Most of us have, at some point or another, daydreamt about being rich. To have enough money that your financial concerns are gone, and to be able to go on vacation and spend leisure time however you want, is a luxury most of us can only fantasize about. Realistically, most of us will never have a chance to become a billionaire (and a billion dollars is probably more than you think).
Then again, you don’t have to be a billionaire to be financially secure and comfortable. In fact, a million dollars would be more than enough to help most people live a more financially stable life—and if managed carefully, it might even last you a lifetime. Even better, almost anyone can become a millionaire with the right approach. So what’s the fastest path to the top?
Paths to Becoming a Millionaire
You can think of the “path” to becoming a millionaire as unfolding in three different ways:
- Gift/prize/inheritance. First, it’s possible to become a millionaire by winning the lottery, or by getting an inheritance from a wealthy relative. These are technically the fastest methods to become a millionaire, since they happen almost instantly, but they’re also the least reliable; most of us don’t have millionaire elderly relatives willing to leave us a fortune, and the chances of winning the lottery are embarrassingly low. Accordingly, we can write these off as reasonable ways to become a millionaire.
- Raw earnings from a business. Another path is to start your own business, collecting the profits as a form of personal income. At scale, a successful business can earn millions of dollars in revenue, resulting in hundreds of thousands or millions of dollars in annual profit. On top of that, the business itself may grow to be worth a million dollars or more—and if you’re the only owner, all of it counts toward your net worth. That said, it can take many years for a business to reach this level of success, and not all businesses have this potential in the first place.
- Earnings and interest. One of the most reliable methods is also, unfortunately, one of the slowest. The idea is to capitalize on earnings in a high-paying career, save money when you can, and invest the money in stocks, bonds, index funds, real estate, and other assets. Thanks to compound interest, your savings can multiply ridiculously quickly, and if you start young, your potential will be even greater.
Starting a business can be considered a “faster” way of becoming a millionaire, but it’s also far less reliable. More than half of businesses fail within the first five years, and even if you make it past that threshold, there’s no guarantee your business will generate revenue substantial enough to make you wealthy.
Choosing a Career
If you’re interested in becoming a millionaire in a reliable way, the best thing you can do is start investing in a career with high earning potential. People often think about lawyers and doctors as the prime earners of the world, and to an extent, they’re right—but it takes many years of school, and oftentimes hundreds of thousands of dollars of debt to get into those positions.
Instead, consider alternative routes. For example, you could become a real estate agent. You can get a real estate license through online courses in just a few weeks, and start your own practice or join an existing agency. As an added bonus, you’ll have insider knowledge and opportunities to invest in real estate as an avenue of growth for your savings. You could also take up almost any sales position, or take an entry-level position in a large company that promotes from within.
As long as you’re making a good salary, and you’re capable of living below your means, you’ll be able to invest money on the side—and that’s how the average person can become a millionaire.
Compound Interest and Wise Investments
The best way to invest money is with a combination of different assets, balancing their strengths and weaknesses against each other. Take advantage of retirement accounts like a 401(k) or Roth IRA when possible, and make deposits regularly. If you’re able to invest just $8,000 per year, and get a cumulative 7 percent return on your investments, it will take less than 32 years to become a millionaire. At $15,000 a year and 9 percent interest, that shrinks to just 21 years.
There are many choices and adjustments that could accelerate your path to becoming a millionaire. Cutting costs, moving to a cheaper area, picking up a side gig, and fighting for promotions and raises can all make your journey even shorter. Just remember—quicker isn’t typically more reliable when it comes to building wealth.