Take These Steps to Become a Millionaire

Becoming a millionaire is a goal for many people. To achieve this goal, it takes hard work, patience, and a plan to get there. I will discuss a few ways to get there.

Believe You Can and You Will

The first step to becoming a millionaire is to believe that you can. Set goals for yourself and start working towards them. You may need to do this alone as most people will not support your dream. Don’t listen to your friends or family when they give you all their reasons about why it’s risky or impossible. You can’t take advice from people who haven’t achieved what you want to achieve. Becoming successful starts with your mindset. Most do not have a good mindset because of how we are trained in school. In school, we are trained to get good grades, get a good job with benefits, and retire at age 65, with a little bit of money, if we live that long. If we follow this system, we are always slaves to someone else. We work hard, pay enormous amounts of our hard-earned money in taxes, make someone else richer, and never build wealth for ourselves and our families. It’s time to do build something for yourself.

Surround Yourself with Successful People

You will become like the people you spend most of your time with. Surround yourself with people who can help you grow and want you to succeed. Learn what you can from people who have achieved great things. Be coachable. Never feel like you know everything. You can learn a lot more by listening than you can by talking.

If you are the smartest person in the room, you’re in the wrong room. — Confucius

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning. — Albert Einstein

Put Your Money to Work

Money that sits in the bank is dead money. You will never get rich by saving money. Yes you should have a good savings but you should also have investments. Money that sits in the bank loses purchasing power due to inflation and does not grow for you. The bank makes money off of your money by investing it and lending it but you never see any of that profit for yourself.

Put your money to work by investing some of it either in the stock market or in real estate that can provide income such as rental properties. Every dollar is an employee. Rich people become rich because they keep their money moving. The best way to do this is to invest in assets that appreciate over time or provide income. Stocks and real estate are the winners when it comes to the best ways to build wealth.

The easiest and most efficient way to invest in the stock market is to invest in a fund that tracks the S&P 500 such as VOO (Vanguard S&P 500 ETF). This is the minimum you should invest in. If you start investing $500 per month into this fund in your 20s, it is almost impossible to not be a millionaire in your 40s or 50s. Even better, if you do this in your Roth IRA, you will not pay any taxes on your gains but you will have to wait until age 59 1/2 to withdraw the money.

Another way to invest in the stock market is to build a portfolio of dividend-paying stocks. This option will require more effort. This option can also provide you with yearly income raises. A great way to build your portfolio is to consistently invest in stocks that have a healthy financial position and have increased their dividend payments year after year. These stocks are placed into a group called dividend aristocrats.

Dividend aristocrats are stocks with 25 or more consecutive years of annual dividend increases. These stocks tend to be some of the most reliable dividend growers and income producers in the market. Common examples of these stocks are Procter & Gamble, Coca-Cola, Johnson & Johnson, and Abbott Laboratories. More broadly, these stocks tend to come from industries with relatively stable businesses, such as consumer staples, healthcare, and utilities. Other than providing consistent dividend payments, dividend aristocrats may have characteristics of strong balance sheets, solid cash flow, and competitive advantages. Investing in dividend aristocrats can be a great way to add beneficial exposure to your portfolio while receiving passive income.

Another potentially amazing tool for building wealth is rental properties. When you own a rental property, you own a business. This business comes with many benefits. You may create an income stream through the collection of rent payments while also owning an appreciating asset and claiming many tax benefits. Owning investment real estate is definitely not as passive as owning stocks but you have the option to self-manage or pay a management company to take care of the daily tasks for you. Either way, real estate will require someone who knows what they are doing, is dedicated, has a great team of people, and is willing to take huge risks. Some benefits of investing in rental real estate may include

Tax Deductible Expenses: All costs associated with owning and managing rental properties, such as advertising, repairs, home insurance, mortgage interest, and property taxes, may be deducted from your taxable income.

2. Depreciation Deductions: A portion of the cost of a rental property can be written off against rental income, even if you haven’t yet paid off the loan. Some of the money you pay toward the loan can then be used as a deduction.

3. Capital Gains Exclusion: You can exempt up to $250,000 in capital gains on the sale of a rental property. This amount is doubled if you are married and filing jointly.

4. 1031 Exchange: You can defer taxes on rental property gains by taking advantage of a 1031 exchange. This lets you reinvest the proceeds from the sale of one rental property into a like-kind replacement property within 180 days.

There are many ways of achieving the dream of becoming a millionaire. Most importantly, believe in yourself, surround yourself with successful people, and put your money to work! These three steps will set you ahead of everyone else. Never stop learning. You don’t get paid in relation to what you do, you get paid in relation to what you own. The difference between where you are now and where you want to be is knowledge. Take this knowledge and apply it. It’s time to build something for yourself.