Upon seeing this title, I had a flashback to Ben Afflec’s scene in “Boiler Room” emphatically pronouncing “I AM A MILLIONAIRE” over and over again! As for me, I must say I wasn’t counting my brokerage account balance like the miles on my poor college car from long ago as it rolled over to 100,000 miles, 150,000 miles, and so forth, but it was a significant milestone for me personally. If that happens to you, certain memories will be forever implanted in your memory about that precise moment.
Aside from inheriting, acquiring through litigation, or participating in something that will cost you 20 years in San Quentin, ownership of key assets is the fastest way to build net worth. I’ll say again, owning something that will increase in value over time is the easiest possible way of making your first million. Certainly, you can actively work for your income as everyone does, in which I know ten families that have a 1million plus bank account. They are essentially workaholics to some extent but so are many other in their profession (scientists, stock brokers, and specialty lawyers). They all put in 70 100 hours/week to maintain their $150,000 plus salaries but nearly all of them absolutely love what they do.
I know what you’re thinking, another guy raving about passive income but I’m not joking when I say it really works. Most importantly, its nearly foolproof with adequate planning and some maintenance every now and then. The most important lesson to learn is this: you can never learn enough on the subject of making money and how you make your Benjamin’s work for you. If you have 20 minutes at lunch, read a copy of the financial news or tune into CNBC and catch Jim Cramer’s Mad Money. He’s a character for sure, but his insights on trader psychology is worth far more than the stock picks he gives and that’s saying something because many of his picks have done extremely well for me. Can anyone say Google, Intuitive Surgical, or Transocean? Very good picks for investors with a 1-2 year time horizon.
Can you see a developing pattern here? I’ve already discussed two quick ways in which to make your money make MORE money. Since the description says “path” I thought I would describe a few strategies that everyone can follow to put themselves on the path to becoming a person with six zeros behind your name:
1.Do not live beyond your means under any circumstances. If you live off your credit cards or constantly refinancing your homes for frivolous escapades, you are going in the wrong direction.
2.Plan a budget and stick to it. Calculate your total must pay bills and deal with them accordingly. Never become past due because a $14 delinquent water bill will show up on your credit report when you least expect it. Trust me!
3.Think like the millionaire next door. Don’t buy a 7 series BMW or buy your significant other an obscenely large precious metal that can be seen from space.
4.Live simple. Set a savings goal each month and invest that in a brokerage account. Studies show that adults who start investing in their mid 20s can stop investing in their retirement accounts at age 30 and have a larger balance than a person who invests from 30 to retirement age. Compounding interest is a very powerful mathematics tool so use it to its full potential.
5.Keep your eyes out for ways of generating easy income and simultaneously cut back your own funds that are outgoing.
I’ll give you a brief example of my successes. I began by learning investing skills in graduate school, and acquiring enough capital to buy a home near Washington DC. I was working as a scientist at the time but I was still actively trading when the market was in free fall crash mode and I essentially had short sells on everything technology related I could find. Then a friend offered to sell me his townhouse, which I did and quickly rented it out to a nice single family from Philadelphia. Two months later my real estate agent called me with another townhouse that was in pre-foreclosure so I refinanced the two existing mortgages, got a family member as a cosigner, and got the cash to cover all three townhouses (mine included). Granted, my budget was so tight I thought cheese on my $0.99 burger was a luxury, I had acquired a 3 homes in a very desirable location during a buyers market. Even with the real estate decline that has occurred this year and forecasting zero growth next year, those properties have doubled in value since purchased in 2001 2002. Including the positive cash flow each month after mortgages and HOA fees are paid, it still provides a nice profit that goes into an investment account each month. I still actively trade and give small entrepreneurial loans to trusted business partners after carefully reviewing their business plan for several weeks and make a nice 6% guaranteed return. I have other deals in the works and all of them are non-traditional type investments so I hope you realize a variety of passive income sources can provide you with a comfortable lifestyle.
Personal Note: as always, questions/comments/concerns are welcome.