Updated: Oct 21, 2018
One simple tip...
“Who wants to be a Millionaire”?... You? Well good, then you’ve come to the right place. This blog will teach you how to become a millionaire. But not only that, it will teach you how to do it on complete accident. How you ask? We will get into that in just a second. But first, let’s get some general understandings out of the way. Investing in the not just the #1 way to become wealthy, in my opinion, it is the only way to become wealthy. Whether it is investing in Real Estate, Stock Market, Cryptocurrency, or Businesses, it is a must that you invest in something. In this case, I will be touching on stock market investing and how you can become a millionaire investing in it.
So what is the key to becoming a millionaire on accident? Simple, it's one word that we’ve all heard many times. AUTOMATION!!!! Automation is a simple but powerful trick to improving your investing success. Here are 4 ways that automation leads to successful investing:
1) Automation tricks yourself into investing. How many times have you put one of your magazine or website subscriptions on autopay and months later forgot that you had it? You haven’t opened those magazines in months, yet you’ve still been paying for them. This works the same way for investing just in reverse. Simply allocate a certain amount of money to go into your investment account every month automatically. After a while, you will forget you’re doing it and BOOM you’re investing thousands a year and don’t even realize it. Your work 401k plan is a perfect example of this!
2) Automation increases your returns. Studies have shown that the fewer individuals check their investment portfolios, the better returns they have. In fact, the difference between Total Returns (what the portfolio actually returned) and Investor Returns (what the average investor in that portfolio returned) is about 1%. In other words, not checking your portfolio often could increase your returns by 1% a year, which is HUGE!
3) Automation avoids timing the market. By automating your investments on the same day each month, you avoid attempting to time the market. Timing the market is a loser’s game because no one (AND I MEAN NO ONE) knows where the market is going in the short term. So by avoiding this failed investment strategy, you have yourself time and money.
4) Automation saves you time. Since you are not taking time out to invest each and every month or week or day, you get to spend more time doing the things that actually make you happy. Life is too short to continuously do things that we don’t enjoy.
So, I know what you’re thinking “All that is fine and dandy, but how does this make me a millionaire.” Glad you finally asked! Let’s take a moment to do some math. If you invested $300 a month into an S&P 500 index fund each month for 40 years (typical working life), you would have accumulated…….$972,541! Yes investing $3,600 a year for 40 years (total invested $144,000) you would get just under $1 Million. Plenty of people spend $300 a month on bar hopping (nothing against that) rather than putting money aside to become a millionaire. But by automating your investments to be invested every month, you will trick yourself into becoming wealthy!