DIY Investing: An Easy Guide To Investing Your Own Money
02.12.2023We’re back with a brand new season of Whiteboard Friday episodes for your viewing pleasure. First up: SEO expert Cyrus Shepard shares his top 22 tips for successful Google SEO in 2022. Watch to find out what to prioritize and what to look out for in the year ahead! Click on the whiteboard image above to open a high resolution version in a new tab! Video Transcription Howdy, Moz fans. Welcome to another edition of Whiteboard Friday, a very special edition, our annual SEO tips of the year edition. This year it is 22 smart SEO tips for 2022. I’m going to be talking about some of the most talked about things in the SEO industry over the past year plus a few tips from last year that we wanted to pull over because they were just that important. Because we’ve got 22 of them and we don’t want this video to take forever, we’re going to be going through these pretty quick, but for you we’ve linked to some resources in the transcript below so you can explore all of these topics further if you want. All right. Without further ado, let’s get started. On-page SEO tips for 2022 1. A/B testing I’m going to start with some on-page topics. Tip number one, A/B testing or simply testing. We’ve seen a lot more testing tools pop up in the last couple of years, which is awesome because SEO is not make a decision and implement it and you’re done. SEO is implement, evaluate, and then make decisions or sometimes course corrections. Is this something we need to pull back? Did C perform better than D? Which one would we choose? All the tips we’re talking about today can apply to this testing mentality. SEO is incredibly complex, and the old-school idea of best practices just doesn’t cut it anymore. So in ’22, develop a testing mentality with your SEO. 2. Author pages Number two, author pages. I really love this because Google this year updated some of their advice around author pages and their schema markup. It’s an important part of my strategy and a lot of websites that I use. A good quality author page helps Google evaluate your authors, which can be used for E-A-T and other things, and helps link them with their expertise. So linking your articles to a good author page usually includes links to other websites, author profiles, links to the articles they wrote, some biographical information. It can help establish your authors as expertise in a certain space. So take a look at your author pages and try to improve them and make this a task. 3. Google title rewrites Google title rewrites, number three. I don’t think there is any topic more discussed in 2022 than Google rewriting titles. A lot of studies, including one I did, showing Google rewriting 60%, 70% or 80% of a site’s titles. It can be frustrating. But what we’re finding is a lot of people aren’t evaluating those Google title rewrites. When you do, you can learn a lot about your own titles. Why is Google rewriting it? Is my title too long? Am I missing important keywords? Do I have fluff in there that Google doesn’t like? Or in some cases you can go back and try to correct the title that Google rewrote if they’re doing just a terrible job. So Google title rewriting, do an audit of those Google titles and learn what you can do. 4. Nuke the «fluff» Speaking of fluff, this may be the year that you want to nuke the SEO fluff. You know what I’m talking about with SEO fluff. It’s those flowery keywords. It’s those descriptions and it’s recipe pages. «Oh, I was walking along the Irish countryside thinking about my bread and biscuits.» That is your fluff. We’re finding that it may not be necessary, and it may even be detrimental to your SEO. Glenn Gabe wrote a great case study where they reduced a lot of their fluff on category descriptions and they actually saw an increase. Google is removing fluff from title tags. So this marketing, flowery, SEO writing stuff, it may not be helping you, and, in fact, it may be hurting you. Today Google is rewarding sites or seems to be rewarding sites that provide quick answers and more direct engagement. Better engagement, it’s usually better for your customers as well. So experiment with losing the fluff in 2022. 5. FAQ schema Number five, FAQ schema. So last year we talked a lot about different schema types, how-to schema, FAQ scheme, different things. If there was a clear winner in 2022, it was FAQ. The reason FAQ is the winner is because so many sites can qualify for it, it’s easy to implement, and if you win a FAQ schema in SERPs, you can gain a lot of Google real estate. So there are a lot of articles that talk about how to optimize for FAQs. You can get links, deep links in FAQs. There are a lot of things you can do. We’ll link to those in the transcript below. But take a look at your FAQ schema if you’re not currently using it: How to Optimize Your FAQ Schema to Maximize Positive OutcomesWhat Google’s FAQ Schema Update Means For Your SEO Strategy6. Tabbed content Last year we talked about tabbed content, bringing your content that is in tabs, in navigation and bringing it out. This year, we’re getting a little more advanced. Our friends at Merj did a study about types of tabbed content and how easily Google can extract and render and index different tabbed content. So if you still have content in tabs, it doesn’t necessarily mean you have to take everything out, but you should research if Google is able to index and rank those appropriately. There are better resources this year to try to do that. So take a look at your tabbed content. 