what it takes to become rich

How to Become Filthy Rich

People get into business and investing often with the hopes of becoming a multi-millionaire mogul..Fame, fortune, respect, and other deep seeded desires can all seem to come to mind when people start imagining their future life of wealth and luxury.

what it takes to become richUnfortunately, not enough thought goes into the mathematical requirements for one to grow wealthy. Believe it or not, pretty much anyone who lives within their means and invests 10% of their salary will probably have at least a couple of million in the bank by the time they retire. To be honest, one or two million really isn’t that much anymore. If you average 6% on your portfolio, a million dollars generates about $60,000.00 a year. If you’re not retiring for another 25 or 30 years, that’s really like a $30,000.00 annual income. You’re not exactly rolling in dough.


What is the definition of “rich”

Forbes has defined rich as making $1 million or more annually…..preferably passively. If that seems like a lot, keep in mind that Warren Buffet is worth about $80 billion dollars. He’s currently 87 years old. That means his average MONTHLY income since he’s been born has been about $76 Million! We’re just shooting for $1 million annually.

  • So here are the three variables we have to work on maximizing in order to grow wealthy.
    • How much up front capital can you make each year?
    • How much can you invest each year?
    • What rate of return can you generate each year?


It’s all about ROI

If you can earn a lot, and keep a lot, then it doesn’t take a rocket scientist to figure out that you’ll retire comfortably. That’s even if all you do is buy and hold mutual funds that pay single digit returns.

But the little guy doesn’t have the luxury of socking away an extra $2,000.00 a month. Many families are living paycheck to paycheck, and $300.00 a month is a lot to ask for. So how to you make miracles happen when you can only save a few thousand in an entire year?

Well let’s take a look at what upping our return on investment does even when we only have $300.00 a month or $3,600.00 a year to invest.

If you’re averaging 6% in mutual funds, in 30 years you would have about $300,000.00. At a 6% average ROI, you can passively generate about $18,000.00 a year……….not too exciting.

Now let’s say you pick up some basic investment skills, and average about 10% annual. In 30 years, you should have about $650,000.00, and generating a passive income of about $65,000.00. That sounds a little more comfortable.

Now let’s say we can up your ROI to 15%. In 30 years you should have about $1.8 million. And you would be producing passive income of about $270,000.00

Now let’s really start thinking big. What if you could generate 20%? In 30 years you would have about $5 million……and you’d be passively earning $1 MILLION A YEAR.

So even a hard-working family who can only scrape up a few hundred dollars a month has a shot at actually becoming truly rich once they know how to generate returns of 20% annual. Pretty crazy huh? This is probably why Albert Einstein thought compounding returns was so amazing.

Think of it this way. If you were to dedicate yourself increasing your performance 3 fold, your income in 30 years would increase 55 FOLD! This is why your rate of return is by far the most important part of the equation.

About The Author


I am a college drop out who found my passion as an investor. I love the many facets of finance, investing, and business. But even more than that, I love sharing what I learn with others.

Share your thoughts......