Multiply My Money is a website devoted to economic empowerment and aims to help individuals build wealth. If we are being honest, just about everyone would like to be rich whether they admit or not. There are a plethora of benefits to being wealthy. Being rich affords you the opportunity to pursue the career that you truly love, purchase your dream home, buy a luxurious car, and travel the globe. You can also help family members, friends, and donate money to charitable organizations helping the less fortunate. Getting rich provides you with the financial independence that you have always dreamed about and allows you to truly take control of your life.  So, today we will discuss the best strategy that I know of for how to get rich.

Strategies For How To Get Rich

You can get rich a number of different ways. Listed below are some of the most popular ways to become a millionaire.

Invent something! 

Inventors are the creators of a new good or service that has not previously existed. An inventor is a visionary who sees a need for a product that others are not able to see. Inventor James Dyson became a billionaire by developing the bagless vacuum cleaner. His idea was initially rejected because it was viewed as hurting vacuum bag sales. Today, his Dyson vacuum cleaner is an international best seller. Chaleo Yoovidhya developed a net worth of over $6 billion dollars by creating a hyper caffeinated beverage known as Red Bull.

Inherit from a rich relative.

The good news is that inheriting money from rich relatives is the easiest way to become wealthy. The bad news is that you have to find those rich relatives first! Jim Walton, S. Robson Walton, Alice Walton, and Christy Walton are in the top ten of wealthiest people in the United States because of the the late great Sam Walton. Sam Walton is the visionary who created the retail behemoth Walmart. Walton turned the small retail store into the dominant retailer that it has become today.

Become an innovator who disrupts an industry.

Innovators are the entrepreneurs who develop in entirely new way of doing things. They don’t build the mousetrap but are the people who build a better mousetrap. These are the disrupters. Mark Zuckerberg who created Facebook copying the tremendous success of MySpace. Reed Hastings who created a mail order DVD service known as Netflix which killed DVD rental giant blockbuster. Jeff Bezos is another innovator who started with ebook delivery and has turned Amazon into the dominant retailer on the Internet.

Start a business. 

Entrepreneurs are the risk takers who are willing to take the risk of starting, growing, and managing a business. Entrepreneurship comes in all shapes and sizes from building a startup from the ground up to buying an existing franchise, Bill gates of Microsoft and Larry Ellison of Oracle grew tiny technology firms into two of the world’s largest software companies. Oprah Winfrey is another example as she started a career as a Baltimore newscaster and ballooned it into being the billionaire CEO of a media empire. 

You could also get rich by hitting the lottery, winning big at casinos, getting a settlement, or sports betting on long shots. It’s possible to get rich from all of those methods but they rely on pure luck.

The Best Method I Have Found For How To Become A Millionaire

Become an investor.

Investors are those individuals who commit to an endeavor with the expectation of a profit. This is done by purchasing an asset with the expectation of receiving a long term capital gain. Warren Buffett, Benjamin Graham, and John Bogle built fortunes through investments in the stock market. Cowboys owner Jerry Jones built his fortune through investing in oil and gas exploration. Developer Donald Bren created his massive stockpile of dollars through real investing. Investing requires using capital (whether small or large) to reap a greater return on investment.

I selected the investing route as my primary path that I have used to build my wealth. Investing is a tried and true method that has created millionaires and billionaires over time. Investing is not a get rich quick strategy but it is definitely a strategy that can get you rich. You just have to approach it with the right mindset. Famed investor Warren Buffett, who knows how to get rich, has two basic rules for investing. Rule number one is, Don’t lose money and rule number two is to remember rule number one! The goal in investingis to get your money to grow over time. Profit is the ultimate motive of every investor. Every investor dreams of making his first million dollars. A net worth of one million dollars is the standard to be considered rich by most people.

In order to reach the millionaire level, you have to set reasonable monetary benchmarks that will keep you motivated until you hit that level. If you have $100, the goal is to grow it to $1000. Once you have $1,000, then the goal is to grow it to $10,000. After hitting the $10,000 mark, aim to grow it to $100,000. Once you have reached the $100,000 level, $1,000,000 is in sight. The same rate of return that can turn $100 into $1000 works the same way for turning $100,000 into $1,000,000. With that in mind, let’s take a look at how to reach the elusive ranks of the well to do by learning how to get rich and reach the 1,000,000 dollars.