7. Faceted navigation Along the same lines, faceted navigation. We’ve been talking about faceted navigation for years, but this is the year to get a little more strategic with it. In certain ways, faceted navigation has always been like a set of rules, like if it has green dress, we are not going to index this or crawl it, but if it is size 12 or higher, we will index it. Today, smart SEOs are getting a lot more savvy about what they index, don’t index, and crawl with faceted navigation, and these tools are becoming increasingly available for sites like WordPress and things like that, where you can actually look at the traffic each page receives and index, crawl, faceted navigation on a page by page level, and these broad rules aren’t necessarily as necessary. You can get down to the nitty-gritty and increase your traffic that way, with fine-grained tools. So both tabbed content and faceted navigation, old-school concepts, but we’re getting much more sophisticated with them in 2022. Link building tips for 2022 All right, let’s talk about everybody’s favorite subject, links, because you need links to rank in SEO. But what a lot of smart SEOs know and talk about is you need links to rank in SEO, but you probably don’t need as many as you think. 8. Internal link optimization If you only have a few good external links, one of the best ways to leverage that is optimize your internal link optimization. We’ve seen a number of new tools and processes talking about internal link optimization. We’re talking about pages that have too few links, under optimized anchor text, pages that have great opportunities that aren’t ranking that should. So if you haven’t done an internal link optimization audit in a while, this is the year to do it and this is the way to leverage those internal links that you’re getting. 9. Deep linking Speaking of which, deep linking. In the old days, if you linked to a page, you just linked to the URL. But we’re seeing an increase in deep linking, linking to specific passages, text fragments, things like that, navigation, jump links. This is increasingly becoming a popular strategy to get people deeper into the page and give Google and other search engines signals about very specific parts of pages. This seems relevant as Google has recently introduced passage ranking, where they’re not just evaluating the whole page. They can understand individual passages as well. So making deep linking part of your strategy, as opposed to just linking to the URL, seems to be a great way of moving forward. 10. High ROI link building High ROI link building. I watched a great presentation from Ross Simmonds this year, the Coolest Cool, on link building with assets and determining the ROI of each of them, because everything you build links with, whether it be a tool, a blog post, a free PDF, it has a cost and that cost has an ROI. Ross found that certain things have higher ROIs than others. Tools have an incredibly high ROI, but they’re also expensive to create. Pages with stats on them, not that expensive to create, but also a really high ROI. I’m going to link to that video. It might be a paid subscription. I apologize about that. But it’s awesome. It was voted number one at MozCon. If you do link building, it’s definitely worth watching and definitely worth the cost. High ROI link building, know the cost of everything you’re producing and how much value you’re getting out of it. 11. Reduce redirects Let’s go old school again. Our friend Nick LeRoy tweeted not too long ago about reducing redirects. This is really old school, but a lot of people are forgetting it these days. If you have a large site and you have thousands or millions of redirects all sending confusing signals, 301 jumps to a 302 jumps to a 404, what is that? Looking at your redirect chains and reducing them to a single redirect with a clear directive can help reduce canonicalization errors. It can improve crawling efficiency, and at scale it can influence your rankings. So if you have a large site or even a small site with a lot of redirects, this is the year you want to do a redirect audit. Get on it. Audit, on it. 12. SEO for affiliate links How about SEO for affiliate links? We don’t talk a lot about affiliate links here at Moz, and Google traditionally hasn’t talked a lot about it either. But this year we saw Google introduce specific guidance for affiliate sites, which is something they really haven’t done before. Specifically for review sites, Google talking about what a good review looks like, talking about the good and the bad part of the product, the fact that you should link to multiple merchants so consumers have a choice. We haven’t seen this from Google before. So if you do SEO for affiliate sites, you do review sites, this is the year to review those Google documentations and make sure you’re creating sites that Google rewards and actually following Google’s guidance on it, which is