The Millionaire Investing Advice for 20 & 30-Year-Olds

The Millionaire Fastlane

There’s a reason why the rich get richer.

“To those who have much, more will be given. To those who have nothing, more will be taken.”

That statement is called the Matthew Principle, or what economists sometimes allude to as a Pareto Distribution.

Pareto distributions apply to us all intrinsically.

This means the more wealth you generate the more likely you are to generate even more wealth; and the more success you find, the more likely that more opportunities will come your way.

Everything compounds itself and grows exponentially. And nowhere is that more true than investing. So, with 2022 at our doorstep, here are the 8 best investing lessons to ensure you’re on the right side of the Pareto Principle.

1. Savings accounts are a bad joke

If you have savings in your 20s, you’re doing something wrong.

This isn’t because you should be partying every night like it's 1999.

It’s because savings accounts are a complete joke that pay out less than 1% interest on your money. It’s a total scam.

Don’t save. Instead, invest.

When you invest your savings, you are still ‘saving’. Both terms are not mutually exclusive. A ‘saving account’ is a dumb bank account where you can store your savings and let the bank invest them and take the gains instead of you.

Moreover, the interest rate in your savings account does not beat the current rate of inflation, meaning your money is slowly burning in a savings account.

Invest your money in stocks, index funds, or cryptocurrencies so that you reap the rewards of your money and not some two-bit banking crook.

2. This is where you should start if you’re new

If you are looking at safe long-term investing, do some research on 401ks, Roth IRAs, and general index funds to first build your financial base.

Don’t go all-in on Dogecoin because your sketchy cousin Vinny told you to.

401ks and IRAs have tax benefits that make them well worth your time, plus if you have a decent job your employer will often match you a percentage of your 401K contribution.

Additionally, index funds protect you from risk by investing in a widespread of different stocks while also keeping fees low because there is very little to manage.

When it comes to individual stocks, they are slightly riskier and you are less diversified. Conversely, if you do pick a winner in the stock market you can do better than someone who has a diversified portfolio.

3. Take risks and invest everything you can

Do not ignore the practicality and assurance of index funds, 401Ks and Roth IRAs. However, for the most part, you should be taking your biggest financial risks in your 20s and early 30s.

Everyone is forced to speculate today because the markets are disconnected from reality and everyone is chasing yield with their monopoly dollars.

You won’t get a clear picture of which companies are likely to go up based on the assets in their balance sheet, because investors are willing to pump companies that are cash flow negative based on memes and future narratives.

This isn’t necessarily a bad thing.

In your 20’s and 30’s, you’re the most in touch with upcoming trends.

The companies you use and trust every day are often great investments. You should still do your own research, but popular companies like Tesla, Etsy, Ford, Starbucks, and McDonald's all beat the market (grew more than 10%) in 2021.

Investing isn’t neuroscience. I promise. It’s acknowledging the fundamental pillars of the economy and allocating your money to them.

4. Microcap cryptocurrencies should be avoided

Cryptocurrency is becoming the most popular topic on Medium.

This is bad news for many newer investors.

Even traditional “blue-chip” cryptocurrencies like Bitcoin and Ethereum are highly risky, volatile investments compared to stocks and index funds.

In other words, when you chase microcap cryptocurrencies — otherwise known as crypto projects that are barely known and have low market caps — you’re basically gambling.

It’s a lot of fun, very high risk, and very high reward if you can nail it, but it is hard in good conscience to recommend low-cap crypto projects to someone who is new to all this.

There is a real chance you could lose a lot of money if you explore this avenue of investing. Please don’t forget this.

5. Open a Roth IRA and become a millionaire when you retire

Warren Buffet played the long game to achieve his wealth.

The muppet-looking man is worth about $86 billion today and the majority of that wealth (99.7% of it) was created after his 52nd birthday.

A Roth IRA account works in a similar way to Warren’s financial success.

If you max out your annual contributions of $6,000 to the tax-free retirement account you’d become a millionaire at age 55, after 33 years and four months of contributions.

Of course, this is barring any global nuclear wars or mass societal breakdown in the next 33 years [knocks on wood]. $6,000 a year may seem steep, but if you dollar-cost average into a Roth IRA then it becomes much easier psychologically speaking.

6. Don’t buy a house, unless…

Buying a house will make sense when the housing market crashes again.

This means that right now renting is better than buying.

The nationwide median listing price for active listings in October 2021 was $380,000, up 8.6% from the previous year and up 21.8% compared to 2019.

In my opinion, here’s the reason why: Airbnb.

People are using housing as a means to create profit, instead of holding profit. This isn’t usually how it is traditionally speaking. Now the housing market has almost turned into day trading.

This means two things for you, 1) Nobody knows when the housing market will crash, and, perhaps prices could keep rising to the point where you’re priced out of the market entirely 2) Buying or renting a property on Airbnb is definitely an avenue of passive income you should read up about.

7. Don’t become a slave to one stream of income

“A salary is just the drug they give you when they want you to give up on your dreams.” — Kevin O’Leary

The fewer income streams you have, the less leverage you own.

If you hate your job or your boss, you’ll have no choice but to stay because you have nothing for leverage. You’re trapped because you don’t have multiple streams of income.

So here are some easy income streams I found online:

Little to no Investment($100-$1k)

• Dropshipping
• Making Online Courses
• Digital Media or Marketing of any kind

Some Investment Required($1k-10k)

• ATMs
• Authoring or Online publishing
• Automated News sites or any kind of automated blog

Large Investment Required, but still very passive(10k+)

• Parking Garages or lots
• Laundromats
• Rental Properties

8. Always remember that money doesn’t buy happiness (or does it?)

It does.

“Money doesn’t buy happiness” is the mating call of the 30-something lower-middle-class person that says things like “living my best life” and doesn’t know what they’d do with their time if he retired.

Avoid this person. They’ll try to bring you down with them.

Money is the best way to help yourself, your spouse, and your family and friends. Don’t demonize money because it’s edgy and cool to do so.

Learn everything you can about money. Being smart enough to learn is a good start. Being willing to learn is the other half.

Nearly 80% of Americans live paycheck to paycheck. And nearly four out of five teenagers fail a financial literacy quiz.

Meanwhile, tens of millions of kids are trying to be Wiz Khalifa or Bella Hadid. Is there something wrong with this picture?

Final Thought

I didn’t get rich streaming video games I didn’t get an inheritance and a free house I didn’t get rich off making a gaming youtube channel I didn’t get rich of making music

And I didn’t magically mine and buy Bitcoin in 2010 to buy drugs and then forget about my hard drive until I randomly opened it up to 20 million dollars.

I wasn’t born into a perfect situation. Most likely you weren’t either.

If you don’t want to end up a statistic (i.e. as one of those people who live paycheck to paycheck or can’t pass a basic financial literacy quiz) you need to start making prudent financial decisions now.

You don’t have the luxury to wait all your life. That’s alright. As long as you’re trying, many people will take chances on you because they don’t care that you don’t have everything figured out. They care that you’re trying your best in spite of your lack of experience or success.

Make prudent decisions now and you won’t regret them later.

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