How To Become A Millionaire
The goal for most people is to one day become a millionaire. Becoming a millionaire is not as difficult as you think. You just need to acquire a net worth of $1 million dollars. This means that the value of all of your assets together minus your liabilities should be equal to $1 million dollars.
Here are 5 steps that will put you on the road to becoming a millionaire.
1. Buy a piece of property.
One of the easiest ways to increase your net worth is by investing in a home. The premise behind owning property is that the value should appreciate over time. Your balance owed decreases as you make payments and the equity in your home should increase. If you buy a home valued at $200,000 and make 10 years worth of payments, it’s reasonable to expect that the home could easily appreciate to a value of $250,000 and your loan balance could decrease to $150,000. This would give you equity of $100,000.
2. Start investing.
Find an asset that you believe will increase in value over time and invest. Invest during the good times and the bad ones. The problem for most people is that they don’t invest heavily enough in their best ideas. Start investing with just $100 and see what happens. If you could invest $250/month for a ten year time period, you would have close to $50,000. If you invested $500/month for 10 years, you would have $93,000. I am assuming a return of 8% per year which is reasonably possibly. You could invest in REIT’s or MLP’s and easily earn 8% in dividend yield alone. You could also get a 5% to 6% dividend return on high yielding stocks (ex: Verizon) and would just need to generate 3% via capital appreciation.
3. Accumulate, accumulate, accumulate.
The first goal is to accrue $100,000 in capital. After that it gets a whole lot easier to get a net worth of $1,000,000. If you invest $100,000 and get a 5% return on your money, than you would have earned $5,000 in interest alone. Remember that every dollar that you have is either working for you or against you. Make your dollars work for you by maximizing the return. Get your money out of the big banks and place it in higher yielding FDIC insured accounts. You may have to sacrifice and make cuts to reach your goal but when you get there it will definitely be worth it.
4. Develop multiple streams of income.
Unless you are an athlete, high level corporate exec, or a trust fund baby; it’s unlikely that you will become a millionaire off of your job alone. Create a side income for yourself. Find a need and fill it. Start a business, develop a business idea, create a website or pick up freelance jobs. It is possible to pick up an extra $25k to $50k per year working from home in your spare time. Do something. Use your free time to generate extra money. Make productive use of every moment that you have. You never know which business venture will be the one that makes you your fortune.
5. Never lose sight of your goal.
Keep track of your progress by evaluating your goals monthly and determine if you are on track to reach your million dollar goal. Use financial calculators to gauge your progress. If you notice you are falling behind, change your plan. Increase your income, reduce an expense or change your investment strategy. Most people never achieve their financial goals because they are afraid to take risks. You will have to take some risk if you want to realize your dream. Never follow the crowd. If you do what everyone else has done, than you will get the exact same results as everyone else.
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