something in past years I didn’t think I would be able to say about that. So it’s awesome to see. Google SEO tips for 2022 13. Reputation research All right, moving on to different topics, reputation research. My friend Lily Ray talks about reputation research a lot in terms of E-A-T. The idea that Google can evaluate your site based on what other people say about you. So if you’re Dr. Mercola and an anti-vaxxer and everybody is saying all these terrible things about you on other websites, Google can disappear you from search. Reviews, what are other websites saying about you in terms of reviews? Google quality raters often look at other websites to get reputation research, and it’s supposedly believed that Google can do the same thing algorithmically. So making reputation research part of your SEO audit process, what are other sites saying about you, is it incredibly positive, is it incredibly negative, this is especially important for your money or your life sites, sites that are going to be more impacted by E-A-T algorithms. So if you sell things or dispense medical advice, reputation research is a little bit more important for those sites. 14. Core Web Vitals — minimums Boy, last year we talked about Core Web Vitals a lot. One of my happiest things is that we are talking about it much less. Google announced a big update. It was a big hooplala. It didn’t quite work out the way Google kind of explained that it might. What happened was Google released Core Web Vitals, and some sites saw a boost, other sites saw a decrease, but it wasn’t as intense as we thought it might be. A lot of sites did improve. But we’re finding in 2022 maybe we don’t need to worry about it as much as we thought. My colleague Tom Capper did a study that showed that slow sites were still ranking and fast sites were ranking even higher, but the effect wasn’t as much. The one thing Tom did find though, that was important, was sites that failed all three Core Web Vital requirements were definitely in the dumps. So we should optimize for speed always, but perhaps in 2022 we don’t need to obsess over it as much as possible, based on Google advice. Speed is awesome. You should make your sites as fast as you can. But Core Web Vitals, don’t sweat it as much as we were in 2021. 15. Ditch AMP? Other things we might want to consider not sweating, AMP. 2021 was the year that we’ve seen a lot sites start to ditch their AMP. This is because Google no longer requires it as a ranking factor in their top stories. It does provide some speed benefits. It’s kind of a neat technology. We know people who work on it. It’s really cool. But a lot of companies were stressing out trying to maintain two different versions of their website to get that ranking boost. A lot of sites are starting to like, «Well, we don’t want to have two different versions. It’s a lot of overhead. It’s a lot of engineers. What if we just got rid of it?» They’re finding it really doesn’t make a difference. They can just work with one platform and still get as much rankings as they want. So if your company is struggling with AMP, this might be a year to experiment with ditching it. Or keep it if you like. It’s great, but a lot of people seem to be walking away. 16. Google Discover On the flipside, a lot of people are flocking to Google Discover. Google Discover is interesting. It’s not traditional SEO traffic, where you research a keyword and people are converting. It’s a little bit more like social media traffic. In fact, social media sharing seems to be one of the ranking factors that can influence how much traffic you get from Google Discover. But what we’ve seen in the last year is some publishers are optimizing for Google Discover, publishing those stories, and seeing huge amounts of traffic for that. Great for like news sites, blogs, popular things, things that talk about popular topics. We’ve gotten some Google Discover traffic here at Moz. We’re going to link to a couple of articles to show you how to optimize for Google Discover. But if you haven’t tried it yet, it may be a channel for you to explore in 2022. 17. Local SEO GBP categories We’ve got to squeeze in one local SEO tip. We’re doing this for our friend Darren Shaw, who publishes the Local Search SEO Ranking Factors every year, doing an awesome job at it. If you have a local site and you just have five minutes to do one thing, the number one SEO tip for 2022, get your GBP categories in order. Ranking factors studies show that it is the number one thing that can influence rankings. Do an audit of your Google Business Profile categories. Darren has a lot of tips over there with that Local SEO Ranking Factors. I would encourage you to look at it. Also Joy Hawkins is doing a lot with experimentations. I’d encourage you to look at her site as well. 18. Favicon review My tip, the tip that I’m going to die on this hill — favicon optimization. Why favicon optimization? I talked about this last year, but I don’t think people took me seriously enough. Over 50% of search results take place on a mobile phone where your favicon shows, and people are not optimizing those favicons. A good favicon can draw attention. It can zero you in on a very busy SERP, and it does it with just a few pixels. A good favicon can raise your click-through conversion rate one or two percent, which is awesome. How does it work? What do you notice on this screen? You notice the tip with a favicon. A good favicon is usually bright, it’s usually high contrast, and it draws your attention to your search results. So optimize your favicon, folks. I’m dying on that hill. SEO career tips for 2022 All right. So I want to spend a few tips on talking about your SEO career, because I don’t think we talk about this enough. What should you be learning this year, aside from Python because everybody loves Python? 