Is it possible in this day and age to become a millionaire? Or perhaps the better question is why would you want to become a millionaire? I mean in media today Millionaires and billionaires for that matter are often not depicted in the best light. Characters like Scrooge McDuck or the always supremely evil C. Montgomery Burns come to mind here. And of course right now in real life we have the ever-present Donald Trump as one of the main poster boys of the super wealthy. So I suppose with that kind of media influence hovering over us our entire lives it's not surprising that most of us have a fairly negative view of the super wealthy and many really do not want to become a part of it. Especially since the majority of us don't personally know anyone who's Super Rich so we don't have anything to really balance the scales, and that's all we can really draw upon is what we see in the media.
And that's really unfortunate because there's a lot of really great wealthy people out there. But most of them are not in the public eye and even the ones that are in the public eye like Bill Gates don't get as much media attention as someone like donald Trump does. And as a result there are a lot of misconceptions about millionaires and the wealthy in general. Hey guys, Daniel here from Next Level Life and it recently occurred to me that I’ve been neglecting a huge part of what it takes to have that next level life that we all dream of… because whatever your dream life is, you need to have the finance resources in place first to be able to live it.
So with that in mind I’m going to be starting this new series on my channel covering various topics in the field of personal finance. And as you can see by the title for my first video of the series I wanted to talk about a simple plan that, if stuck to, will practically guarantee your future millionaire status as well as take a moment and really define what a millionaire is and is not. Because believe it or not even for the average American it is possible. No you know what possible is too soft of a claim because it's more than possible. In fact if you follow a few simple steps it's almost guaranteed. Don't believe me? Well hopefully over the course of this video as well as the rest of my personal finance videos that will be coming out soon I'll be able to convince you. So without further ado, let's get started. What is a millionaire? A millionaire is simply someone who has a million-dollar positive net worth. Meaning after subtracting debts and other liabilities and expenses they have a million dollars worth of stuff leftover between their cash their house and all their other assets.
That's really all there is to it. It has nothing to do with how much money you make. It has nothing to do with what type of person you are or how well-known you maybe, it simply means that your assets are valued at least 1 million dollars greater than your liabilities. But how can the average American get to that $1000000 positive net worth in their lifetime? I mean $1000000 that's 6 zeros, i'd imagine that most of us have never written a check with more than three zeros. Unless of course you bought a new car or house with cash and if that's the case kudos to you, you may not even need this video because you're already probably well on your way to that million-dollar net worth. Now I said that if you follow a few simple steps it's not only possible to reach that million-dollar marker, it's almost guaranteed.
Let's find out how. Well I did a few calculations and found out that over the course of the last 40 years the S&P 500 has returned an average of percent per year not including dividends. Now technically speaking past results are no indicator of future returns, but until we see the future returns this is the best we've got to go off of. So assuming that over the next 40 years the market does roughly the same as it did since 1978 you could invest $2per month over the next 40 years and become a millionaire. Again assuming no dividends. Now 261 dollars may seem like a lot but when you break it down it's not even $10 a day, and there are lots of ways to save money. You can cut cable, or go down to a lower internet speed, or not eat out quite as often, or use coupons when you're shopping for groceries, or you can do none of those things and instead find a way to make a little bit of extra income.
Maybe you start mowing lawns or shovel and driveways on the side, maybe you start selling old clothes that you don't need anymore online, or if you're young you might be able to start teaching people how to use social media better. You'd honestly be amazed at how many people would pay you to do that. There's a ton of options out there, all you have to do is pick the one or maybe few that work out the best for you and start your own Journey on the path to becoming financially independent. Now there's a couple of things that I want to clear up before ending the video for those of you who are a little bit more Analytical in nature. That percent is the geometric mean rate of return that the S&P 500 has had since 1978 according to Yahoo finance. All I did to get it was go through each year and look at where the market was in September because as of the recording of this video September just ended.
