What is the Best way to Become a Millionaire?
The best way is the one you can stick to. Only you know how comfortable you are with risky investments vs saving regularly into a high interest savings account. If high risk investments terrify you, then your path to financial freedom or millionaire status might take longer but you will feel better about it.
Can Anyone be a Millionaire or Financially Free?
The path to being a millionaire or being financially free is different for everyone. Honestly, while so many people say anyone can do it there is a huge difference between how easy it is and how possible it is depending on so many factors. Background, upbringing, education, knowledge, where you live, health, family considerations and more all impact your capacity to be financially free or become a millionaire.
Mr Aspiring Millionaire is Ni-Vanuatu (native to Vanuatu) and grew up there, surrounded by poverty. Ms Aspiring Millionaire is a Caucasian Australian from a relatively middle-class background but we had numerous wealthy friends and family, well above our level.
The reality is, financial freedom for Ms Aspiring Millionaire was always realistic and going to happen. Financial freedom to Mr Aspiring Millionaire seemed unrealistic because of his background but it was what he wanted.
Saving to be Financially Free or a Millionaire
One way to become a millionaire or financially free is through saving. Simply putting a specific amount aside each week or each time you get paid and putting it in a high interest account.
This is probably the safest but also the slowest and not the best investment as far as most people are concerned. Having $1,000,000 in cash might feel good but if that money isn’t making money then it’s not really the same as having a million in income generating assets. The interest made with this money sitting in the bank is minimal compared to how much you can make with it in other ways.
It is the lowest risk method though and for some, it feels best.
Investing in Shares to be Financially Free or a Millionaire
The preferred method for many in the FIRE (Financial Independence Retire Early) community or who follow that. Shares have statistically outperformed the property market and while it does go up and down, the value, especially with ‘blue-chip’ shares or indexed funds has been solid.
Warren Buffet made his wealth this way, as have many others. It requires less effort than running a business or property and still returns an income you can live off in later years if you invest enough.
A good way to experiment with shares to see if you like it is through micro-investing. You’ll get a feel for how comfortable you are with the ups and downs without having huge amounts invested.
However, if you want to invest more, there are other platforms which are better to invest through such as Vanguard.
Real Estate to Become Financially Free or a Millionaire
This was my original plan back when I was a teenager. I even tried to get my dad to go guarantor on a mortgage when I was 13. Not surprisingly, despite my thorough plan, he said no. He is more risk-averse than I am. If my 13-year-old came to me with a plan right now, I would consider it.
I owned a house in Sydney during my first marriage which was a rental for a few years. My tenants trashed it and while I had some good times with it, overall, it wasn’t a great experience. But I also hadn’t planned to be a landlord with that home.
Buying a property specifically as a rental is extremely different to buying for yourself. I’ll go into more detail in future articles.
Currently, my partner has a couple of properties overseas through inheritance. They are basic and rented to locals. Our future plans are to develop those plans, in the way the family had always wanted to but didn’t have the finances There are also 3 other properties we have rights to but we have not moved on those yet.
Real Estate Options
To become a millionaire through real estate you can become a landlord and grow your portfolio. Alternatively, there is flipping – where you buy an old home, fix it up and resell it. This was extremely popular for the past decade. Both options come with risks and real estate is not as liquid as shares should you need the cash for any reason.
Businesses for Financial Freedom or to be a Millioniare
This was how I had a net worth of $1,000,000 by the time I was 30. Due to a long, expensive custody battle, I had to sell off things and was no longer a millionaire.
Business is how most millionaires I know have done it. Either by founding a business themselves or buying one and growing it. Everything from building to pharmacies, wineries to tourism companies have been used to create this wealth.
Personally, I love business but I know it’s not for everyone. Our aim is to have a combination of savings, shares, real estate and businesses. It is what we have currently and will continue to grow.
What other options do you know of or are you pursuing for financial freedom and millionaire status?
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