The Easiest Path to $1,000,000 in 20 Years

Let’s not make it harder than it actually is, because it’s easier than you think

You can accomplish anything in America, right?

Not quite. Not so fast. Not even in Joe Biden’s America.

Ever since we celebrated Donald Trump’s loss here in Los Angeles this past weekend, a recurring money thought I often have moved to top of mind.

I’m under no illusion. I write these articles about personal finance from a privileged position. There’s a good chance you read them with privilege fully intact. If we spend our time thinking about building wealth rather than how to make ends meet, chances are we were born on third base. We didn’t hit a triple.

So when I say it’s easier than you think to amass $1 million in 20 years, I say it from a position of privilege to an audience largely comprised of people on the same perch. This isn’t to say hard work doesn’t get you anywhere. It does. But, speaking for myself, I’m aware I have a head start. And it has little to do with anything other than my place in life. Hard work didn’t get me here. Luck and where and when my parents decided to have sex mainly did.

If you’re one of the lucky ones to earn, say, $50,000 a year or more, you have a better than fighting chance to amass $1,000,000 (or more) within 20 or so years.

Here’s how it can look on the ground. After establishing the cash flow part, it really is easy. So easy, in fact, it’s a wonder more of us don’t do exactly what I’m about to lay out.

An insanely low cost of living

As always, it starts with an insanely low cost of living.

If you take home $4,000 a month and want to attain financial flexibility (or freedom) ASAP, it begins and ends with your expenses. I keep my expenses — fixed and discretionary — below $3,000 (generally around $2,500) most months. If I were earning $4,000 a month, this means I have between $1,000 and $1,500 left over each month. Remember those numbers.

It comes down to striking a balance between sacrifice and compromise.

When you sacrifice, you give up something you‘ll miss.

When you compromise, you make a choice in one area to get something you want more in another.

Compromise isn’t a bad word. It’s the foundation of all relationships — be it interpersonal, intimate, or your relationship with money.

It sounds painfully impossible to “only” spend $3,000 versus $4,000 in monthly cash flow, or to “only” spend $4,000 versus $6,000 in monthly cash flow. It sounds tough to have a significant surplus left over at the end of the month. Except, it’s not. Not if you sacrifice a little and compromise a little more.

Investing $1,000 a month like your life depends on it

There’s one bill each month that’s most important — my rent.

I think most people treat their housing payment as the one thing they’re gonna pay no matter what. If you miss a credit card payment (and I don’t advise it), you might face consequences, but they don’t seem quite as potentially dire as missing your rent or mortgage payment.

From there, maybe it’s your car payment. You don’t want your mode of transportation repossessed.

So, if you were living paycheck to paycheck, having to count every penny, you’d likely count each dollar until they added up to, first, your rent or mortgage and, second, your car payment. You’d worry about paying everything else last. You might tweak first and second, but I feel safe in thinking there might be general consensus here.

From our privileged positions, many of us don’t think this way very often, if ever. We make money. We pay the rent. We pay for our transportation. We pay other bills. We go out and eat and drink with friends. We buy plants. We take lessons. In some cases, we throw money around. Whatever.

If you took on the aforementioned rent and car payment mindset for your monthly investing habit, you’d be well on your way to $1 million in 20 years. If you operate from the position of financial strength illustrated here, there’s no reason why you should not have an extra $1,000 a month to invest each month. It’ll be tighter if you “only” make $50,000 a year. If you make more than that, there’s probably no excuse other than overspending for not having an extra grand at the end of the month.

$1,000 a month.

That’s it. Not really that much money (I say with privilege).

But it adds up, fast. To $1,000,000 in 20 years.

Here’s how:

• Start with $12,000 in the first year.
• Add $1,000 a month, every month, for 20 years. (So I guess that’s 21 years!).
• Invest this money, methodically, in dividend-paying stocks that appreciate a modest 5% annually, that yield a somewhat modest 5% annually, and that grow their dividend by a modest 2.5% annually. Reinvest all dividend payments. For a primer on what all of this means, see here and here.

If you do this, here’s how things look for you after two decades:

I’m not saying you can just throw $1,000 every month into a brokerage account and these results will magically happen. It takes knowledge, oversight, work, luck, and history that cooperates. So you might need to maneuver and adapt. But that’s another part of the discussion for another day.

All else equal, this is what it takes. $1,000 a month. 20 years. You’ll have about a million bucks. Treat it like your most important bill each month. Treat it like a job. Learn what you need to learn to ensure that $1,000 a month does what it’s more than capable of doing for you, even under the most conservative model. Up my numbers here and there just a bit and you’re not just shy of a million, you’re well over it.

If you’re lucky enough to have $1,000 left over at the end of every month, consider it a sacred responsibility to use that money wisely. You can still have a great life in the process. Getting to a million bucks isn’t going to, in and of itself, give you a great life. But it can certainly open up a lot of doors that not being wealthy leaves closed.

If you want to build wealth, you can.

You just can’t follow the crowd. The crowd isn’t frugal. Not even close. The crowd overspends. The crowd throws money away. The crowd cries about being broke. The crowd as no idea what it actually means to be broke, or truly wealthy.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.