Then I put them all into the Excel spreadsheet and calculated the return. And I think the reason why we hear so many different rate of returns thrown around by Financial gurus is because of the inflation effect. I've heard gurus say that you can expect to earn anywhere from 6 to 10% per year in the market. And depending on what time frame and type of average you use any of those numbers could be true. For example if you go from 1978 and use an arithmetic average the average return on the market would be about percent per year. Inflation is generally assumed to be about three to four percent so if you adjust for inflation your realized return would be somewhere in that 6 – 7% range. If you don't adjust for inflation of course you're at nearly a 10 percent return. So there you go there's a simple formula to retiring with the amount of wealth that most of us would consider to be rich.
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You know before making this video I was just thinking back to some of the greatest things that I learned in my days in school we sure did learn a lot of great stuff in school didn't we for example if you give me the link of two sides of this right triangle here I can actually tell you the length of this third side right here pretty useful stuff huh I can also write in cursive play hot cross buns on a recorder and I can even spell boobs on a calculator my favorite lesson in high school though was how to become a millionaire with just five dollars a day wait a second I didn't learn that in high school did I did you guys learn that in high school did anyone learn that important lesson in high school or was that just left out when we were learning how to cite a source using correct MLA format my point here is about 99% of what you learned in school is useless information and this is a very important lesson that was left out that I'm going to share with you guys today I'm going to show you how to become a millionaire with five dollars a day this is the magic of compound interest pretty magical all right so the first thing I want to point out to you guys is this you cannot save your way to millionaire status one of the most common things people tell you to do if you're looking to grow your wealth is to save your money and put it in the bank that is the most stupid piece of advice anyone could give you because that is a guaranteed way to lose money I'm going to explain why that is so first of all if you have five bucks a day can you simply save your way to millionaire status absolutely not here's an example let's say for whatever reason you were able to save five dollars a day from the day you were born to the day you were a hundred let's say you even lived to be a hundred years old if you save five bucks a day for a hundred years it will have one hundred eighty two thousand five hundred dollars that is a far cry from a million dollars so unless you're planning on living past five hundred years old you cannot save your way to millionaire status second of all interest rates in a savings account do not keep up with inflation so you cannot put your money in the bank and expect it to keep up with inflation so in 2016 inflation was two point one percent okay the average checking account pays zero point zero five percent interest on the money you put in there so here's just an example in terms of how much money you're losing by keeping your money in a savings account so ten thousand dollars in 2015 is equal to ten thousand two hundred sixteen based on that two point one percent rate of inflation now let's say you had ten thousand dollars in your checking account over that year as well so you're ten thousand dollars grew to an astounding dollar amount of ten thousand and fifty dollars at that point so you made fifty dollars okay also known as you just lost one hundred sixty dollars of value maybe that doesn't sound like a lot of money but if you had a hundred thousand dollars in there you just lost sixteen hundred if you had a million dollars you just lost sixteen thousand dollars because your interest rates are not keeping up with the rate of inflation so that is why a savings account is a guaranteed way to lose money so when people recommend you save your way to retirement or you save your way to being rich that's a guaranteed way to lose money there you're basically guaranteeing that you're going to fork over a lot of money because you're not going to keep up with the rate of inflation with what these banks pay you as far as interest goes so what is the solution to this problem I'm going to give it to you right now I'm going to show you how to become a millionaire with five bucks a day all that I ask you guys to do is subscribe to my channel and drop a like on this video and help this message be spread to other people out there who are stuck saving money in a bank account all right guys here it is here's how you become a millionaire with five bucks a day no this is not some course that I'm selling for a thousand dollars on how to become a millionaire that has 40 hours of video content this is this is four steps four steps guys and you can become a millionaire with five dollars a day okay here's how you do it number one set aside five dollars each day I'm talking about the amount of money you probably spend at Starbucks every single day at the end of the month you will have one hundred fifty dollars saved up okay what you're going to do with that money you're not going to put it in your bank account you're going to invest