How to become a Millionaire in 10 Years

I don’t trust millionaire florists. They’re always running some kind of pansy scheme. Fortunately there are more legitimate ways to build wealth. I recently watched a YouTube video where a young realtor in California named Graham Stephan explains how he became a millionaire in his 20s. He says just about anyone can become a millionaire in 10 years with the right attitude. In short here is his advice to others:

• Get paid for your results, not your time.
• Cut back on unnecessary spending.
• Invest consistently and actively work on those investments to increase returns.

The biggest misconception in the personal finance community is that you can’t beat the market by actively selecting individual investments. But both Graham and I have experienced first hand that if you put time and effort into finding and managing your investment portfolio, your returns will be higher than if you take a completely passive approach. I’ve been consistently make 15% annual return or higher for the last 10 years. My monthly net worth updates are evidence of this.

The mindset of a Millennial millionaire

Graham thinks like a millionaire. He prefers to eat at home instead of going out. He drives a used car and buys clothing from the discount section of H&M. Graham also uses leverage to invest, and his portfolio consists mostly of real estate and stocks. Although we live in different countries, Graham and I seem to have a lot in common. 🙂

If you want to build muscle, you have to lift weights. If you want to lose fat, you have to change your diet. Change requires commitment. Becoming a millionaire is no different. Graham explains that building wealth starts with the right mindset.

The only way you will change is if you believe the payoff is worth the sacrifice. Graham suggests a good way to begin is to ask yourself one question.

Is one decade of living modestly worth not having to do something you don’t want to do ever again?

Graham and I both answered this question ten years ago, and we categorically decided yes – it’s totally worth it. Admittedly it took me 12 years, not 10, to reach a million dollar net worth. Life doesn’t always go as planned. That’s why it’s important to also enjoy the journey. 🙂

What makes you feel wealthy?

Wealth can come from material possessions or financial security. I’m a big fan of the latter. I’ve always derived more joy from knowing that I could afford something, than actually buying it. And Graham feels the same way. The mindset of most millionaires is one of frugality.

But everyone is different. For many consumers, a frugal lifestyle would make life miserable, not better. Whatever drives you to feel rich will motivate you to follow that path. If having “things” make you feel rich you will never be financially wealthy. On the other hand, if being financially independent makes you feel rich then your values will line up with the millionaire’s mindset. Live true to your values, but understand that you decide what those values are!

Do you need a high income to become a millionaire?

Income is important to build wealth. But similar to oxygen, it doesn’t become a problem unless you’re not getting enough of it. So how much is enough? As long as you can earn $75,000 a year or more, you should be able to become a millionaire within a decade. Don’t worry if you start off making less. My salary was $35,000 in 2008. But today I earn more than twice as much. Here’s a copy of my employment letter from last year. I am making roughly $71,000 a year today.

Graham’s income started modestly low as well, but now he makes six figures annually from his real estate business. It’s not about where you start. It’s about where you can get to. 🙂

Jobs to avoid and jobs to pursue

Graham cautions to stay away from careers that pay a low hourly rate. There are only a certain number of hours in a day, so your income potential is capped. 🙁 The solution is to either acquire a skill such as plumbing or welding that pays a higher hourly wage, or switch to another line of work where you’re paid for your results rather than for your time. Results based jobs include any commission based work such as sales, brokering, or consulting.

Project based work is also results driven. Independent contractors, landscapers, wedding planners, and event organizers are all paid per project. All these examples require work that must be broken down into smaller tasks. Your income potential depends on how efficient you can delegate and manage those tasks.

Creating an online business is another valid option due to the scalability of the internet. You can offer a course, a service, or a product that fills a market need. The same amount of work it takes to reach 10 people can be scaled up to reach 10,000. This way you can “leverage your effort, not your time – to make significantly more money.”

Returns on Investment 

The last piece of the million dollar puzzle is to invest wisely. Building up $1 million from savings alone is too difficult. You would basically need to save $100,000 a year for 10 years. So to speed up this process you can invest your savings. At 15% annualized return for example, you would only need to save $40,000 a year to become a millionaire in 10 years. Graham mentions that you can actively manage your investments to increase your returns in the market. He particularly likes to buy rental properties and gives a real life example of how to double one’s investment (100% return) in a year with the help of a bank loan.

This leveraging principle applies to stock investing as well. You can easily double your stock returns without doing any extra work by utilizing other people’s money. As I explained in a previous article this is an effective strategy to increase investment returns without adding a lot of extra risk.

Graham ends the video by saying that if he believed that none of his success was achievable, he never would have achieved it. He developed the mindset from the beginning that he could turn his dream into a reality, and that became a self fulfilling prophecy. 🙂

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Random Useless Fact:

Experts project the current physical distancing measures in Canada will continue until June 2020.