you the most choices, of which money is but one leverage point. My knowledge garnered in my twenties allowed me to negotiate with the insurance company and wrangle the birth hospital to shape superior care for my baby son fighting private healthcare’s byzantine bureaucracies stacked up against the patient. There are so many more cases where all the money at my disposal didn’t matter. It’s how you critically think, decide, and leverage power that matters.
So when I read blogs such as these, it has a sense of surreal half-truths, a life fortunately lived, but also disconnected from the rest of humanity, those who were apparently too dumb to figure out how easy savings and accumulating wealth is. But having lived on the both sides of the Rubicon, I can safely say that unless you can cite other much harder life choices and difficulties you had to contend with, it’s quite easy for old timers like me to dismiss perhaps unfairly financial advice that applies to those whose parents and lives were teed up for success, and with an rather unobstructed life mixed hard work and stamina afforded to the young, and so was indeed able to reach a wider degree of financial freedom than most.
But then there is also love found and lost, children and families, to plain old shitty initial conditions that get in the way for mere mortals that did not live in such a rarefied environment where frugal stout parents provided for and duly instilled the ingredients and laid the groundwork for your station in life today.
Consider this – The Long-Term Effects Of Poverty Linger Even After People Become Wealthy
https://www.businessinsider.com/report-long-term-effects-of-poverty-linger-2013-7
In large part that is why I don’t read this blog regularly. It is monotone and insults those who had a different sort of life than you, and does not account for the real world. It’s like a radio station that never evolved from the 90s set to heavy metal or gangster rap telling the world how ____ they are for not having the dope bling by now.
What goes around comes around.
A mortal life with truly humbled perspective, that is well lived and learned is far more important.
Good perspective. Sorry you aren’t going to hit your 40 million by 40, but $1 million at 38 ain’t bad. You should feel proud, not bitter.
Your type of response is what I was expecting when writing this type of post, which is why I don’t write these type of revelation posts much at all compared to other sites. It makes me sad that you are insulted by me just telling you my story. I don’t feel insulted by your story, so perhaps there is something deeper in your life you need to attend to?
Your life is reality and my life is not real, to you at least. But I can assure you that my life is real to me. If my blog makes you sad, definitely don’t read it. Perhaps read other blogs that are full of suffering and sadness. Perhaps you’ll feel happier reading a story about someone who is your age with a negative net worth. The great thing about this country is freedom. Cherish it forever!
I love how you deal with negativity haha
some people in this world are complainers and blame their circumstances. Other people take action and grab life by the horns.
I enjoyed the article very much I myself am recently 22 and work from 8 am to 10 pm every day operating my own online business.
Some days are better then others and some days I get so frustrated I want to quit but I always remind my self of people such as your self and that anything is possible in life if you have the right mindset.
im currently doing about 5k a week in sales with the aspiration to get it to 25.
Loved the article hopefully I can hit a bit of luck/educated guessing in the stock market or investments and get a jump start like you (haha)!
Anyways, thought I would send you a positive message to let you know you are sending a good message and it’s worth doing.
Thanks Brandon for the message! Just gotta roll with the punches.
I hear you on feeling the month to month movement in the revenue figures. Hopefully things will be up and to the right for you!
I think your diminishing of financialsamurai’s post and accomplishments sounds awfully snarky. There are lots of other people in the world who had the same or even better advantages than he who did not make use of them.
If I’m snarky, it’s only because I find some of his posts equally annoying.
Having overcome so much, I am quite a happy satisfied guy who now is enjoying life doing what he wants. But compared to real world life experiences, it’s apparent to me that this blog and its contents apply to a thin slice of people who lived in rarefied atmosphere making opportunistic plays that play out now maximizing for passive income and retirement.
What snarked me was the disdain that it often shows for people not like him. How utterly incomprehensible that people even those who earn 45k a year can’t save to be millionaires. How Roth is an evil govt plan that should be avoided when it plainly defies finance basics – arithmetically and compoundingly so. With nary a counter response that, hey, you were lucky but most of life isn’t like you. That life doesn’t line up to spreadsheet columns and rows.