19. Learn GA4 This might be the year that you want to finally familiarize yourself with GA4. GA4 is the product that’s replacing traditional Google Analytics. You’re going to see it in a lot more client accounts. It can be a little confusing to people. Some of the metrics aren’t there. It’s got some cool things in it admittedly, like they basically got rid of bounce rate and replaced it with engagement metrics, which is great because a lot of SEOs are a little too focused on bounce rate and engagement may be more representative, a holistic way that Google views your website. Our friend Dana DiTomaso has a course on LinkedIn that you can check out. But familiarize yourself with GA4 so you can walk into those meetings and you can present those reports and know what you are talking about. 20. Attend virtual conferences Conferences. COVID moved a lot of conferences virtually online. People attended them. A lot of people are getting burnt out on virtual conferences. But looking back at all the virtual conferences of 2021, there’s some great value there. Here at Moz, we had MozCon. We had some tremendous speeches. It also makes it more affordable for people all over the world. Traditional conferences, you pay $1,000 to $2,000 just to attend the conference plus travel and all that. But with virtual conferences, oftentimes they’re free or just $100 or $200. You can attend virtually and focus on the content and the learning and advance your career, and do the networking, reach out to the speakers. There are lots of opportunities there. So I would commit in 2022 to attending two or three virtual conferences and make that part of your career advancement. 21. Charge more Finally, the last tip on the career, charge more. 2022 is the year to charge more for your SEO services. Our friend John Doherty at Get Credo publishes his annual salary report or agency fee report. If you’re an independent consultant or agent, you can check to see what you’re charging compared to your peers. But, in general, SEO services are in high demand all over the world, especially high-quality SEO services. The power is in your hands to charge what you are worth, not undermining yourself. If you’re working in-house, it might be time to evaluate your salary and make sure you’re getting paid what you deserve, especially if you’re not getting paid as much as your colleagues or you’re part of an underrepresented group. Charge more in 2022. Make more money. And finally… 22. Be the last click Final tip of 2022, this was the final tip of 2021. It’s my favorite SEO tip of all time. Be the last click. That means satisfy your users. When someone is searching Google or any other search engine and they’re presented with a list of results, they’re clicking around, looking for what they want to be, make sure you are the last site that they click. Why? Because when they clicked to your site, they found what they were looking for. You satisfied them so much that when they see your site again, you’re going to be the first one that they click on because you gave them the answer. Provide awesome experiences for your users. Think of them first. Give them everything they want. Give Google no excuse not to rank you number one in the search result. All right, 22 tips for 2022. That’s all I’ve got. I would love to hear your tips. Please leave them in the comments below. Reach out to me on social media. If you liked this video, please share it. Thanks, everybody. It’s been fun. Video transcription by Speechpad.com
02.12.2023[ad_1]
Everybody wants to become a millionaire. Unfortunately, not everybody’s chances of becoming a millionaire are the same, partially because the playing field is not even. This article looks at historical data on your chances of becoming a millionaire by race, age, and education.
Getting to at least one million dollars in net worth is a nice milestone to achieve. However, due to inflation, you need more than $3 million to live the traditional millionaire lifestyle today. Thankfully, I firmly believe the majority of people reading Financial Samurai and other personal finance sites will be able to achieve millionaire status.
If I were to guess the exact percentage of Financial Samurai readers who become millionaires in their lifetimes, I would say 60 percent. This doesn’t seem like a particularly high percentage. But once you’ve read the statistics below, you’ll come to agree that 60 percent is a home run figure.
For the remaining 40%, even if you don’t become millionaires, you’ll likely still build way more wealth if you keep on reading Financial Samurai and other finance sites than the average person who does not.
