6 shapes (with examples) of how to earn your first million dollars given by ordinary people who became millionaires
Called me attention to an entry on Quora, which asked the following question:
«How did you get your first million dollars and how can you repeat that process?
This threw me to a deep search.
I read all the answers to all similar questions on Quora and Reddit.
Overall, I wasn’t surprised by what I found.
But I thought it would be interesting to share my notes with you.
This is the most common, boring and low-risk way to earn a million dollars and become a millionaire. If you can earn a six-figure salary and as long as you don’t make any serious mistakes in your personal finances (e.g. credit card debt, overly concentrated risk exposure) and avoid unfortunate negative scenarios in your personal finances (e.g. divorce , medical complications), you will reach your first million.
Little by little.
The jobs that most people in this category fall into are engineers, lawyers, merchants or doctors. So if you have a good job, are reasonably frugal, and invest safely for a decade or more, you’ll end up making a million dollars.
One person made his first million in his late thirties by negotiating a deal where he earned stock instead of part of his salary. When the company went off the market, the first employee’s shares became millions. So as long as he has the opportunity to earn shares instead of cash, and is in a secure enough position to support himself, and believes in the future of the company, take the risk.
Founders are paid much more because they absorb more risk, but early employees who own stock options can make millions in a favorable liquidity event (e.g., a secondary, IPO, or acquisition). Another startup employee jumped from a net worth of $230,000 to $3,000,000 in cash because his company filed for an IPO. Without risk there is no reward (millionaire wisdom).
One person said he bought NVDA in 2011 at $17 a share. «The stock traded below my purchase price for 2 years and 10 months», shared the millionaire on Quora. At the time of writing, NVDA is trading at $596.54 per share. This represents a profitability of 3,505.88%. «I sold just enough shares to live», the person wrote. So if you can identify a market opportunity before a company “skyrockets,” you can make a million and become a millionaire.
First of all, it is not a repeatable process. Whether it’s cash lump sums or paid-for residences, inheriting assets from deceased relatives can catapult a person’s net worth above one million in no time. Most recipients appear to use the inheritance money to pay off debt and purchase a home outright.
A millionaire joined a sports and media agency at age 27 and became a commission-based sports agent. He earned a base salary of $50,000. However, he earns a 7.5% commission from clients, which net him about $73 million in contracts alone. So if you’re good at sales (most entrepreneurs are), you can find a way to increase your net worth to seven figures.
The millionaire who wrote the longest answer said he got into real estate, starting with a $405,000 house that he rented to his college friends and sold for a $120,000 profit after graduating. This opened his eyes to real estate as a wealth creation tool.
He eventually amassed 11 buildings worth $3.5 million… raising $500,000 in cash from friends and family (almost none of his own money, he admits). So the lesson is that real estate is a proven path to a million-dollar net worth.
There are only three ways to create true wealth in America:
Own a private company
Invest in the stock market
Own real estate
That’s all. Everything else is not sustainable or repeatable, or could be lost instantly.
So ask yourself, Do you have a plan to use any of them? Do you know well how each of these assets works? If not, it’s time to start learning.