In my case economically, through Fed and market’s thick and thin, our portfolio has yielded us 28%. I now have time to attend to a pretty important function of my family’s well-being, and with no regrets. That’s life for you. What I don’t have is an attendant disrespect for people less fortunate than me and in fact believe there are ways to save successfully despite poverty.
So while FS does indeed treat his readers with respect and positive feedback focused on a segment that wants to “make it”, it is also quite evident he treats many others not like him, through the substance and content of his posts without much respect much less comprehension why they are not like him, and thus makes his advice limited to a slivered shrinking few who are not getting squeezed by globalization, shrinking wage raises, and able to a hold of paper profits without worry about life’s difficulties getting in the way.
You’ve had good luck FS, and I don’t begrudge you for that. Call that karma. I do take issue to how you put down others as a means to deliver your message. You can do better in the future by simply recognizing your particular use case and the scenarios and variables involved sans value judgements and put downs on huge swaths of society you seem so disconnected from.
Like I said, money is but a tool. Knowledge and wisdom are far more important. Snarky and snoody as that may sound.
Just wanted to leave a note for FS. While I like the overall message, I too find the tone to be off-putting. While you acknowledge luck several times throughout, reading between the lines it’s hard to believe that you actually attribute that first windfall to luck. You lost me at “Was I lucky? Hell yes! But, I did my research and was I willing to put my balls on the line to try and make some money.”
You’ve made some good choices, and I’m happy to see any message advocating saving over spending, but it just doesn’t connect with me.
No problem. Thanks for reading!
Anything specific you want to point out that is off putting? I understand it’s hard to please everyone, and don’t want to. But I do want to understand different perspectives.
Check out this post! https://www.financialsamurai.com/stocks-versus-real-estate-it-depends-on-your-luck/
As an objective observer, it looks like jealousy has taken hold of you. Just have a read of your two comments. First you try to discredit someone’s else’s story, then you say how wonderful your life is and how great your portfolio performance. This is clearly a reflection of your unhappiness, since happy, content people don’t lash out the way you do. Until you can come to grips with your own issues, you will always consider yourself an underachieve and angry.
I don’t see Sam trying to put anybody else down with this post. His posts are very insightful and make people think.
Read this post. So relevant to the situation now: https://www.financialsamurai.com/2012/06/23/you-will-always-be-viewed-as-arrogant-if-you-have-more/
I’m confused, Awakeinwa. First, let me say that I’m sorry to hear about all of the death and health issues you experienced. You’ve been through a lot. And it’s amazing that you have persevered and saved any money at all. But I don’t see why you find Sam’s posts/story “insulting” because he writes about HIS experience and HIS perspective (not the rest of the world’s) and you feel that he didn’t face as much adversity as you (or the rest of the world)????
He’s a writer. He’s SUPPOSED to write about his own experiences and his own perspectives. If not, he wouldn’t be unique, or truly engaging for that matter. If he didn’t, he would just be the 5:00 news.
I can’t speak for everyone else, but the reason why I come here is because I find Sam’s posts inspiring and, sometimes, the kick in my arse that I NEED.
Yes, he’s has some advantages that I didn’t have, but that doesn’t mean I can’t learn from him. He had great parents that instilled good values in him and he attributes a good chunk of his success to that. Did you have a parents who loved you and didn’t abuse or neglect you or teach you self-destructive things? Again, sorry to hear about the death’s in your family in your 20’s, no one would argue that that was tough. I hope you learned ways to cope and have moved past it. But I also hope you at least had a good childhood pre-20’s… because I didn’t. It’s not a competition about who had a harder life, but I can tell you that I had an abusive, crazy, drug addicted mother. Crazy literally, like…brain damaged. I don’t need to tell you how bad it was, but just imagine you and would probably be right. I was also in a lower-middle class household and they were hoarders! My father was a wonderful man but too passive and too in love with her to do something about her for his kids. He thought she was “sick” and needed our help. I was a child. I didn’t learn what other people learned from their parents. You know, like how to have healthy relationships, have a sense of humor, how to deal with emotions, how to react normally to situations, how to handle money, how to study, how to apply to college, or how to be… successful. I survived. I learned from friends. You know to this day, at damn near 30, I have a hard time understanding or sensing sarcasm? Or not dealing with all emotions with survivalist anger? Or to cry? I had to fight to learn how to be “normal” from other people, mostly in my teenage years, and how to be successful in adulthood by seeking mentors . Everyday I have to override what I learned in my critical years of 4-13 years old. I don’t find people who had advantages that I didn’t have, or people who couldn’t even imagine what I went through, insulting. I find them inspiring. I see them as mentors. I see their behaviors and thoughts as the good kind that can help me unlearn the bad ones and learn the ones that can help me lead a happy, healthy, successful life, for me and my family. I also love to come across people like that because I want my children to be that way too, never having to experience what I did, and to have the happy, healthy, strong, productive thoughts that would allow them to be successful in life as if that is always the way it should have been. Some people would call people who haven’t suffered “naive”, some people would call them lucky. Hey, whatever it is, that’s what I want for my kids. And when I meet people like that, like Sam for example, it reminds me that it’s possible, that there ARE people out there that didn’t suffer like I did, and I can help my kids be like them and have a life like that too, if I stick to being a good parent.
