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Building Wealth: Five Steps Towards Becoming a Millionaire
by Alexander Wissel, Editor in Chief, Investment U
Thursday, June 4, 2009: Issue #1011
Just over six years ago, we wrote to our subscribers about the smartest path to $1 million. With the rollout of the new Investment U course, “Building a Million-Dollar Portfolio From Scratch,” it seemed like a perfect time to revisit the five easy steps that we can all take to reach – and exceed – that seven-figure milestone…
“What’s the best stock that I should put my money in – How do I become a millionaire?”
We get this question, or something like it, almost every day from Investment U subscribers, family members and close friends alike. And while I respect the simplicity of the question, the answers of how to begin building wealth are a little harder to vocalize.
For instance, when I was in insurance, I took calls everyday from folks who would request a quote on, say, an 86′ Chevy Nova. But that’s all the information they wanted to give. When I told them it wasn’t that simple, and that we needed to know about their driving history, zip code, mileage and a number of other pertinent facts, they typically became irate…
Insurance isn’t that cut and dry. And neither is investing.
Trying to pick just one stock that is the “best” for everyone is about as easy to do as predicting where the S&P will close in 2020. It can’t be done with any accuracy. And for the record, pushing too much capital toward a single, “holy grail” stock isn’t intelligent risk-taking, either.
To get to the heart of the matter, you’ve got to ask yourself deeper, more relevant questions – ones that are very specific to your unique situation….
- “How do I create lasting wealth?”
- “How can I make enough money to never have to worry about finances again?”
- “How do I retire when I want to?”
- “How do I make enough money to get what I want out of life?
Actually pulling it off isn’t easy, but it’s not as difficult as you might think. Here are five healthy habits that will help you reach your financial goals, and why building wealth with a “Million Dollar Portfolio” isn’t far away.
Building Wealth: The Smartest Path to a Million Dollars
Just over six years ago, Investment U’s then president, Steve Sjuggerud, showed readers five steps towards creating habits that will help begin building wealth – how to become a millionaire. I’m excerpting it below from his original article, “How to Create Wealth: The Smartest Path to a Million Dollars.”
“You can create wealth and acquire a multimillion-dollar net worth by doing just five things:
1. Get to work an hour early.
2. Develop and then perfect a financially valuable skill.
3. Use that skill to earn an above-average income.
4. Spend less than you earn.
5. Invest your savings smartly.
Investment U will work hard to build you into the best investor that you can be. But we specialize in investing – which is only one of the five things above.
Building good investing habits and making smart decisions with your finances is something you must use discipline with for the rest of your life.
The 5 Steps of Building Wealth
- 1. Get to work an hour early. “By getting to work early, you can do all the little things that put you ahead of the pack. You can make extra contacts, learn useful skills, take time to write an impressive memo, polish off a report, etc. If you do it right, this will be the most productive part of your day.” My friend sometimes refers to it as “compound effort.” Like compounding interest in investing, the rewards are small at first, but in time, your value to your business increases extraordinarily.
- 2. Develop and then perfect a financially valuable skill. “To put yourself on track to make the big bucks, you must get yourself into the money stream of your own company. In business, a valuable employee is one who can make a critical contribution to the bottom line. Selling is a financially valued skill. So is producing profits. So is the ability to create growth. Other skills – making things run smoothly, eliminating mistakes, balancing books, etc. – are valuable to business, but they are not as highly valued when it comes time to determining how much of the money pie goes to you. Do everything you can to help your boss produce a better bottom line.”
- 3. Use that skill to earn an above-average income. “If you are making less than $75,000 a year now, it’s almost certainly because you have not perfected a financially valued skill. Applying a financially valued skill toward a business you work for or a business you own (or both) will create wealth. Part of that wealth should go to you. Ask for it. Beg for it. Demand it.”
- 4. Spend less than you earn. “It was as easy as that. I decided simply to get richer one month at a time. That simple promise had a profound impact on the way I thought about myself, my job, my business relationships and wealth building itself. It made me see – almost instantly – that many of my habits (including some of my spending habits) were financially unhealthy. Plus, it gave me an underlying determination to get a little bit richer every day.”"One day I had an idea. I took out a sheet of paper and tallied up my net worth. Despite earning $50,000 more that year than my previous highest salary, my net worth was still less than $10,000. I made myself a simple promise. I said that from then on I’d recalculate my net worth once a month and that I’d do everything I possibly could to make sure that each month’s total would be larger than the month before.
- 5. Invest smartly. The fifth step is something that you can do every day by reading Investment U. You’ll get actionable advice and insight on how to take advantage of market movements. In addition, you’ll understand how using simple strategies like position sizing and asset allocation can reduce your risk. In short, we’ll help you invest your hard-earned money and savings smartly.
To get to where you want to go, you must do more than read about it – you must put the plan into action. To build personal wealth, you’ll need to commit today to doing all of the following:
- Set your alarm an hour earlier.
- Identify the financially valued skill you are going to develop.
- Commit to spending less than you earn.
- Make it a habit to recalculate your net worth on a monthly basis. Then promise yourself you’ll do what it takes to grow that bottom line.
- Invest smartly.
Dr. Steve’s five habits are as true today as they were six years ago, and they will be true in another six, or 60 years. So start this quarter with a fresh perspective and take the first steps to building long-lasting wealth.
You have nothing to lose. And a lot to gain.
Good investing,
Alexander Wissel
P.S. You can put these healthy habits – and the descisions they will produce – to work through Investment U’s new course, “How to Build a Million-Dollar Portfolio… from Scratch.” It’s one of the best ways to “invest your savings smartly” for maximum returns.
- Investment U & The Oxford Club: Empowering Investors & Building Long-Lasting Wealth
- Compounding Your Interest: How To Increase Your Saving’s Return
- The Philosophy of Money: What It Means to Be Truly Wealthy
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One Response to “Building Wealth: Five Steps Towards Becoming a Millionaire”
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June 4th, 2009 at 12:40 pm
I dont want say a much but
it is true and perfect and may be each one of it knows that five points but no one turns that that into action unless some one keeps him motivated
Thank you Mr. Alexander
Truely.
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