I don’t trust millionaire gardeners. They’re always running some kind of pansy scheme. 😎 Fortunately there are more legitimate ways to build wealth. I recently watched a YouTube video where a young realtor in California named Graham Stephan explains how he became a millionaire in his 20s. He says just about anyone can become a millionaire in 10 years with the right attitude. In short here is his advice to others:
- Get paid for your results, not your time.
- Cut back on unnecessary spending.
- Invest consistently and actively work on those investments to increase returns.
The mindset of a Millennial millionaire
Graham’s methods are simple and effective. He prefers to eat at home instead of going out. He drives a used car and buys clothing from the discount section of H&M. And he sticks to the same budget no matter how much extra money he earns. Graham also uses leverage to invest, and his portfolio consists mostly of real estate and stocks. Although we live in different countries, Graham and I seem to have a lot in common. 🙂
If you want to build muscle, you have to lift weights. If you want to lose fat, you have to change your diet. Change requires commitment. Becoming a millionaire is no different. Graham explains that building wealth starts with the right mindset.
The only way you will change is if you believe the payoff is worth the sacrifice. Graham suggests a good way to begin is to ask yourself if living frugally for ten years is worth financial freedom for the rest of your life. Is one decade of living modestly worth not having to do something you don’t want to do ever again? Graham and I both answered this question ten years ago, and we categorically decided yes – it’s totally worth it. 😀 Admittedly it took me 12 years, not 10, to reach a million dollar net worth. Life doesn’t always go as planned. That’s why you also have to enjoy the journey. 🙂
What makes you feel wealthy?
Wealth can come from both material possessions and financial security. I’m a big fan of the latter. I’ve always derived more joy from knowing that I could afford something, than actually buying it. And Graham seems to feel the same way.
But everyone is different. Although Tim Cook and Donald Trump are both super successful and wealthy, you just can’t compare the two. It’s Apples and oranges – if you know what I mean. 😉
The mindset of most millionaires is one of frugality. But for many consumers, a frugal lifestyle would make life miserable, not better. Whatever drives someone to feel wealthy will motivate them to continue down that path. So knowing your mindset is paramount to living true to your values.
Do you need a high income to become a millionaire?
Income is important to build wealth. But similar to oxygen, it doesn’t become a problem unless you’re not getting enough of it. So how much is enough? As long as you can earn $75,000 a year or more, you should be able to become a millionaire within a decade. Don’t worry if you start off making less. My salary was $35,000 in 2008. But today I earn more than twice as much. Graham’s income started modestly low as well, but now he makes six figures annually from his real estate business. It’s not about where you start. It’s about where you can get to. 🙂
Graham cautions to stay away from careers that pay a low hourly rate. The problem is that there are only a certain number of hours in a day, so your income potential is capped. 🙁 The solution is to either acquire a skill such as plumbing or welding that pays a higher hourly wage, or switch to another line of work where you’re paid for your results rather than your time. Results based jobs would include any commission based work such as sales, brokering, or consulting.
Creating an online business is another valid option due to the scalability of the internet. You can offer a course, a service, or a product that fills a market need. The same amount of work it takes to reach 10 people can be scaled up to reach 10,000. This way you can “leverage your effort, not your time – to make significantly more money.”
Returns on Investment
The last piece of the million dollar puzzle is to invest wisely. Building up $1 million from savings alone is too difficult. You would basically need to save $100,000 a year for 10 years. So to speed up this process you can invest your savings. At 15% annualized return for example, you would only need to save $40,000 a year to become a millionaire in 10 years. Graham mentions that you can actively manage your investments to increase your returns in the market. He particularly likes to buy rental properties and gives a real life example of how to double one’s investment (100% return) in a year with the help of a bank loan.
Graham ends the video by saying that if he believed that none of his success was achievable, he never would have achieved it. He developed the mindset from the beginning that he could turn his dream into a reality, and that became a self fulfilling prophecy. 🙂
Random Useless Fact:
Experts project the current physical distancing measures in Canada will continue until June 2020.