Millionaire Myth
Most people think you need over a six-figure salary or some kind of family wealth to become a millionaire, but the truth is actually going to surprise you. Research shows that only a small portion of millionaires ever earned over $100,000 per year, and nearly 80% didn’t inherit a single penny of their wealth.
Struggle and Success
But it can still be frustrating to feel like other people get all the luck, while you’re sitting here struggling to get by one day at a time. Now, I know you might think to yourself, “I just need to work harder,” but that’s actually completely wrong. You can become a millionaire even if you only have $50 per week – I’m going to show you how.
Money Truth
Like I said, it can feel like millionaires were born rich, or they just won the lottery one day or something, but I assure you that’s not the case. In short, you don’t have to have a high salary to make a million dollars. All you need to do are a few simple things.
Steve Story
Let me show you a couple of examples first, though. The first one you might have heard of – his name is Steve Adcock, and he was 42 years old when he retired as a millionaire. Now, he and his wife both had pretty good jobs, but they definitely were not rich. So how did they do it?
Smart Saving
They did it in an unexpected way. First of all, they cut their spending drastically. Second of all, they downsized their home. These things enabled them to save 70% of their income, and they invested all that into 401(k)s, IRA, and other kinds of brokerage accounts. But the bottom line is, by rearranging the money that they already had, he and his wife achieved a net worth of $1.3 million when he was only 42 years old.
Janitor Millionaire
Now you might be thinking, “That’s great for Steve and his wife, but I don’t have a good job like that.” Let me show you another example – his name was Ronald Reed, and he was actually a janitor at JC Penney for many, many years, and he also worked at a gas station. Now, most people would have looked at this guy and thought, “This guy is poor, I’m sure he doesn’t have a single penny to his name.”
Hidden Wealth
But unknown to everyone around him, he was investing his money a little bit at a time, and by the time he was 92, he was worth $8 million – and that was from just having a part-time janitor job for most of his life. Now, I just tell you these examples just to encourage you that someone with just an average income, or even a low-level income, can still achieve great wealth.
Money Mindset
And I’m going to use some of the tricks of these two guys in the rest of this video, but I can hear you saying right now, “That’s all well and good, Chad, but there’s no way I can afford to save 70% of my income like Steve and his wife did, and I don’t have the patience to wait until I’m 90 years old to become a millionaire like our millionaire janitor.”
Weekly Investment
Well, don’t worry – you actually don’t have to wait that long, and you don’t have to invest half of your income either. All you need to get started is $50. Let me show you really quick – if an 18-year-old starts to set aside $50 per week and invests that money consistently, he can become a millionaire by the time he’s 65 years old, and the key here is by taking advantage of something called compound interest.
Index Funds
A great example of this is investing in what’s called an index fund. Now, index funds – their goal is to imitate their performance of Market indexes like the S&P 500 or the Dow Jones Industrial Average. You’ve probably seen these on the news. What exactly are these things?
Market Understanding
You can think about a market index almost like a report card for a specific group of companies in the stock market. So they pick a group of companies that represent different parts of the economy – so they’ll pick a tech company to represent the tech part of the economy, they’ll pick a car company to represent the auto industry, they’ll pick a fast food company to represent the fast food market, and they’ll combine all these things together and track how well are the stocks of these companies doing when you combine them, and this market index gives us an idea of how well the stock market is doing overall. What does this mean to you? What that means is if you invest in an index fund, that means you’re putting your money.
Market Performance Over Time
Into an investment that will likely perform similarly to how the market is doing as a whole. And by the way, the market as a whole consistently increases over time. There’s lots of ups and downs if you’re watching it on a day-to-day basis, but if you zoom out and look at it over a long period of time, it consistently goes up.
Index Fund Returns
So the bottom line is, if you invest in an index fund, you’re bound to get a solid return on your investment as long as you leave the money in that investment over a long period of time. Now I know there’s no guaranteed return, but major indexes like the S&P 500 have historically returned around 7 to 10% annually over the long term.
Low Cost Investment
Now there’s two great things about index funds. The first one is they don’t cost very much. So a lot of times when you’re investing, there’s all kinds of different fees and things like that as the person that’s managing your investments are making trades, buying and selling different stocks. There’s a lot of fees involved.
Passive Management Benefits
With index funds, they’re kind of passively managed so there’s not that many fees that cut into your returns. And the second thing is they are diversified, meaning you invest your money but it’s spread out over lots of different types of companies, lots of different stocks. So some stocks might go down a little bit, some might go up a little bit, everything evens out instead of a high-risk situation where all your money is in the stock of one single company.
Long Term Investment Growth
And all these things that fit together are why an 18-year-old can invest $50 a week, every single week, week in and week out until he’s 65. And assuming he’s getting an average of 8% return (because remember these index funds get around 8% on average), this 18-year-old will have around $1.3 million when he turns 65.
Money Management
Now I’m going to show you how the math on this works in just a second, but first I’m sure you’re asking yourself, “How do I get an extra $50 a week? I don’t even have that!” Well, if you remember the two stories. One of the keys is carefully tracking and managing the money coming in and the money going out of your life. This is essential if you ever want to achieve millionaire status.