that money you're going to invest in a diversified portfolio of blue-chip stocks and investment-grade bonds okay for those of you who don't know blue chip stocks are these stocks of well-established companies they have a very high market capitalization they are things that have been investing in for many many years and over the last 100 years on average blue chip stocks have paid a 10 percent return you're also going to be investing in investment grade bonds these are high-quality low-risk bonds over the last 100 years these bonds have paid out on average 6% what I recommend doing is investing 50% of your money in blue chip stocks and 50% of your money in investment grade bonds over the last 100 years on average this portfolio page you 8% return on your investment you're never going to sell you're going to leave it there and you're going to let it compound over time you're taking advantage of compound interest now you may not have enough money each month to invest but you're going to save that money and when you do have enough money you're going to buy more shares of blue chip stocks and you're going to buy more investment grade bonds okay after 50 years now we're talking 50 years I know that sounds like a long time but like we said before if you save five dollars a day for a hundred years you'll have a hundred eighty two thousand five hundred dollars okay so now we're talking about half the time 50% less time we're talking 50 years okay you do this for 50 years and due to the magic of compound interest you now have a portfolio worth 1 million thirty two thousand seven hundred eighty six dollars and 28 cents you just became a millionaire for the price of a starbucks cup of coffee each day why is this lesson not being taught in school
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Hey guys retired at 40 I'm going on a little road trip today just me and Murph and last week I reached a milestone on my channel and I hit a million views total and 10,000 subscribers in the same week since I've been getting requests for quite a long time about how I retired at 40 and I'm on a long road trip right now I figured what better time to share the story so without further ado here's the retired at 40 story so before I get started I want to say that this is not in any way a brag story in fact I'm definitely not a showy type guy I enjoy very simple things in life and money to me is more of just a vehicle to be able to retire young and have my family live a comfortable and an easy life and to be able to enjoy lots of life experiences and be comfortable in life before I'm old and gray so really the retirement journey began in about 2002 graduated from Iowa State University with a degree in marketing and business and by that point I have met my wife Kelly she had already graduated from school and she was kind of waiting for me and we wanted to move west out of the Midwest to move west see some new territory and get closer to the outdoors so I grabbed my degree ran out the door packed up my 1987 Ranger fully equipped with eight foot hay racks full of all of my personal belongings and we drove to Littleton Colorado and at this point in my life I had $200 in my pocket and Kelly had about the same so being completely naive and basically completely broke but with a degree I was on the search for the best suit and tie job that I could possibly find so I bounced around for a couple months just working some kind of halfway jobs and I quickly realized that I did not want to wear a suit and tie and I wanted nothing to do with the man and working a nine-to-five job well Kelly had found a job in a real estate office working the front desk and she had become friends with a couple of the big-time Realtors there one of which you caught wind that I had some handyman type skills but he made me a deal that if he paid cash for a house and I fixed it up that he would split the profit with us 50/50 and at this point in my life all I saw was dollar signs if I was completely blown away that there was someone that could pay cash for a house this is coming from a guy who had less than $200 in his pocket at this point it was pretty much scraping by I tried to hold back my excitement to him but naturally I said yes please let's do that I was working the graveyard shift at Target stocking shelves I'd worked for 10 hours I would go home grab a little bit of breakfast and I'd head over to the property and work on it for another five or six hours I try and catch a few hours of sleep and then I would rinse and repeat it was at this point in my life that I learned a few different things one you really have to dig deep to reach your goals in life because I was not getting paid by the hour and at this point I didn't know how much money I was gonna make I didn't know if I would make $500 when this was all done or if I was going to make $5,000 when this is all done so I learned that a lot of things that can benefit you financially you have to put in the work upfront without knowing what your final outcome is going to be after about three months which seemed like an eternity of working seven days a week for sometimes 15 sometimes 20 hours a day on this house the house was ready to go on the market and it was all finished it looked great and then before you knew it it's sold and then the house closed and at this point I still didn't know what we were gonna make off it but for me it didn't matter the hard part was done I didn't have any of my own money into it I just had my time basically so the