What Asset Should I Invest In To Reach 1,000,000?

Before getting into how to reach the $1,000,000 level, let’s start with the type of investment vehicle that you need to place your money in.

If you plan on placing your money in a savings or checking account; you will never reach your goals. Saving to reach your wealth building goals is a horrible strategy. You cannot save your way to wealth. The rate of return on savings is simply too low. The average rate of return for a savings account at a commercial bank is 0.09 percent. That rate is simply awful. You will be dead before your money ever doubles in a commercial bank! Banks are a place to park your short term and emergency savings. They are not the place to deposit significant amounts of capital that you need to grow. If you ever want to achieve the ranks of the rich, you have to be willing to take risk. No risk, no reward! You can invest in real estate, gold, and other assets but the best method that I know for the average person to grow their money is through investing in the stock market. Investing is not magic but it is a proven wealth building strategy over time.

If you understand the stock market and investing fundamentals, then you can build your own portfolio by selecting your own stocks. The benefit is that one individual stock can outperform the market as a whole earning you a higher rate of return. The drawback is that you have to regularly spend time monitoring your portfolio, listening to conference calls, pouring over financial statements, and rebalancing your portfolio. After all of that, your portfolio is likely to still underperform the market. That is why I typically recommend index funds for most investors. Index funds are like putting your investments on cruise control. All of the work is done for you.

Get An Index Fund

The simplest and easiest way to invest is by purchasing a Standard & Poor’s 500 index fund. S&P 500 index funds buy shares in the 500 largest companies in the United States of America. The S&P 500 index is the best representation of the market as a whole. When you buy a S&P 500 index fund, you are buying the stocks that make up this index and your return will track the return of the S&P 500 index. Index funds have the double benefit of a low fee structure while providing broad diversification. Index funds charge fees that are typically below 1 percent and add a mixture of technology, energy, healthcare, retail, and banking companies to your portfolio. Warren Buffett considers index funds the best investment vehicle for most investors. The most popular S&P 500 index funds to buy are the Vanguard 500 Index Fund, Schwab S&P 500 Index, and the SPDR S&P 500 ETF. You only have to buy one share of an index fund to get started index. You can purchase an index ETF at any online broker such as TD Ameritrade, Merrill Edge, Etrade, or Fidelity. The S&P 500 index has returned approximately 12 percent annually over the past decade. That’s a great rate of return for set it and forget it investing. 

So, how can you ensure you hit the $1,000,000 level? Let’s take a look at a few investing scenarios.

Reaching The Millionaire Level

Your starting investment in each scenario is $1000. You invest the money in an S&P 500 index fund. The average annual rate of return earned will be 9 percent, which is conservative based on the return of the index over the past decade. The only variables that will change are the monthly contribution amount made and the time period. (*All of the amounts listed below exclude taxes and inflation).

Let’s assume a 10 year initial investment time frame.

In order to reach your $1,000,000 goal in 10 years, you would need to save $5,259 per month and you would end up with $1,000,098.

If the $5,000 monthly contribution amount required is too steep, you can always lengthen your investment horizon. 

Let’s take the same scenarios and change the time to 20 years.

Over 20 years, a monthly contribution of $1,557 allows you to accrue $1,000,297.

Let’s look at a 25-year time frame with the same parameters.

Over a 25 year time period, a contribution of $938 a month will generate $1,000,000. 

Finally, let’s look at a 30-year investment time period.

Over a 30 year time period, a contribution of $580 a month will generate $1,000,493. 

Remember this: the longer your investment time horizon, the less capital that you need. The shorter your investment horizon, the more capital that you will need. You cannot control the rate of return on an investment. You can however control how much you contribute (amount) and for how long you contribute (time). You can use an investment calculator to see where your investment earnings will meet.

Achieving a higher rate of return than the 9 percent assumption rate can reduce the number of years that it takes you to become a millionaire. If you can increase the expected rate of return to 15 percent by pursuing riskier investment assets then it is possible to reach the $1,000,000 mark in 20 years.  Increasing the amount of the initial investment from the $1000 starting amount used would allow you to reach a million quicker as well.

The best advice that I can give is start investing for your future today because the one commodity that you can never get back is time. Investing small amounts of money today can have you reaching the ranks of the financially affluent tomorrow.