And as I’ve said elsewhere (despite my hardships), I did go to some good colleges and I’m at pretty good income level at 28 (though could be better)!
I don’t know Sam, I’m just some random commenter and casual reader, and just from the few minutes I spend on this every few days in the past few months, I’ve already changed my career trajectory (Sam, the promotion is finally coming!!!! My boss flew out the main office and it’s all he talked about out there and then there was this company-wide meeting conference in which all of my accomplishments/contributions were noted and now they are in talks about creating my position!).
So Sam, please keep doing what you are doing. You’re obviously on the right path and your readers appreciate what you’ve been doing. I know I do.
Congrats on the promotion! Glad you are owning your worth. Thanks for your support! I’m excited for your future and thanks for sharing your story.
Your post reminds me that the human condition frequently makes us all mysteries to one another. I’ve never responded to anything on this site in the way that you have in your comments. I think the advice on FS is timeless and wise, no matter what life throws your way: be frugal and save, make wise choices, work hard, invest, take risks when you can, etc. I could go on and on. Some stuff here fits my circumstances better than other stuff, but it all is earnest and interesting.
And I’ve had plenty of life experiences. None of us have a corner on wisdom and Sam is sharing plenty here on an ongoing basis.
“Fortunately we live in the USA and not Uganda, and the choices afforded to us are truly bountiful, at least for those of us whose parents sacrificed providing us a leg up at least with educational opportunities so we had at our disposal choices, ideas, and critical thinking and decision-making that would serve us well throughout our lives.”
As a Ugandan living in Uganda, I’m thinking…what now? Migrate to the states? Make the most of what I have? I have no clear answer. But one day, when I turn 40, I will have a story on how I made my first million (USD that is, I’ve made my first million shillings already and it’s nothing to write home about!)
Fugee,
I know Financial Samurai is finally a success when I’m reaching Ugandans living in Uganda! Welcome to my site!
I wish you all the best in making your first million USD. Check out this latest article about How Long It Takes To Earn One Million Dollars US Around The World, and my takeaways. I think you’ll enjoy it!
Best,
Sam
Really inspiring post Sam. I loved how you put your story out there. I agree totally on the work ethic part and building wealth in your 20’s. I did try as much as I could, but my first job out of college paid just bare minimum. I’m in my mid-30’s and I hope to hit that 1M mark by 40.
Sounds good! Hope you get there as I think the 40 mark will catch up to us quick!
Very interesting post Sam. I started my career out in banking as well. The most surprising thing about this post was that you were able to leave work around 6:30-7:00 at GS. I think they must have sweated us much longer! Certainly M&A was pretty grueling.
We expect to cross the $1M mark in net worth next year. I’m expecting to keep chugging away till long after that, but its nice to have a little parked away. Not quite 30, but I’ll still take mid 30’s anyway :) I’m hoping the second $M can happen by the time I hit 40.
My observations- Starting a career at GS , or any other place in IB definitely helps, thats a luxury that most don’t have. Its bloody hard work when you are in though. The big income helps trigger large savings, which if managed well can get you a good head start. I think you are right about real estate. I should have levered far more into property than I did. I went with stocks as my chosen pathway, but a property allocation would have been a better play. Some smaller cap dividend stocks have helped along the way, combined with solid double digit returns from some larger stocks. I’ll be looking to beef up property holdings pretty soon. We own a condo, but I’m underweight property relative to where I should be.