Debt Management
Now one major way of cutting your expenses is to cut down on your debts, whether it’s paying off your student loans and just avoiding credit card debt in general, because the money that you’re paying in interest on those debts seriously cuts into your extra money that you could spend investing in the future.
Budget Method
Now the next thing that I recommend people do in managing their spending is what I call the “50-30-20 method,” and that works like this: 50% of your income should go toward your essentials, things like rent, food, healthcare. Then 30% goes towards doing whatever you want, so that would be like entertainment costs, eating out, splurge items. And then finally you’ve got 20% left, and that 20% is what you’re putting into an index fund or a 401(k) or something like that.
Investment Planning
If you rule this out on paper, you’re going to find that coming up with $50 extra to invest just can really work once you get all the details written out. Now another way that’s a great way to come up with an extra $50 per week is by starting a side hustle.
Side Income
This doesn’t mean you’re taking on another job. This is something that you can do on evenings and weekends, a couple of hours here and there that can really generate some extra income for you. Maybe it’s a skill you have like teaching piano lessons, or maybe it’s taking on some freelance work on the side.
Online Class
And in fact, it’s not that difficult with the method that I teach in that free class to come up with $2-$300 per month. In fact, my own kids have used the information in the free class to bring in $3 to $800 extra per month.
Maps App Money Loophole
They don’t do anything on an ongoing basis for that money to come in. It actually uses a loophole on the Maps app on everyone’s phones to generate money from local businesses. So if you’re interested
$50 Weekly Investment Strategy
Now I promised you that I would explain a little more of the math behind how you can take $50 per week, add it up over a lifetime to make it a million, and that is through the power of compounded interest. So let me explain really quick how compounded interest works.
5% Interest Example
Let’s say you start with $100. Now let’s say, just to keep them as simple simple, you earn 5% per year on that $100. So you take that $100 and after a year you’ve got $100 plus 5% of $100 or $5, so now you have $15. Now the way compounded interest works is the second year you’re getting 5% not on just $100, but you’re going to earn 5% on $100 plus the five so now you’re getting a 5% return on $15, so now you have $110.25.
Long-term Growth
Now in the third year, you guessed it, you’re not just earning 5% of the original 100, you’re earning 5% on $110.25 which is around $5.51, so that means after 3 years you have $115.76. Now every year it grows faster and towards the end of your 65 years you’re earning interest on a very very large sum, so it starts to compound very very quickly, and that’s the magic of compounded interest and that’s the magic of steadily investing a small amount over a lifetime.
Investment Basics
Now all this investment stuff might seem daunting to you. You’re probably like, “How do I do it? I don’t even know where to start.” I’m going to share with you two simple ways to get started, but I want to make sure to tell you do your own research on this because I’m not a financial advisor.
Brokerage Accounts
The first step that you need to do is open what’s called a brokerage account, and this is basically the investment account that all your money is going to be going into. A really simple way that people are doing it these days is through Robinhood, which is an app that makes all this really simple that can go on your phone, but you could also open a brokerage account through more traditional company like Vanguard or Fidelity or Schwab. And by the way, I don’t make any money recommending any of these companies.
Account Types
Now after you’ve opened a brokerage account, then you go to step two which is deciding which kind of account is going to work the best for you. Now if you’re thinking about doing this for retirement, a Roth IRA might be a good option for you to look into because it allows your investments to grow tax-free instead of having to pay taxes on all the increased money that you’re getting. But if you don’t really want to do this for retirement and you want the flexibility to pull the money back out whenever you want, then a simple individual brokerage account might be better for you because you don’t have to leave the money in there until your retirement age.
Automatic Investments
But once you have that account set up, this is one of the most crucial steps is that you decide how much you’re going to put in and you make it an automatic withdrawal. That way you just set it and then you just forget about it and it automatically goes into your investments every single week or every single month.
Index Funds
Now like I said earlier, I really recommend if you’re really a beginner to just invest in index funds. Now the S&P 500 is an index fund that tracks the 500 largest US companies. There’s also the Total Stock Market Index Fund which tracks the entire US market, not just big companies but also small, mid and large cap stocks. Now there’s also International Index Funds which provide exposure to global markets outside the United States, and one thing that might help you decide between these is pay a lot of attention to your annual fees. Obviously, the lower those fees are, the more money you keep for your own investments.
Steady Growth
And it’s really as simple as that as long as you’re steady to put that money in there week after week and month after month. When you look back after a number of years, you’re going to be amazed at how compounded interest is causing your money to grow steadily over time without you having to do anything.
Robo Trading
Now if this investing information has been interesting to you, that I have that is on robo trading. Now this is a little more involved than an index fund, but if you’re interested in managing your own investments and really learning more, I’ve researched a bunch of different trading bots in that video and it’s a great way to get started in the investment and trading world.
Autopilot Business
And finally, if you’re interested in setting up that autopilot business that I talked about earlier that my kids have done, and I’ll email you that free class. It’s a great way to get extra money coming into your bank account that you can just fully invest without needing it at all because it’s on top of whatever you’re making in your day job and it hardly takes any time on an ongoing basis to run this business.