How to Become a Millionaire on a Low Salary

sometimes we see these depressing stats about how millionaires all inherited their money from their parents and reality is that is not true the majority of millionaires are first generation wealthy and what that means is that you don't have to depend on having wealthy parents in order for you to become a millionaire I want to show you how you can become a millionaire even if you weren't born into wealth and even if you didn't go to an elite college or make $500,000 a year at the root of this question there are three main levers that you

can actually adjust to hit a million dollar lever number one how long you invest for now time truly is the most important thing you have on your side I've now been investing in the stock market for over 25 years with more time my investments start to earn more interest that interest and the principle that money compounds meaning I make even more money it's like rolling a snowball down a hill it just gets bigger and bigger at a certain point you can't stop it let me show you what I mean let's say you have a salary

of $50,000 if you invest 15% of your gross income that's $7,500 a year and you invest it for 30 years you're going to have about $750,000 but if you invest for 4 years more just four more years you'll have just over a million dollar and it grows even faster after that do you see that the real gains come at the end not at the beginning and notice in these examples I'm not assuming any salary increases which of course is likely I'm not assuming you get married which would mean you have a higher household income and

you can invest more this is a super conservative calculation you can try it yourself the lesson here don't put off investing in fact every single day you are not investing aggressively you are losing a tremendous amount of money because time and compounding are on your side so now that you understand time is your first lever that you can pull and push to wealth what's another lever you can adjust to become a millionaire faster well that brings me to lever number two how much you invest if you invest $425 a month or basically $14 a day

starting at the age of 25 you will easily be a millionaire by the time you're 65 look at the math in 40 years with a low. 1% management fee assuming a 7% return you'd have over a million doar this is very straightforward when I tell people this you know their first action they go oh my God I have to invest $400 a month till I'm 65 where am I going to get $400 25y olds don't have $400 I'm like are we focusing on what won't work or are we focusing on what will work because I

don't know about you but I prefer to go through life wearing the lens of what will work not what won't work if you want to come up with 50 reasons something won't work guess what you're right it's not going to work I can't help you but if you want to know how it works I'm showing you one way that that you can become a millionaire faster that's by increasing the amount you invest now one of the easiest ways to do this is to increase your investment rate by 1% per year for example if you first

contribute 5% of your income create a little rule for yourself the next year contributes 6% then 7% and every year increase it by 1% that single decision alone would make you hundreds of thousands of dollars more than all the lattes you will ever buy in your entire life also notice that because it's a percentage as you make more money you will also invest more money it's a beautiful rule to have in your financial life and of course there are a lot of other ways that you can increase your Investments you can keep your housing expenses

and your car expenses low so you can invest more when you're married you can have two incomes that can go towards your Investments you can negotiate your salary and then send 80% % of that increase to your Investments take the other 20 and have a great time you can earn money with a side business like we teach in our earnable program take that money and invest it so now let's take a look at the math if you wanted to become a millionaire in 30 years you'd have to invest just over $10,000 a year assuming a

7% return and a .1% management fee you can take a look but what if you want to go faster you I want to become a millionaire in 20 years okay fine you'd have to increase your Investments to $23,100 per year again keep in mind that these are just average numbers but as you're income increases you'll be able to contribute more whereas at the beginning you're probably able to contribute less remember that people in their 20s don't have a lot of money but people's incomes increase in their 30s and 40s so the important part here is

to set up the automatic habit of investing so you can automatically increase your Investments as you make more okay okay we've covered lever one how long you invest for Lever two how much you invest and that brings me to lever three your investment returns listen up and listen closely you have less control over this which is why it's lever number three so this really should not be your priority okay a lot of financial freaks online they go around thinking I'm going to get 18% I heard of Renaissance technology it's possible if he did it I

could do no you can't you pretty much cannot I'm going to tell you right now you want honesty this is is honesty we know from history that the market returns about 11% per year that's the nominal return minus about 3% per year of inflation which is 8% 8% is the real return meaning po inflation now we're going to just use 7% to be conservative it's like if you're running a race put a weight vest on because when you run the real race take that vest off and it's going to be easy so we're assuming 7%

per year Returns on average based on Decades of History you can find the research in my book the point is for everyone who's about to write me a comment named dividend investor 22222 do me a favor close your account and never Post online again first of all why are you dividend investing at age 22 it makes no sense second of all all these dividend freaks they really think they're going to get 20 to 25% returns these folks they live in the middle of nowhere and they're like I'm a PE investor private Equity it's all about

irr like um can I be honest those PE firms don't want your $18,000 Investment Trust Me is This video Just One of remit sa's grievances after another because if so this is my favorite video of all time I'll do this all day dividend investors um uh Drop Shipping uh nuts on Tik Tok get real okay I don't need a picture of you on a fake boat they go out on a rental in Santa Barbara it's like $150 they rent a get a boat rental on Yelp and they're like look at me I'm My Yacht it

literally has the name of the touring company on the side I'm like you're the worst at lying you're so bad at this you can find the research in my book on why we assume 7 to 8% Returns the point is you're not magically going to get 15% returns so don't even bother in fact don't even worry about changing your investment return assumptions I myself use 7% for my assumption now there is one thing that will alter your investment returns and that's paying fees for example if you're investing but you're paying a financial advisor 1% of

your returns you're actually dramatically reducing your returns for example a 1% fee translates over the long term to about 28% of your lifetime returns that means you're going to pay over 25% of your returns in fees so I always recommend that you pay a flat fee or an hourly rate never a percentage if you choose to work with a financial adviser here's another suggestion if you end up managing your own Investments which you can easily do using my book I will teach you to be rich always look for low management fees or expense ratios and

you'll be in a pretty good place now what's a good management fee well in general 2% or lower and many of the best index funds at Vanguard Schwab or Fidelity including Target date funds offer very low fees like this now that you understand the three investment levers that you can adjust to grow your Investments faster this brings me to a point that's going to make or break your financial journey and this is really important and this is what the math doesn't show a lot of people watching this are like if this is so easy why

don't more people do it well there are lots of reasons that people don't take this advice to grow their wealth and I think it's really important to talk about them money is deeply emotional we learn about money from our parents we hear phrases in our head that they said 30 years ago we can't afford it and as you've heard on my podcast even when people start to make more money they often still play small now it's okay that money's emotional but I want you to understand your attitude and behavior towards money A lot of times

people are frustrated that they don't make a lot of money or they make a lot of money they can't figure out where it's going why don't I have any money left to invest well there are lots of reasons sometimes you have certain responsibilities that other people don't have maybe you're taking care of an elderly parent maybe you have a young child at home and for the next couple years it's going to be really tough maybe you have to prioritize your mental health maybe you were simply never taught about investing or even taught that it's okay

to want more we are often taught that in order to get rich we've got to have 30 screens with all these ratios running down the screen and we need to pick stocks that's not real investing that's day trading that's gambling investing is boring it's not entertainment you want to be entertained get a dog better yet watch my Netflix show but real investing is like watching paint dry that's why when I realized that I had a million dollars or even much more than that I didn't feel it here but I did feel it here when I

was able to be super generous when I was able to buy something I truly love when I was able to take a trip with my loved ones and experience a true moment of a that's when a million dollar has meaning so I hope this video helps you on your path to creating your rich life check out this video popping up on screen to watch more