How Future Millionaires Invest and Build Wealth in their 20s & 30s

Five Rules To Help You Fast Track Your Way to One of The World’s Millionaires

Like is fundamentally unfair; some struggle while others are millionaires.

Being rich is not about fairness at all. Wealth is merely class and access.

As such, wealth generates even more wealth; and success finds more opportunity. If you want to get into the game of wealth, you will have to follow these uncommon rules.

Furthermore, remember that your efforts compound and grow exponentially. Here are the 5 best investing lessons to ensure you and your family fall on the right side of the wealth equation.

1. Savings accounts are a joke. Millionaires don’t really save, they invest.

While having an emergency fund of no more than $2,500 can avoid income uncertainty, you are better off investing your money and fast. If you are saving a bulk of your money in your 20s, because a financial influencer on social media told you to, you’re doing something wrong.

A payout of 0.01% at your local bank is a joke. Why?

Let’s say you save $10,000 at the bank. After one year, you would have earned $1. By year 5, the bank would have awarded you $5. Unfortunately, this is before Inflation. The real value of your $10,000 at 4.00% inflation and 0.01% growth would be worth $8,223.22.  

Remember that inflation peaked at 7.5% in January 2022.

The longer this savings game goes the worst it is, and the further behind you will be.

Let’s say someone saved six months of expenses. Based on the Bureau of Labor and Statistics, the monthly median household expenses for 2020 totaled around $5,000. If someone was foolish enough to save $30,000 at a 0.01% rate of return and at a 4% inflation rate for 10 years, they would have the buying power of $20,286.42.   

Simply, I never met a person who became a millionaire from saving. While I’m at is Debt-Free is also a joke in your 20s or 30s.

2. This is where you start a Million dollar portfolio

It’s a no on Crypto. While I know it’s the hottest conversation in town, most people have no idea what crypto is and how it functions. You would be 100% taking full advantage of all your other options.

If you are looking for consistent long-term investing with a ton of perks, stick to accounts such as; employer plans, 401ks, 403bs, and 457bs; Individual Retirement Accounts, Traditional or ROTH; Health Savings Accounts (HSA); and after-tax investments to set your financial base.

It’s the tax advantages that the rich flock to. If you have an employer match, it’s basically free money that’s worth at least one full year of your salary in retirement. Millionaires understand the simplest path to wealth.

Since most people aren’t investment gurus that can speculate on the next great stock, try index funds that protect from excessive risk and have lower expense ratios that won’t do into your profits.

A combination of 401k + HSA + Roth IRA means that a single person can invest up to $30,000 annually tax-advantaged. Here is the power of your own choices, at the historic rate of return of 8%:

Year	Contribution	Interest	Ending Balance
5	$150,000	$32,362	$182,362
10	$300,000	$150,311	$450,311
15	$450,000	$394,016	$844,016
20	$600,000	$822,498	$1,422,498
30	$900,000	$2,621,377	$3,521,377
40	$1,200,000	$6,852,698	$8,052,698

3. Open a Roth IRA and become a millionaire when you retire

A Roth IRA grows tax-free. If you max out your annual contributions of $6,000 to the tax-free retirement account you’d become a millionaire at age 55, after 33 years and four months of contributions.

Short of nothing else going wrong in the world, a Roth IRA closes the wealth gap substantially. Can you imagine sitting back and gaining 20% on the market for years and it’s all tax-free? That’s what a lot of people did for the last 10 years.

What were you doing?

4. Millionaires own (affordable) homes. Broke people rent instead.

A lot of people are moving away from the traditional concept of life, and owning a home is one of them.

Contrary to social media, buying a home is still a very favorable path to wealth. What you need to remember is to buy an affordable home versus a luxury home.

Homes are expensive but rent is taxing you way more.

The nationwide median listing price for active listings in January 2022 was $385,000, up 8.6% from the previous year and up 21.8% compared to 2019.

Rent, on the other hand, climbed over 30% in one year in certain locations.

You would be better served with a mortgage that is rent controlled versus sudden death price hikes. The people stuck renting will end up renting for their entire life as the cost of home ownership skyrockets.

I also stress affordable because your total household expenses should not exceed 25% of your take-home pay. If it is, you are merely working hard, and longer while missing out on your wealth snowball.

5. Multiple Streams for Millionaires

Ever since the Two-Income Trap book, it should have been clear that Americans turn the dream into a delusion. Of course, you can’t afford to stay in the middle class. People spend upward of 62% of their expenses on homes that are too big, cars that are foreign and expensive, and food that is increasing their waistlines.

The worst part is that only one income is supporting most homes. The fewer income streams you have, the less leverage you own. You end up being indebted to your own lifestyle. Don’t know where to start trying some of these SMART+ER Book recommendations.

Instead, make more money and fast. Researchers have even pinpointed a statistic: millionaires, on average, have not just one, but seven streams of income.

According to the IRS, most millionaires have these seven income streams:

1. Dividend income from stocks owned.
2. Earned income from paychecks.
3. Rents from rental real estate.
4. Royalties from selling rights to use something they’ve written or invented.
5. Capital gains from selling appreciated assets.
6. Profits from businesses they own.
7. Interest from savings, CDs, bonds, or other lending activities.

Turns Out, Money Buys Happiness

For some reason, people convince themselves that money is evil. It’s not.

Money does buy happiness through quality of life, opportunities, and most importantly time. Ask any millionaire and you will find how important the concept of time is. Too much television and screen time, warped the average person’s concept of wealth and purpose.

In the end, it’s not about the money but the progress you made with the time you are given. That progress builds on experiences, perspectives, and ideas. Nearly 80% of Americans live paycheck to paycheck. To be wealthy means that you are opting out of stress and unhappiness.

Yeah, life is unfair and our starting points are not the same. However, don’t you want to take a chance of changing where you end up?

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