Start a 401(k) Early and Max It Out Every Year
If you have a 401(k), you rich, even if you don’t feel like it.
If you don’t have one yet, it’s never too late to start.
Forget the common wisdom that you can’t invest too much in your 401(k). If you can’t invest enough to max it out, you’re not trying. If your contributions aren’t going to max it out, you can’t afford to contribute. There’s no such thing as “investing too much” in your 401(k).
In fact, the only reason not to max it out every year is if you’re also maxing out an IRA.
The reason to max out your 401(k) every year is not because it’s a tax deduction or that it builds value or anything like that, because it can’t. It’s the tax breaks on these investments that give you the tax deduction. It’s the tax breaks on these investments that build up your balance. These tax breaks decrease with increasing income for most people.
What if You're Self-Employed?
If you're self-employed with no idea of your salary, put in what you estimate it to be. It'll make the rest of the calculation a little harder, but that's OK. Remember, you're doing this for fun anyway!
If you're self-employed and have some idea of what exactly you're making, then put that in instead. Again, you may be off a little, but it should still give you a good idea of where you're at.
Invest a High Percentage of Your Income
One of the easiest ways to make a million before turning 40 is to invest a high percentage of your income. It’s pretty simple. If you have a higher income, it will be easier to invest a high percentage of that income. And if you are able to do that, in many cases, you’ll reach the goal soon.
Even if you don’t have a high income, you might still be able to achieve this goal if you manage your money effectively and use financial tools, such as index funds and tax advantaged accounts.
Build a Business
Ok, the easiest way to make a million dollars is to start your own business with a few hundred thousand. A few years of hard work and a lot of luck can lead to a great return on investment. Good businesses will always have people who are willing to invest in them.
Invest in Real Estate
You can also purchase properties and rent them out. This is a great way to build wealth slowly over time.
Only you know your local market. If you have a lot of real estate in your area, you can probably get a better deal than if you live in an area with less demand for the things you own. However, there are very few people who have the guts to buy a nice house or piece of land and rent it out, or live in it while it increases in value.
Play the Stock Market
This is more risky than the above two, but there is the possibility of becoming a millionaire in a few years. You should probably understand the stock market before you make your way into it.
You have to be very careful about this:
- Never invest in anything without doing your research.
- Diversify your portfolio (different stocks and types of investments). It’s one thing to lose a huge investment on one purchase, but if you spread everything out, you reduce the chance of total ruin that much more.
Secondary Benefits of Building a Business
No business owner starts out with that goal in mind. They start a business because they have a passion for a product, idea or service and they want to create and control their own future. However, there are secondary benefits of building a successful business that can help you achieve your financial goals.
If you’re working towards financial independence and a wealthy retirement, these benefits will help you get there faster. They also help you control your own financial destiny today.
Buy Real Estate
Professional athletes and entertainers make millions of dollars and retire in their 30s and 40s. It’s easy to assume that you have to follow a similar course in life to be able to retire early.
But according to many financial experts, if you start saving and investing wisely from a young age, you can really make that number (the big 1,000,000) in your bank account.
You can retire early by doing what most people will talk about doing, but will never actually do – investing in real estate.
You can invest in any type of real estate, whether it’s a home or a piece of property. You can purchase as little as a single family home or you can buy a piece of a complex.
The most important thing is to make sure that you’re using a trusted source and making wise investments. Whether you have a lot of money to invest or only a little, you can take the steps to retire younger and still enjoy your life. Keep on reading for a few more effective ways to build wealth.
Making a Million Dollars in Real Estate With Just $10,000 per Year
Shoot the Works on High-Risk Stocks
Stocks that are considered high-risk typically go on roller coasters. They shoot straight to the sky and plummet straight to the ground.
But these types of stocks are exactly what you want during your 40s. That’s because you’ve already saved enough of your income that you have a critical foundation for investing. This means you’ll also have the financial cushion to comfortably ride some of the bumps of investing.
You’ll just need to take on more risk because the returns will be higher. That’s what you should be looking for in high-risk stocks. You need to set yourself up to hit a home run rather than hit a single and move on to the next batter.
Final Thoughts on How to Make $1 Million Before Turning 40
The previous 4,800 words have given you all the basic principles and actionable advice you need to make your fortune prior to age 40. Yet these same words can only take you so far. It will be your follow-through, perseverance and dedication that determine what you ultimately do with this knowledge and how much you end up making. You can sit around and do nothing or you can go out there and start making your life happen.
We truly wish you nothing but success and happiness in your business endeavors. Feel free to email us, Facebook us, Tweet us or contact us via our website. We’d love to hear from you and we’d love to help!