Since 2009 I’ve received dozens of e-mails from readers saying they’ve busted through the $1 million net worth figure thanks to aggressive saving and investing. Many have mentioned they wish they had discovered the personal finance world sooner. But better late than never I say!
So what about the rest of the 330+ million Americans who were fortunate enough to be born or gain citizenship to our great country? What are their chances of living the champagne dream and caviar lifestyle? Let’s have a look.
How Many Millionaires Are There In America?
Before learning about your chances of becoming a millionaire, let’s find out roughly how many millionaires there are in America.
According to Spectrem Group’s Market Insights Report, in 2021, there were roughly 9.8 million individuals with a net worth between $1 million and $5 million. There were 1.8 million individuals with net worth between $5 million and $25 million. Finally, 156,000 households (not individuals) had more than $25 million in net worth.
In other words, there are roughly 11.8 million millionaires in America, making up roughly 3.5% of the population. This count is at a record high thanks to a long bull market in stocks, bonds, and real estate.
According to Credit Suisse’s latest Global Wealth Report, they estimate there are actually 22 million millionaires in America. That’s an impressive 6.5% of the population. Whatever the true millionaire count is, there are millions of millionaires and growing!
With stocks, real estate, and other risk-assets continuing to do well, the number of millionaires is likely even higher in 2022. Further, I suspect the actual millionaire number is higher due to stealth wealth and plenty of unreported or underreported assets. It’s easy to obfuscate the value of your own private business.
Now let’s look at three insightful charts based on Federal Reserve data that shows your chances of becoming a millionaire by education, age, and race.
Your Chances Of Becoming A Millionaire By Educational Attainment
The chart says that the more education you receive, the higher your chances of becoming a millionaire across all races.
This makes sense since high-paying jobs often require higher levels of education e.g. lawyer, doctor, executive management, and scientist. However, thanks to free online learning and shorter specialty school programs, a college degree is slowly getting devalued.
Chances Of Becoming A Millionaire With A High School Degree By Race
- Asians 6%
- White 5%
- Hispanic 2%
- Black 1%
Without a high school degree, you practically have no chance of becoming a millionaire across all races.
Chances Of Becoming A Millionaire With An Associate’s Degree By Race
- Asians 3%
- White 7%
- Hispanic 2%
- Black 1%
For Asians, your chances of becoming a millionaire are actually higher if you only have a high school degree versus an Associate’s degree (6% vs 3%). Perhaps this is due to the prevalence of more Asian small business owners.
If you are Hispanic or Black, the percentage probability of becoming a millionaire does not change if you have a high school degree or an Associate’s degree.
Chances Of Becoming A Millionaire With A Bachelor’s Degree By Race
- Asians 16%
- White 18%
- Hispanic 4%
- Black 3%
If you are Hispanic or Black, this data should make you very wary of getting into student loan debt. Please apply for as many scholarships and grants as possible to minimize the cost of attending college.
If you are Asian or White, getting a college degree significantly increases your odds of becoming a millionaire.
Chances Of Becoming A Millionaire With A Master’s Degree By Race
- Asians 27%
- White 38%
- Hispanic 11%
- Black 6%
By the time someone has a Master’s degree, chances of becoming a millionaire should be similar across all races. However, the difference between the percentages between White (38%) and Black (6%) is striking.
If I was a White person, a Master’s degree is exactly what I’d get. Maybe just not a Master’s degree in History or Journalism if you want to become a millionaire.
Unless Hispanic and Black people are getting a Master’s degrees in mostly low-paying fields, the huge percentage discrepancy seems too egregious. Put it differently, the chance of a Black person with a Master’s degree becoming a millionaire is the same as an Asian person with only a high school degree.
The Master’s degree percentage discrepancy between Whites and Blacks is the strongest evidence of systemic racism. I’m not talking about one person hurling a racial slur at another person.
I’m talking about things like a private club, where it was originally 100% Whites only 70 years ago. Today, the club says it is open to all races. But to get in, you need to get five letters of recommendation from existing members. If you are a minority, you will have a harder time getting this support network together.
You see the same thing happening when applying for preschools, private schools, high-paying jobs, and so forth.
