More than half of Americans wish they were rich but over 75% think they will never become rich in their lifetime. But becoming rich before you die is not as hard as you think. However, it’s important to realize that the definition of “rich” changes based on how much you make.
Considering the median household income in the united states is only $51,000 a year and only 4% of households make $200,000 a year or more, it’s probably a safe bet to assume that most people would consider having $1 million to be rich. So how can you reach the $1 million milestone in your lifetime? Well, it’s certainly not easy, but here are a few things to consider:
Timing is everything, so start young
The younger you are, the more time you have to get rich. This means you can save your money longer and let your interest compound for more years. It also means you can take more risks. So if you want a real shot at becoming rich, make sure you start trying young.
If at age 25 you start investing $300 a month into a retirement account and your company matches at 50% (many companies match your 401k contributions at 50% of what you put in, up to 6% of your paycheck) at an average interest rate of 6.5% you would have over $1 million when you retire! But you can also take investing into your own hands without being a stock expert…
Invest in big ideas
You don’t have to be Warren Buffet to pick good stocks. Websites like Motif Investing make it easy (and even kind of fun) to buy portfolios of 20 to 30 stocks based on curated ideas, trends, or sectors. Each portfolio is called a “motif.” You can invest in motifs such as “Wearable Tech” or “Modern Warfare.” There are hundreds of motifs to choose from.
This unique approach takes the leg-work out of picking companies and let’s you focus on the ideas that you believe in. And, unlike traditional online investing platforms where you pay $9.95 per stock trade, Motif Investing let’s you trade an entire motif of 30 stocks for just $9.95.
Until December 31st Motif will add up to $150 to your account (on accounts opened with a minimum of $2,000 and 5 trades). You can open an account with as little as $250.
Invest quality companies (with as little as $10)
Until now it’s been very hard for someone with little or no experience or people without a lot of money to buy stocks in quality companies. But an all-new service called Loyal3 allows you to buy stocks in companies you love with absolutely no fees. You can own shares in your favorite company for as little as $10 (yes, they allow you to buy partial shares). So instead of spending $10 a week on Starbucks you can actually own $10 worth of stock in Starbucks. There are lots of great company stocks to chose from! You can even sign up to an email list to get access to new company IPOs. (There has never been an easy way for the general public to gain access to IPOs until now!)
Don’t Waste Money On Common Monthly Expenses
One thing that will hurt your chances of getting rich is wasting money that you could otherwise be saving or investing. So many people waste hundreds of dollars every month by overspending on things like car insurance, mortgagees, and other common expenses.
Instead of just staying with the status quo, you can use websites like eSurance.com to compare car insurance rates or sites like LendingTree.com to compare multiple refinancing rates for your house or car (yes, you can even refinance your car payments into a lower rate!). You could save literally hundreds of dollars a month between these expenses alone.
Don’t carry credit card debt (and consolidate it if you do)
Another area people waste hundreds, if not thousands, of dollars every year is on interest-bearing credit card debt. You should avoid credit card debt all-together, but if you’re already paying interest on a card you could significantly reduce your rate by dumping the credit card companies and consolidating your debt through a peer-2-peer lending service like Prosper Marketplace, where interest rates can be as low as 6.73% on up to $35,000. Loan payback terms can be 1, 3, or 5 years. You can get a free personal loan rate quote here.
Uncommon (but still legitimate) ways to get rich…
Invest in startups
In the last decade it seems like more investors than ever before have gotten rich off of investing in startups. When companies like Facebook IPO with a market cap of over $200 billion, even the earliest and smallest investors get filthy rich.
You don’t need to have hundreds of thousands of dollars to invest in startups. Many early stage startups raise money from friends and family and you can often take part in a round with just $5,000 – $10,000. And with new Crowd Funding platforms you can even invest less in early stage startups.
Invest in real-estate
If you watch Shark Tank then you’ve probably heard about how Barbara Corcoran turned a $1000 loan into a real-estate empire. Investing in real estate is not easy and it takes some cash to get started, but if you know what you are doing you can become seriously rich. If you know nothing about real-estate, don’t try it on your own. See if you can find a mentor to show you the ropes.
Start your own business (and sell it).
There are very few day jobs that will make you rich. So if you want to make some serious cash, don’t bank on getting there via a 9-5 job. Instead, consider starting your own company. Sure, a business comes with lots of risk, but there is also a lot of potential reward. But you can’t get rich starting any old small business; to hit it big you need to start a business in a large industry. These days many entrepreneurs are getting rich by starting successful companies in industries such as technology, healthcare, consumer products, etc. But keep in mind that about 50% of businesses fail after just four years.
And don’t forget…Save, save, save!
One of the most obvious and overlooked ways to get rich before you die is to actually spend less than you earn and save your money earn interest on it (using traditional investment vehicles or services like Motif or Loyal3).
Getting rich before you die really is possible with some determination, a good plan, hard, work, and a little bit of luck. But it’s also important to always remember that to really be rich you have to be happy with what you have.