Congrats on the progress. Sweat equity eventually pays.
Thanks mate. Good thing I wasn’t in M&A/corporate finance, but Equities! Hence all the investment related posts on the site. I didn’t understand what the M&A folks did all day long but I did understand stocks given i started trading in college online.
Equities is so much more fun, less hours, but you get in earlier eg 5:30am-6am at the time.
$1 mil my 35 ain’t bad at all! Having the nut definitely gives you more confidence to pursue more things you really want to do. And of course once you gain a large enough passive cash flow stream,
then it is total freedom. Good luck!
Thanks for laying it out, Sam. I rode a dotcom up, and then all the way down. CMGi. A good lesson on taking profits.
The first took me longer than I thought it should have. Early 40’s. I had my own small business that was modestly successful off and on. I was a fairly disciined saver/investor. The second took only about 4 years as the business started making money more consistently. The third took about 2.5 years as I bought distressed real estate 3-5 years ago.
The first was the hardest, the second was much easier, and the third was easier/faster than I thought it could be.
Nice work Jon! Do you think the 4th will be simply on autopilot ten as your business, RE and stocks hopefully inflate on their own now that you’ve got a large nut?
Any plans on hanging up the boots if not yet already?
It does appear that the trajectory will continue. The business is throwing off good cash flow with little of my attention because we are blessed with good managers. Rents keep increasing in my rentals, which are at 100% occupancy at the moment. I’ve just backed a guy in a little start up which is exceeding our expectations in the first month. I don’t want to presume on the future, but the next MM looks like it could be the fastest yet. Even if it doesn’t come at all, that’s OK.
My current decision is where to spend my time since I have more options than ever before. I don’t want to retire, but I am trying to cut back on hours. The start up added a bunch of time, but that’s already requiring less. I manage my own rentals which isn’t a joy, but I do it pretty well.
Excellent post, one of your best to date in my opinion. Good stuff for everyone, but in particular for people recently out of college – they should read this post and bookmark it.
Thanks Ray. Figure I’d put it out there once and for all as reference for those who keep inquiring. My memory is slowly fading as well so it’s good to have to revisit when really old.
Hope all is well!
Awesome you and your wife are living in Hawaii! Do you have a post telling your story about why you moved there and where in Hawaii? I’d love to check it out.
Sam,
A nod to your naughty past and current success:
https://www.dailymail.co.uk/sciencetech/article-2391833/Bad-boys-make-good-entrepreneurs-Risk-taking-behaviour-combined-intelligence-secret-making-millions.html
K
Very interesting study, and by UC Berkeley no less, so it must be true :)
At the end of the day, it’s about taking risks… and hopefully calculated risks. You just need one of many to pay off often times before you start the rocket ride journey.
If you are timid, don’t feel like you deserve, then you will not get what you could. Dare to dream.
It does take time. What I find is going to help me in my situation is to continue to work on the things that are producing income and then work on trying to expand those incomes into P2P lending, stocks, rental properties and other investments so that I can continue to have decent incomes even if a few income streams fall off the face of the earth over the next few years. I think that is the best insurance that one can take for themselves in this economy.
So would you not recommend P2P at this point? Do you use any automated tools? I’m open for suggestions re alternatives to P2P; I definitely want alternatives to market investments for some variety. I hate watching my entire portfolio go down on days like today….
I would actually because returns should be going up with higher rates. My expertise has been in picking stocks, so that is what I’ve continued to do although setting up an auto debit and investment schedule with prosper is easy and a good idea.
I have an aggressive goal for myself. I am trying to have a million in bank accounts by 40. I’m not talking net worth; Im talking accounts valued at $1M. Im 35 now and close to the 500k mark. I have equity in my house (~300k) and my wife has savings too, but I don’t consider our combined assets in the calculation.
I am going to need a bit of help (i.e. I’m not sure I can make it purely on my salary without stock market help) , but I figure its better to set an aggressive goal and miss than to not set an aggressive goal and not try.
I wish I had been serious about saving, and had the income I do, in my 20s; I wonder what the extra decade of growth would have done for me.
