Can You Really Build a Multimillion-Dollar Fortune from an $800 Investment? Here's How to Get Rich on $50K a Year
Who wants to be a millionaire? Presumably, you do, since you clicked on this article. But what if you only make $50K a year? Are the odds stacked against you for life?
Unless you were born a Kardashian, becoming a millionaire may seem out of reach. Most American workers earn much less than famous celebrities. According to the Social Security Administration, the average net compensation in 2019 was $51,916.27.
What if there was a proven way to grow wealth on a modest salary of even $50K? Well, according to our very own Ryan Daniel Moran, there is. And he wants to spill the beans.
"You can get rich making $50K a year as long as you save $20K a year."
Ryan remembers his Uncle Tom repeating this statement throughout his childhood. At the time, he didn't really know what it meant. But as he grew up, Ryan found real value in this idea. Of course, it isn't plausible to save every dime you make. People still have bills to pay, and unexpected expenses arise. However, regularly saving even a fraction of your paycheck can make you unbelievably wealthy.
And forget what the banks tell you. Stockpiling your money in a savings account with a pitiful interest rate won't do anything. As of June 2021, the "best" savings accounts offer a measly $0.50% interest rate. Most of them are much lower. So that savings account your grandparents encouraged you to open won't make you rich—not even close.
Want to know what will? Investing.
Turn $800 a Month into Millions
Too many people want to get rich overnight. They want to experience the thrill of instant gratification, but this mentality rarely pans out. Don't believe us? Scientists at Tulane University reported the odds of getting struck by a meteorite are 1 in 250,000, but the chances of winning Powerball are 1 in 292.2 million. Want a surefire way to create wealth? You're better off investing your dollar bills instead.
Investing isn't a get-rich scheme. The odds of hitting the jackpot after buying and selling a few stocks is entirely unrealistic—just ask a former day trader. A staggering 85% of day traders underperform over a multiyear period, according to CNBC. This approach is pretty much the same a gambling, and if you only make $50K a year, it's not a risk worth taking.
Instead, people should view investing as a long-term way to build wealth. The longer you let your money simmer, the bigger your returns. And index funds are perhaps the safest bet. Over the past 50 years, index funds have gone up at a rate of around 9.7% per year. However, if you invested in some of the top companies, like Apple or Netflix, a decade ago, you would earn much more annually.
Investing in high-performing index funds, like the S&P 500, is all you need to reach millionaire status. How much do you need to save? Assuming your return was 15% per year, investing $800 a month will compound into over $1.7 million in 30 years. The old saying is true—good things, indeed, come to those who wait.
Learn How to Change in the Short-Term to Build for the Long-Term
Saving $800 a month will reduce your take-home pay by just under $10,000 annually. If you can live on $40K instead of $50K, you'll reach millionaire status well before your retirement party. And there are plenty of ways to live below your means. Try incorporating these easy-peasy tips into your budget:
- Skip Starbucks, brew coffee at home, and save $4-$6 a cup.
- The next time you want to dine out, try getting creative in the kitchen. You'll save $20-$40 per meal, on average.
- Find an alternative to cable television, such as Hulu or Netflix, and save $2,000 or more a year.
- Rethink automatic subscriptions, and cancel ones you rarely or no longer use to pocket an additional $10-$80 a month.
- Instead of paying the sticker price for a newer model, drive a used vehicle to enjoy an instant savings of $5,000-$15,000.
These are just a few examples to help you save cash, but when you really sit down and analyze your spending habits, you'll discover plenty of additional ways to trim the fat. Once you do, investing that $800 each month will be the easy part.
Of Course, No Two Budgets Are the Same
While saving $10,000 a year might be a piece of cake for one person, it may be impossible for the next guy. What if you still can't come up with the extra funds? Should you kiss your million-dollar dreams goodbye?
Absolutely not! Any little bit helps, and even if you only invest $10K just once without ever adding another penny, it will still grow to over $660K after 30 years. We see you raising your eyebrow in skepticism over there, so let's examine how Warren Buffett became one of the wealthiest people in the world.
Warren Buffett has a net worth of $103.6B, and he owes nearly all of his fortune to long-term investing. His annual ROI is about 20%, which, while impressive, is most certainly not the best. But the one thing Buffet has working in his favor is time. He's 90 years old, and his investments have had more than enough time—over 60 years—to compound.
As Ryan teaches, "You don't build wealth by making more money. You build more wealth by letting the money you DO have compound over a very long period of time."
What if you allowed your $10K investment to grow for 60 years? You may want to sit down for this because your money would grow to over $43M even if your salary never topped $50K! Now, imagine if you invested even more—your portfolio would compound into millions of dollars in the long term.
The Strategy and the Plan Will Set You Free
Living in the rat race is tiring and overwhelming. You always find yourself chasing after the next promotion or looking for a higher-paying job. Once you get stuck in the race, it's a never-ending cycle.
But where do you get 15% compounded over time? Here's how to start:
Invest in dividend-paying stocks when the prices go down.
These companies tend to perform well over long periods, and many outperform other stocks during times of volatility. Dividends also provide a stream of passive income you can continue to reinvest.
Many dividend-paying stocks only pay 3-5% per year in yield, but many companies raise their dividends annually. Plenty of companies have increased their dividends for the past 50 years straight, including 3M, Coca-Cola, and Procter & Gamble.
Find growth stocks to invest in for a long time.
These are brands you use and think will be around for the long haul, like Apple, Tesla, PayPal, and Square. The companies that will run the world decades from now are the ones the current generation decides will win.
When you realize that investing 20% of your $50K salary will earn you millions of dollars, it changes how you view life. You won't be in such a hurry to increase your lifestyle. You'll be more selective about opportunities and make decisions based on what you actually want. You'll finally see the coveted pot of gold at the end of the rainbow. As Ryan says, "The plan changes the way you show up."
There is no rush to win right now—the long-term strategy lets you win. That's how you get rich.
Ready to Ride in the Fast Lane from $50K to Really, Really Rich?
What if you don't want to wait 30, 40, or 50 years to reap the benefits of investing in index funds? It's possible to accelerate the process. According to Ryan, the fastest way to get rich is by building a business and investing the profits. And don't worry, you won't even have to quit your day job. (But we bet you will once scale your business and watch your profits skyrocket.)
What many people don't realize is that you don't need a lot to start a business. Anyone can do it, regardless of how much money they make at the moment. Here are some truly inspiring success stories from two of Ryan's friends:
Aubrey Marcus founded Onnit in 2010 with money he raised from a friend. The tiny startup began with only one product, a brain health supplement, and at the beginning of 2021, Unilever acquired the company for 9-figures.
In 2015, Moiz Ali only had $500 to start a natural deodorant company, and two years later, Procter & Gamble purchased it for $100 million. The brand was Native Deodorant.
Build Your Business on the Side
Even if you work full-time, it's possible to build a lucrative business on the side. And instead of pocketing the profits to buy yourself an overpriced McMansion, invest the money into long-term index funds or other places of passive income. Before you know it, your investments will compound into millions of dollars and set you on the road to true financial freedom.