People Tend To Take Care Of Their Own
To explain why this huge difference exists, my theory is that people tend to take care of people who are most similar to themselves. Thus, if the majority of people in power are White, then more Whites will benefit at the expense of other races. Therefore, the chances of being a millionaire is higher if you are White and lower if you are a minority.
When I was working in Asian Equities, the head guy based in Hong Kong was a White English chap. To nobody’s surprise, he appointed White English heads at our offices in London and New York.
When the head English guy left, a Korean guy became the boss. The English heads in London and New York got laid off, and in came two Koreans to head the respective offices.
I bet if your new boss came from Tasmania, you would suddenly see a lot more Tasmanian lieutenants. If your new boss was a woman, you’ll likely have more female colleagues.
Despite over 12 years of online writing experience, there is probably little chance I could land a job at the Huffington Post given I’m male and Asian. The reality is, I probably wouldn’t even try to apply there based on the lack of diversity. Therefore, if a company wants to recruit a diverse group of employees, there needs to be diverse representation. Nobody wants to feel like the odd person out.
I don’t think most people are intentionally racist. I just think that most people tend to hang out with and help people who have similar backgrounds. Just look around your social group and in your workplace.
Related: Three White Tenants, One Asian Landlord
Your Chances Of Being A Millionaire By Age
The older you are, the greater your chances of becoming a millionaire. This is obvious thanks to compound returns. The earlier you can start investing, the better. Most of Warren Buffet’s wealth came after his 60th birthday.
Everybody’s chances of becoming a millionaire improves up until the age of 61. But after 61, the chances for Hispanics and Blacks to become millionaires declines.
It’s interesting to note the slopes for Asians and Whites are much steeper. Asians and Whites have significantly higher chances of becoming millionaires as they age likely due to a higher representation of Asians and Whites in higher-paying industries.
Another hypothesis is that Asians and Whites make up a greater representation of investors in stocks, bonds, and real estate at all ages. Given investments don’t differentiate between races, investments tend to keep appreciating after the age of 61.
Equal Opportunity Is The Goal
The slope differences between races means there is different levels of opportunity. Therefore, there’s been such a huge rally cry for Hispanic and Black diversity in many industries. Equal opportunity is really all we can really ask for. The rest of our success depends on work ethic, skills, and lots of luck.
The call for diversity is particularly strong in Tech and Finance, two of the more higher-paying industries.
If you were able to join Apple as a 22-year-old 10 years ago, you’d mostly likely be a multi-millionaire by now. But look at the gender and race representation of Apple in the chart below. It looks quite similar across all the big tech companies.
However, I’ve also noticed there’s not much of an uproar in industries that traditionally pay less.
For example, there has been no call for diversity in grade school teaching where the vast majority of teachers are female (~76%). There has also been no call for diversity in the military, where the broad majority of service people are male (~84%).
Hopefully, those who fight for diversity are also willing to fight for diversity across the board, not just at places that pay the most money. Equal opportunity is good. Equal outcome is impossible.
Your Overall Chances Of Becoming A Millionaire By Race
- Asian 22.3%
- White 21.5%
- Hispanic 6.8%
- Black 6.4%
Putting everything together, the Fed data says Asians have the highest probability of becoming millionaires. This is interesting since Asians are the smallest minority, representing roughly ~6% of the American population.
Like other minorities, Asians still face discrimination. Further, it seems that test score requirements are higher for Asians to have the same chance of admittance at certain colleges.
On the flip side, perhaps it is easier to mobilize a smaller population to heavily invest in their future. Singapore and its 5.6 million population is an example. Singapore has a per capita GDP of $53,000. Now compare the difficulty of mobilizing 1.5 billion people in China with a per capita GDP of only $8,200.
Finally, U.S. immigration policy may have something to do with giving Asian Americans a head start. In 1992, Congress created the Immigrant Investor Program to stimulate the US economy and promote job growth.
If you and your family can invest $500,000 in an overseas commercial venture, it’s highly probable that you are already a millionaire. Thus, given the relatively small base of the Asian-American population, it may be fair to ascribe a small portion of Asian millionaires to this cohort group.
However, I also know of several Asian families who escaped difficult government regimes and arrived in America with absolutely nothing. Therefore, it’s hard to generalize, since there are many different types of Asians.