Sounds like a good goal to me! And it feels great to have $1 million liquid and semi liquid to access.
Where are you parking or investing your $500,000 now?
I have financial advisors who manage most of it, so most of it is in the market. I have about 6k in P2P, which I can increase. I’m thinking of moving some IRAs over to P2P so they can grow tax free, but I’m concerned that institutional and automated systems are snapping up all the good loans, making this a less attractive option.
Good stuff. I’m having a problem with shifting a decent amount of assets into P2P as well for similar reasons and because I see opportunity in the liquid stock market,
Hey, thanks for sharing, especially the details of your efforts. I learn a lot from you. I hope you continue to have good luck and that you enjoy your well-earned break.
No problem Liz. The break is coming to an end and I’ll be publishing a new post tomorrow also on net worth composition. Good luck on your asset building journey.
Great insight in the process of building a nest egg. I got started late in the game but stories like this really motive me to keep on working the plan. I’m 28 and have negative net worth due to student loans (like so many these days) and I am almost through with school. Living the bare minimum lifestyle is something I am very used to so hopefully I can just keep it up once I finish school and land a job.
Levi, congrats on being almost through school. It’s easy to continue to live like a college student once work starts for a couple years. But it’s also easy to just blow your money on a lot of stuff and going out once you first get those first paychecks. Pretend you’re getting a PhD while working!
Awesome post– love hearing stories like this
Good to hear from you Billy. I remember stopping by your site several years ago and learning about your Blue Fire Poker website.
Sounds good Jeremy. Way to go raising that savings rate. That is a fundamental key. And Utah is much cheaper than CA SF, so all is good. Just gotta keep compounding and investing those savings.
Do you get much traffic on your site? I would be surprised if you did considering the content is only relevant to 10% of the population.
My site is small peanuts mate. But the one thing you might want to consider is that there are lots of different types of real people out there. If you have a site, id love to read it. Congrats on your nice credit score.
For those in the top 10%, this site in invaluable. There’s plenty of other sites out there covering the other 90% of the population.
I’m 36 and my net worth is negative $9,976. On the bright side my credit score is a 792.
Something I’ve learned is that having a high credit score should only be used to buy assets (i.e. real estate), as opposed to buying items and just putting them on credit to build the credit up.
Good luck in getting your networth over the $0 hump, that’s often difficult but every step in the right direction will make you feel better.
People like Sam, JT, JayCeezy, KrantCents, and a host of others that you’ll see listed on this site have tons of information to help you in your journey.
My husband and I are just over $1M at 38/39. We sort of shrugged our shoulders when we found out — we don’t feel like we’re financially free at all! When we got married 5 years ago, my net worth was around $280K and his was -$90K (mostly medical school debt). From the time we got married till now, it was a combination of making good salaries, living modestly, and saving aggressively that got us here.
I think that working hard will get you to a certain point, but working smart is the path to financial freedom. I worked my tail off in the first 4 years of my career (65-85 hour weeks), but that was the modus operandi for everyone in my engineering group so I certainly didn’t stick out from the crowd. This is where I goofed up because I was too risk-averse and didn’t have enough self-confidence to really challenge myself to explore outside my comfort zone. My husband messed up too because he should’ve been saving in a 401K when he started residency but chose to buy a brand new car instead which tied up all his excess cash (not much after living expenses) in car payments for 5 years.
We currently do not have investments beyond our retirement accounts and home, but are planning to dive into that now that we’re in a good place financially. The question is what sort of after-tax investments should we look into? Real estate is number one in our minds but we’d rather do commercial than residential. We’d love to get into private equity but don’t think we have enough capital yet.
Sounds like you two are really kicking butt! My advice on investments is first pay off every last piece of debt, cars, student loans, mortgage, etc…once you have zero debt, then invest in things that you very clearly understand and are able explain the investment to an 8th grader. Keeping it simple may not be “sexy” but it works! Don’t get worked up trying to chase percentage points on investment income, it won’t impact your lifestyle like knowing you don’t owe a anybody anything will.
I think it’s great u guys went from $250k to $1 mil in 5 years.
I hear you on not feeling wealthy. It all depends on where you live.