guy we were doing the investment with hands me an envelope and I opened it up and at $8,000 being twenty-two years old and having $8,000 I might as well have hit the lottery and that brings me to my second valuable lesson that I learned and that is being responsible with money so when you have $8,000 and you're 22 years old a lot of people would go buy a new car they'd go buy some flashy things some pretty things but to me I had realized that if I can make $8,000 once I can make $8,000 again and again and again and again so I can either go p*&% the $8,000 away that I had worked my a#* off for or I can take that $8,000 and do exactly what he did but do it myself and potentially make twice or three times as much money so my wife being in a real estate office we became acquainted with quite a few smart people financially smart people we learned a lot about real estate very quickly because we were willing to learn which is my next valuable life lesson is that you never stop learning so we took our $8,000 we put a small down payment on a condo in Littleton because we realized that giving someone else our money was you might as well be throwing it away we wanted to be working towards something and it own something on our own so we took our other four or five thousand dollars and we started our search for a real estate investment that we could do all of our all on her own and get a hundred percent of the profits so after some searching we did find a place we found a small town home it was not in as nice of area as we were living it was smaller it needed lots of work but that takes us to our next light life lesson that we learned and that is to sacrifice for a greater payoff in the future so we had only lived in our condo for a very short time but we realized that if we moved into the real estate investment that we could rent out the place that we are living at and move into the place that we were fixing up that we'd have to be paying a mortgage on anyway we had our first real estate investment and we had our first rental so being 22 years old and owning two properties and carrying two mortgages and at this point I'm still working at Target was a pretty scary proposition in life but all I could see was that $8,000 check they had started to change our lives I also want to point out and kind of give a shout-out to my parents and to my wife's parents because neither one of our parents ever handed us anything in life they always made us work for what we achieved in fact when we move we tried to convince my parents to co-sign on our mortgage for the condo that we bought and they said no way at the time I was very very mad at them and I thought I would never forgive them in hindsight it was one of the best things they've ever done for me because it just made me have that fire in my belly and really just want to work to get what I wanted so back to having two mortgages that was a completely scary thing in my life I was making something like 10 dollars an hour at Target I think Kelly was making $13 an hour at the real estate office she was working at we could barely afford the condo we had but now he had two.
God bless the banks lending money to anyone at that point on the very plus side of that we learned that someone else can pay our mortgage and we're basically getting that money for free and then later we figured out that there are many many many tax benefits and huge benefits of owning a rental property so we quickly learned that trying to pay for materials and the things needed to fix up an investment property on just barely over minimum wage is not easy to do the thing that happened next couldn't have come at a more perfect time so all of a sudden I had money to spend to fix up this house and it would just get me to that next big paycheck that much quicker so that's what we did we fixed up the house we doubled our money we rolled it into the next one so we kept bouncing from house to house quite a few times and that sacrifice of from going from a nice house to live in to going to a crappy house to live in to fix up to making it nice again to going to another crappy house to fix up it became pretty stressful but we always had our eyes on the prize “are you still with me Murph?” after doing this two or three times I remember getting a check for the last one and the check was forty one thousand dollars so at that point it didn't make sense to work at Target anymore so I just started doing it full-time but we never took the big proceeds from the real estate and put it into our actual living we always rolled it into the next property and that kind of gave us the baseline of even how we live today we always live well below our means we take the money that we make and we put it into things that will make us an income not into something that will lose us money but you do have to treat yourself every once in a while otherwise there's no reason to make the money in the first place Kelly saw many of the high producing Realtors making large amounts of money so she decided to get a real estate license and she created her own real estate business so now we really felt like we had the world by the balls because we were getting paid a commission to buy the property and then we were saving half of the Commission when we sold the property and I was fixing him up so we just get rolling our profits in rolling our profits in rolling our profits in until family we were able to buy a house and now that we could get a house we were playing with the big boys the profits