It's possible to become a millionaire by:
• Working a 9-5
• Investing into a 401(k)
It's just not very likely.
Here are 4 reasons why (and what you should do instead):
Recent data from Fidelity, which oversees trillions of dollars in millions of retirement accounts, paints a bleak picture.
Out of 21.5 million workplace retirement plan accounts, only around 280K had balances greater than $1M.
That's a little more than 1%.
Not good odds.
Why?
• Earnings upside is capped
When you trade your time for money, there's a limit on how much you can earn.
Even if you have an above-average salary, there's only so much time in a day.
You can't create more hours to work.
This caps your total earnings (& savings) potential.
• Mediocre stock market returns
The long-term average return of the stock market is ~7%.
It's possible to outperform but takes significant work to pick stocks.
Compared to the returns available elsewhere (like in real estate syndications), the stock market's return is paltry.
• Unrealistic assumptions
Individual stock market returns are HIGHLY dependent on when:
• You start investing
• You retire
A few down years at the wrong time can be ruinous.
Not to mention life events that require you to dip into savings, breaking the compounding effect.
• "Millionaire" paints the wrong picture
Let's say, throughout working 40 years, your nest egg grows to $1M.
The 4% rule says you get to live on $40K annually.
Or, you'll have to worry about running out of money.
Does $40K/yr. & constant fear sound like the millionaire life?
So what's the better path?
1. Leverage your time
2. Invest outside the stock market
• Leverage your time
Instead of trading time for money, start building income streams that are disconnected from the time you spend on them.
You want 1 unit of time to bring in 5 units of pay.
• Invest outside the stock market
Your money works harder on Main Street than Wall Street.
Real estate syndications are a 100% passive investment that have higher returns with lower risk than the stock market.
Learn about syndications & seek out deal sponsors to invest with.
TL;DR:
It's hard to become a millionaire working a 9-5 because:
• Unrealistic assumptions
• Mediocre stock market returns
• "Millionaire" isn't what you think
• 9-5 earnings potential is capped
What you should do instead:
• Leverage your time
• Think outside Wall Street
It's possible to become a millionaire by:
• Working a 9-5
• Investing into a 401(k)
It's just not very likely.
Here are 4 reasons why (and what you should do instead):
I help 6-figure professionals escape the 9-5 & live a life of meaning • Done-for-you real estate investing • Anti-Wall St. • Former tech, finance, & consulting