Private equity doesn’t need much. $10,000 here and there is fine too. Just need to be an accredited investor.
Do you own your own home?
Yes we own our home.
I thought to be an accredited investor your net worth had to be at least $1mil not including your primary home, among other things. In that case we wouldn’t qualify since about 25% of our net worth is in home equity.
Or $250,000 a year in income I believe.
$250K a year for the past two years.
Congratulations, it’s quite an achievement to go from $0 net worth to over $1m in 7 years – your story shows that with commitment and consistence we can make major progress in our situations in quite a short timeframe.
The only thing I wouldn’t agree with is the title – surely the second million will be much easier given that you already have significant investment income coming through the door and a much larger salary than when you started. I look forward to your update on the next million!
Thanks. Maybe. I’ll have to think about the journey from $1 to $2. From $0 to $1 was easy in my mind because I wasn’t focused on it. It just happened one day two years before I realized it because I was too busy working.
Going to $2 mil is hard bc you don’t want to lose the $1 mil due to risk.
How’s your NW progress going?
My net worth at the moment
I purchased a house is August 2012 and took on a total debt of $385,000 ($360k from the bank and $15k loan from parents) to do so. Unfortunately real estate here is quite expensive. Of that $385k I’m now down to $340k after one year and my house price has gone up so technically my net worth sits around 90k at age 25.
I say technically, because really I don’t think my net worth should include the home I live in – I can’t exactly sell this property without a) incurring large (20k) selling costs and b) either renting or buying a new home. While it contributes towards my financial independence, it’s not an investment asset as opposed to holding something such as an index fund (which I can’t live in!)
Goal is to be debt free in 5 1/2 years so there is lots of hard work ahead before I can start investing and truly growing my net worth.
FI, congrats on your home purchase. pmfji, but I wanted to make the case for including your primary residence in your NW calc. The reasons you listed for not including it can be flipped; first of all, the imputed rent you would be paying (instead of a mortgage) has a real value. In addition, your mortgage interest expense and property tax both have a dollar-for-dollar value in reducing your taxable income. A tertiary benefit is that inflation won’t impact your mortgage payment (and you will be paying in cheaper dollars in out-years), while inflation will benefit the nominal value of your home.
One thing I do for that calculation is to take the conservative sales value of the home, multiply by .9, and then subtract the outstanding mortgage value owed. This gives you something closer to what you would truly walk away with if you sold the property (the 10% includes the 5% sales commission, 2% processing, repairs and improvements requested by the sellers, etc.). Another way to do it, is to calculate the nut needed to throw off a conservative equivalent rent (i.e. $2,000/month would need about $400,000) and subtract what you would pay to eliminate the mortgage and sell the home. Don’t sell yourself short, man, you are a homeowner and rocking that payoff schedule! Continued success to you.
I agree with you JayCeezy that the the decision to purchase a home does definitely add economic value in the form of saved rent. I’m not a big fan of ‘walk away’ value, however I have actually considered your second option previously – good to see that someone else had the same train of thought. How much would I need to conservatively invest to return the same costs as I save by owing my home?
A 10 year term deposit here in Australia returns 4.3%, or 2.66% after factoring in the tax which would be payable. My home used to rent for $350/w before I moved in, which would mean an equivalent secure long term investment would be worth a whopping $684,000! If I was to have invested instead of purchasing I wouldn’t be 100% in term deposits, but this provides the closest comparison of ‘(virtually) zero risk’ return.
When you consider it that way, my effective net worth would be over $344k. This probably highlights one of the problems with NPV – it can be calculated in different ways to give vastly different results!
Hey FS,
Good stuff. I’m impressed and am pleased to see that you’ve done so well with your time.
James
Thanks James. Per my recollection, you guys are on pace to break $1 mil this year no?
Yes sir. We should be getting there pretty soon.
30 has come and gone (well only by 18 months or so) and I haven’t that 7 figure mark yet. Like you, I believe it is inevitable with hard work and determination. Love the timeline!
So long as the direction is correct, sooner or later we’ll get there no doubt. Any thoughts on updating your net worth series with real numbers and not just percentages now?
Either age doesn’t really matter bc if you are on track by 35, or even 50 it is still going to be some relatively good living towards the middle and end.