Finally, perhaps there is a cultural reason due to the intense focus on education in many Asian cultures. Here are some personal insights into Asian wealth and income.
Do You Like Your Odds Of Becoming A Millionaire?
The odds of becoming a millionaire in America are between 6.4% to 22.3% according to data from the Federal Reserve Board’s Survey of Consumer Finances.
I’d gladly take those odds over trying to become a millionaire in any other country. I bet the odds of becoming a millionaire in Zambia, where I lived for one year, is less than 1%. Zambia’s GDP per capita is only $3,900, or 1/9th the GDP per capita in the US.
But returning to my original thesis, I believe that around 60 percent of you who consistently read personal finance sites will become millionaires in your lifetime. You will naturally take action to boost your wealth with a positive money-mindset.
60 percent didn’t sound like much in the intro, but now you know that 60 percent is 2.72X higher than the highest chance anybody has of becoming a millionaire in America.
How To Increase Your Chances Of Becoming A Millionaire
One of the biggest goals on Financial Samurai is to help people of all races become financially independent sooner, rather than later. With interest rates so low and future investment returns likely going down, financial independence often requires becoming a millionaire.
Put it this way, $1 million only generates about $5,000 – $17,000 a year in risk-free income. The reason why is the 10-year bond yield is around 1.7% and the best money market savings rate is now only about 0.5%. As a result, investors are being pushed to take on more risk for higher returns.
Here are my recommendations for how to increase your chances of becoming a millionaire:
1) Read personal finance sites every day.
Personal finance sites do a lot of things, but most of all, they make you pay attention to your finances.
As soon as you have heightened awareness about how much you are saving, what you are investing in, your net worth asset allocation, and your retirement plan, it’s only natural to generate more wealth than the typical person who is financially unaware.
Personal finance sites are often like free financial coaches, pushing you to continue instead of giving up. When you see someone day in and day out work on their finances, you can’t help but want to improve your finances as well.
In addition to reading personal finance sites every day, read as many finance-related books by people who are multi-millionaires. You don’t have to reinvent the wheel. You simply have to follow the guidance of those who’ve been there before.
2) Run the numbers.
Becoming a millionaire is a function of income, savings rate, investment returns, and time. Therefore, you can easily run various financial scenarios that will make you a millionaire. Here are some examples:
- Put away $350 a month and earn 6% a year, you will become a millionaire in 46 years.
- Max out your 401k and invest another $1,000 in after-tax proceeds a month, you will become a millionaire in just 17 years if you earn 7.5% a year.
Religiously track your net worth in order to optimize your finances. You don’t want to wake up 20 years from now and wonder where all your money went.
3) Do what the average person won’t do.
Obviously, if you want to become a millionaire sooner, you’re going to have to do things the average person won’t do. Here are some examples:
- If the average person works 40 hours a week, try working 60 hours a week to see if you can get paid and promoted faster.
- If the average person only invests in index funds, try to invest 10%-20% of your stock allocation in individual stocks. Your overall portfolio might underperform, but at least you’ll have a chance of outperforming.
- If the average person wakes up at 7 am, try waking up at 5 am for a year to work on your side hustle. Maybe an extra 730 hours a year will make you more productive.
4) Get motivated by the statistics and don’t quit too soon.
What’s annoying about statistics is that they can discourage you from trying. However, one of the core principles of Financial Samurai is to never fail due to a lack of effort because effort requires no skill.
If you don’t like your millionaire odds, change them!
Do not settle for what the data says about your chances. In fact, the lower your percentage chance of becoming a millionaire according to the Fed, the more motivated you should be to beat the odds. Once you do, it will be all the more gratifying.
One of the keys to building great wealth is not giving up. If you can try consistently for at least 10 years, I’m positive you are going to dramatically improve your odds.
5) Work in the highest paying industries.
If you want to be a millionaire, then you might as well seek employment opportunities in the highest-paying industries. These industries include finance, tech, medicine, law, strategy consulting, and entrepreneurship.
Generating a high income makes becoming a millionaire much easier. That said, you still have to have the discipline to save a good portion of your money. There are plenty of high income earners who end up broke due to poor financial habits.
