How to Become a
Millionaire
There are many ways touted to become a millionaire. Most cost money and fail expectations. But for most people one means does surpass all others: long term investment.
The offers are numerous and persistent. They tell you that one can “make millions” through work at home ventures, franchises, self-made businesses, or Multi-Level Marketing (MLM) programs.
There are programs to surf the net, read email, or do home assembly jobs. On the surface many sound very appealing, but in reality most fail, end up costing you money, and many that do work do so as a pyramid mechanism with the very few at the top reaping the financial rewards while others lose their investments.
Caveat Emptor and Internet Businesses
Caveat emptor is Latin for "Let the buyer beware.” It applies as much in the world of business as it does in consumerism.
In one study there was an examination of 172 work at home websites which were vigorously tested. It was found that 141 ranked so low that they were considered scams, and only 32 (18 percent) fulfilled their promise to be able to deliver money. Of these, only three demonstrated outstanding performance.
According to one researcher, people are led to believe that Multi-Level-Marketing (MLM) programs are successful if only one faithfully believes in the system and strictly adheres to that model. The problem, however, is that the MLM model, as practiced by most companies, “is a marketplace hoax.” In one “program” it was found that 88 percent of all participants lost their money. Investigators find that often these offerings are either outright fraudulent or fail to meet expectations, and some have deceptive earnings claims, trade practices, or false advertising.
This is not to say that all such MLM ventures are schemes. There are some 2,100 MLM companies and one cannot state that all are fraudulent or unsuccessful. In fact, there are “dozens of MLM companies over ten years old” and which are surviving very well including Herbalife, Mary Kay Cosmetics, and Amway.
Franchises are often said to be more successful than other business ventures. But even here if one is considering buying a franchise, he or she should not believe everything told and should examine the records carefully. Because of the harsh realities in the business world, only about 62% of franchised businesses survive after four years of operation. Franchises can be very profitable, but it would be best to buy a franchise from an established company with a history of success, and with strict criteria for franchise location and operations. Even here, however, upfront costs, hidden fees, and company restrictions can sour what seems to be an otherwise lucrative opportunity.
Even thoroughly planned, well funded and legitimate businesses frequently fail. According to the Small Business Administration, each year about 600,000 businesses start, and over 50% of these small businesses will fail. Irrespective of having sound business plans, good marketing, hard work and an appropriate market niche, businesses fail at a high rate often leaving owners and investors in debt.
Investing is the Way for Most to Get Rich or Become a Millionaire
However, there is a legitimate and simple plan where an average person could become a millionaire by the time he or she retires. Immediately upon entering the workforce, a young adult should invest the highest percentage of wages possible into an Individual Retirement Account (IRA), Simplified Employee Pension plan (SEP), or into a 401 (k) plan. These vehicles allow long term savings for retirement purposes while providing income tax advantages. Investments and savings made in one’s early 20’s have much more growth potential than when made in later life. The interest from early onset investments compounds, and these returns further compound and continue to increase until retirement.
For example, after college a person, age 22, enters into the workforce and starts a 401 (k) tax shelter contributing $5,000 per year (pre-tax dollars) into that account. Assume that the account returns 7 1/2 percent on the investment, the contributions continue annually, and no monies are withdrawn prematurely. With compounded interest, by the time the individual retires at age 62 that account has accumulated $1,258,873. If he/she retires at age 65 he or she has accumulated $1,590,194. The individual retires as a millionaire to enjoy the golden years with resources for comfort and a high quality senior life.
Interest rates do fluctuate and if low, will rise again. As such, this plan can be modified and still be worthwhile. The key is to start the investment while young and invest as much as possible especially in those early years.
Get Real Wealth - Real Money - Real Income
For the vast majority of people, there are no fast and easy get rich quick schemes. One needs to be aware that many internet-based programs are simply fraudulent or impractical.
The formula for getting rich really has not changed in these last 200 years. It is to earn income (the more you earn the greater the potential for high savings), live within your means, save your money (not rocket science - but difficult for consistency over time), invest wisely (seek a financial advisor), and stick with your plan.
Living Beneath Your Means
Getting rich is really about earning money and living beneath your means. It is about setting aside as much as possible, as early as possible, as consistently as possible, at the best rate possible, for as long as possible.
If needed, work a part time job in addition to the regular job, and dedicate those earnings totally and directly into a retirement plan. Even with adjustments in the interest rates, with this simple formula in the long term one can earn a significant return on the investment for retirement.
Yes, some people have done very well in real estate, and others with particular stocks, but there are no secrets to becoming a millionaire and almost anyone has the chance to make it happen. Stick to the formula - earn, live within your means, save, invest wisely, and stick to the plan long term. The process is simple.
While there are certainly many factors that can make this easier or more difficult for different people, basically the process is simple - and whether it is 5 years or 50, if you follow a few basic steps you can do it or at least tremendously improve your overall financial health.
