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I've seen several people claim "making a million dollars isn't THAT hard these days". Heck, I've seen it here on this forum. Being a complete beginner with investing, business and finance, I wonder what strategy people have in mind for achieving this.

I did a web search, and it proved strikingly useless (you get a list of get-rich-quick sites).

So what do people mean by "it's easy" to make a million dollars? My guesses are that they mean

  • (1) "Millionaire Next Door" style -- in other words, be extremely frugal for a long time
  • (2) Find your niche, start a "lifestyle business" and persist with it
  • (3) Invest some part of your income over a long period of time and let the stock market do the work

...or perhaps some other strategy? I realize that "a million dollars" is a completely arbitrary figure, but it's one people fixate on. Perhaps folks just meant it's getting easier because inflation has made it a far less lofty sum than when the word "millionaire" was coined.

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  • It should be easy if you have a million dollar idea. After that, it's just sweat. – GUI Junkie May 5 '11 at 6:46
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    @Junkie: Most entrepreneurs will tell you "Ideas are a dime a dozen; success or failure is determined by how you execute." Indeed, you can find examples of mediocre ideas executed well (MS Windows, Facebook) and great ideas executed poorly (e-Cash, Ingres). – Fixee May 5 '11 at 15:05
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It is difficult to become a millionaire in the short term (a few years) working at a 9-to-5 job, unless you get lucky (win the lottery, inheritance, gambling at a casino, etc).

However, if you max out your employer's Retirement Plan (401k, 403b) for the next 30 years, and you average a 5% rate of return on your investment, you will reach millionaire status. Many people would consider this "easy" and "automatic".

  • If your employer matches your retirement contribution (most do) you will get there faster
  • If your investments yield better that 5%, you will get there faster. 5% is pretty conservative for a multi-decade investment strategy.
  • If you save additional money (Roth IRA, savings account, etc), you will get there faster.

Of course, this assumes you are able to max our your retirement savings at the start of your career, and keep it going. The idea is that if you get in the habit of saving early in your career and live modestly, it becomes an automatic thing.

Unfortunately, the value of $1 million after 30 years of inflation will be eroded somewhat. (Sorry.)

If you don't want to wait 30 years, then you need to look at a different strategy. Work harder or take risks. Some options:

  1. Start your own business. Work hard and hope for some luck.
  2. Get a job at a startup (the next Google, Facebook, etc) and get some equity. Hope they make it big.
  3. If you aren't up to running your own business, maybe you can invest some of your savings in someone else's business. Do you have a friend with a big idea?
  4. Gamble with the stock market, or futures contracts, etc.
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    I think key part of your answer is that if you want to become rich in middle term is to take risks. – Andrey May 5 '11 at 11:48
  • Note that when a lot of people talk about being a millionaire (or having >$1M in net worth), they also include the value of their home. I deliberately left this out of my answer because I wanted to focus on assets that were a little more liquid. – myron-semack May 5 '11 at 12:46
  • yes, yes. You can't stand too long without a house. – Andrey May 5 '11 at 14:00
  • "Get a job at a startup (the next Google, Facebook, etc)". If you're able to get a job at the current Google, Facebook, etc. you'll also have a good path to being a millionaire quite quickly (SWE roles at those places make easily several hundred thousand dollars per year) – Daniel Jul 27 '20 at 2:47
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    @Daniel This is a good point that a lot of the early retirement strategies seem to gloss over. Step 0 start with a well paying job. Someone earning 150k who cuts their expenses down to 20k will find it easy to become a millionaire. Someone on 40k will not, no matter how frugal or hard working they are. – Eric Nolan Jul 27 '20 at 11:32
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I realize that "a million dollars" is a completely arbitrary figure, but it's one people fixate on. Perhaps folks just meant it's getting easier because inflation has made it a far less lofty sum than when the word "millionaire" was coined.

Your point is correct - it' relatively easier as the 1 million dollar nowadays is no where as valuable as compared in the old days after the inflation adjustment.

However the way to achieve that is easier said than done:

  • The most possible way is to run your own business (assuming you will make profit).

  • For most of the people running a job to earn a living - the job income is the biggest factor. Being extremely frugal wouldn't help much if you don't maximize your income potential.

  • Earning a million dollar through investment? How much capitals are you able to invest in? 5k? 50k? 500k? I see no way to earn 1 million with 5k from investment, I wouldn't call it easy.

This again depends on your income. With better income of course you could dedicate a larger portion to investment, without exposing too much risk and having to affect your way of life.

(3) Invest some part of your income over a long period of time and let the stock market do the work

I'd say this is more geared towards beating the inflation and earn a few extra bucks instead of getting very rich (this is being very relative).

Just a word of cautions, the mindset of investment being the shortcut to wealth is very dangerous and often leads to speculative behavior.

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Easy. Start with 2 millions and lose only one.

Jokes aside, if you want a million USD, you should be asking yourself how you can produce products or services worth $5 millions. (expect the extra to be eaten up by taxes, marketing, sales, workforce...)

If by investment you mean making risky bets on the stock market, you might have a better time going to Las Vegas. On the other hand, if by investment you mean finding something that will produce $$$ and getting involved, it's a different matter.

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  • Whether starting a business or investing, this all boils down to working really hard and learning a lot. – MrChrister May 12 '11 at 6:14
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I think there's a measure of confirmation bias here. If you talk to somebody that started a successful business and got a million out of it, he'd say "it's easy, just do this and that, like I did". If you consider this as isolated incident, you would ignore thousands of others that did exactly the same and still struggle to break even, or are earning much less, or just went broke and moved on long time ago. You will almost never hear about these as books titled "How I tried to start a business and failed" sell much worse than success stories. So I do not think there's a guaranteed easy way - otherwise we'd have much more millionaires than we do now :) However, it does not mean any of those ways is not worth trying - whatever failure rate there is, it's less than 100% failure rate of not trying anything. You have to choose what fits your abilities and personality best - frugality, risk, inventiveness? Then hope you get as lucky as those "it's easy" people are, I guess.

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    Most books on entrepreneurship will tell you that over 90% startups will fail. Feld and Cohen's book "Do More Faster" gives techniques for "failing fast" and talks about how failure is almost a rite of passage for entrepreneurs. You're right that the Millionaire Next Door, Instant Millionaire, Richest Man in Babylon, etc., will not talk about failure, but those books (despite their 5-star ratings) are sappy drivel with little real advice in my opinion. – Fixee May 5 '11 at 15:03
  • Right. So you can tell me if something that has 90% fail rate can be qualified as "easy" :) Maybe for those that had luck to strike the other 1% (because 90% of the other 10% is "working ok", not "getting fabulously rich"). – StasM May 5 '11 at 17:03

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