were much larger but so was the risk and we really didn't want to lose all the way it worked for for the last couple of years so we did a few houses and we made some great money but instead of selling them and pulling out our profits we kept them as rentals and it was at this point that we really started building up our rental inventory at this point it was about 2006 or 2007 and real estate was starting to slow down a little bit but we have purchased a large house I'm a courage that was really a big risk for us it was a large house to fix up it was our biggest project for sure it took us the most money to fix it up and we had the most money into it so we lived in this house for about 8 months while we were fixing it up and we kind of decided after doing about 12 properties that the moving all the time was starting to get kind of old and we were kind of getting older ourselves and we decided that we wanted to have kids and kind of settle down a little bit Murph are you with me? sometimes I feel like I'm just talking to myself so after the eight months was up we finished the house we sold it and shortly after the real estate market completely crashed the bubble had burst and Colorado was one of the hardest hit States we got out of the house just in the nick of time and not only did the real-estate market bubble burst we found out that we couldn't have kids and it seemed like a real low point in our lives but around 2007 when all this happened we realized our next lesson with every negative there is a big positive that can be gained from it and you can just use it as fuel for your fire so the recession was tough we thought our great life had come to an end we thought we were gonna have to get regular jobs you know people were losing their jobs left and right people were losing their houses Colorado was hit very very hard one of the worst states during the recession and we learned that what goes up must come down and in this case it came down hard in many cases not just real estate when things are bad that's the time to invest and if you're smart with your money and you've been saving while everyone else spending that's the time to benefit though from about 2008 to 2012 we were buying rentals so we were able to adapt I started doing contracting because that's pretty much what I was doing before but now I had to be doing work for someone else and Kelly's always been a mover and a shaker and even a bad real estate market she was able to keep her business moving we were buying things for pennies on a dollar and even though we were not making great money and in some cases losing a little bit of money on rentals we were able to stick it out and after lots of lots of years of lots of lots of heartache and lots of lots of doctors we were able to have two boys so about 2014/2015 real estate started creeping back up again prices kept going through the roof and just when he thought it was the peak they just kept going up stuff was flying off the shelves you could list a house and it would have multiple offers within 24 hours so we had about age 35 we were completely debt-free we had several rentals that we were cash flowing we didn't owe any money on the rentals so all that money was just rolling into a bank account when you have no bills and you have an income coming in your net worth starts to grow very quickly so we rode out the storm Kelly's business was doing great my contracting business was doing great we have liquidated a lot of our real estate in Colorado we had capital to play with we had two beautiful young boys and then I fell to my knees crying like a little baby I had herniated a disc in my back and I was on a walker for about a month contracting for me was out of the question I didn't even want to think about picking something up so I took some time off and I raised our kids which at first I thought would just be for a few months and then a year passed and then another year passed and I decided that I kind of liked it we had rental income coming in Kelley's business was doing better than it had ever been in fact she had started her own she had several people working for her and just as a little side income I got to do what I love to do which is antiques I was just buying and selling antiques so we were trying to be very strategic at this point because we owned a fair amount of property in Colorado but we knew that our ultimate goal was to retire at 40 and at the rate things were going up we didn't want to sell too early because we didn't want to miss out on that upside but we didn't want to sell too late because we didn't want to risk the chance of taking a step back so as some regret we sold the majority of our properties in around 2017 but this was a game-changer because we were able to make cash for every rental that we purchased so we loaded up on rentals in Iowa we actually purchased our property that we're going to move into which is actually where I'm headed now and that kind of brings us up to speed to current date I take care of our 10 rentals which keep which keeps me pretty busy just in itself i buy and sell antiques i get to see my kids all the time we have a good rental income coming in now we do youtube oh yeah we also do a couple fix and flips every year Kelly has her real estate team with about 10 employees and in June of 2020 we're going to retire at 40 so all in all life is great I have a wonderful family I have enough assets and passive income to live a comfortable life
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