6) Invest in the least diverse companies.
Let’s say you can’t join a fast-growing company no matter how hard you try. You also don’t think the company will ever change its homogenous workforce. Instead of getting left behind, if it is publicly traded, consider investing in the company.
This way, you get to participate in the company’s growth and have its homogenous workforce work for you!
Come up with a list of the least diverse publicly traded companies. Compare their diversity report card from five years ago and today. If not much has changed, you might be onto something.
Companies love to talk about diversity & inclusion, but it’s really hard to change established culture. If you can skillfully recognize human biases, you can increase your chances of becoming a millionaire.
7) Build your social network of highly motivated people.
Your parents were right. If you want to have a greater chance of success, whatever that means to you, you should probably hang out with people you think are going places. This includes marrying the right person.
Let your friends challenge you to do more. Over time, your friends will naturally become wealthier and more successful. If they are your true friends, they will want to bring you up along with them. If you are their true friend, you will do the same.
Your good friends will invite you to participate in various promising private investments. They will shoot you more enticing job leads. Some will make customer introductions. Others will help your children get ahead.
Welcome to the world of how things have worked for centuries! Your network is your net worth. The key is to be a genuine person who is always looking to help first. No matter your race or gender, this type of attitude will build you a great network. The stronger your network, the higher your chances of becoming a millionaire if that is what you want.
8) Don’t rent for life.
Although it’s a nice thought to rent and invest the difference each month, most renters don’t end up regularly doing so. The return on rent is always -100%.
Every month you get a place to stay with you rent money. However, you don’t build any equity or have a chance to build equity. In 30 years, a renter is guaranteed to be left with no real estate equity. Whereas a homeowner, if he regularly pays his mortgage, will end up owning the house free and clear.
In the Federal Reserve’s 2019 Survey of Consumer Finances, it was revealed that the median net worth of homeowners was $231,400. Renters had a net worth of just $5,000. In other words, the typical homeowner had a net worth 46X greater than the typical renter.
We can argue until the cows come home why there is such a stark difference. However, just know that over the long term, you want to benefit from inflation and not get hurt from inflation.
Related: Mortgage Interest Rates By Race
At Least Get Neutral Real Estate
As soon as you find a place where you see yourself comfortably living for 5-10 years, get neutral real estate by owning your primary residence. Obviously, make sure you can afford your purchase. One home buying rule I suggest everyone follow is the 30/30/3 rule.
Over time, you will see a widening spread between the cost to rent and the cost to own due to inflation and largely fixed costs of owning a home. During this time period, you’ll also be paying down principal and building equity. If the home also appreciates in value, you will have a nice tailwind towards millionaire status.
If you can’t afford to buy a physical property, then you can still participate in real estate’s rise by buying a publicly-traded REIT, like VNQ. Or, you can invest in real estate crowdfunding, like I have done after selling my physical rental property in 2017.
The rental property was too much of a pain to manage as a new father, so I sold it and reinvested $550,000 of the proceeds in crowdfunding. My favorite real estate platform is Fundrise. It has innovative private eFunds that contain a diversified portfolio of income-producing real estate investments across the country.
Best Real Estate Investing Platforms
Earning money 100% passively through real estate is my favorite way. Fundrise is free to sign up and explore and is my favorite platform. The platform manages over $1 billion in assets for over 150,000 investors. Investing in a fund is an efficient way to gain real estate exposure.
If you are an accredited investor and want to invest in individual real estate opportunities, check out CrowdStreet. CrowdStreet focuses on properties in 18-hour cities where valuations are lower and growth rates tend to be higher. CrowdStreet occasionally offers speciality funds as well, like a recent Build-to-Rent fund to take advantage of rising rents.
I’ve personally invested $810,000 in real estate crowdfunding to diversify my investments and earn income passively. Real estate is my favorite way for average Americans to build wealth as we recover from the pandemic.
9) Participate in the new “permissionless” society.
There are people making big money every day without the prerequisite traditional credentials. For example, you no longer need a fancy degree to get a job in tech. You just need to know your tech.
In the personal finance world, there are some very successful bloggers who are doctors, journalists, engineers, cooks, and school teachers. Most do not have a finance background. All they did was start a site and get creative.
You don’t need radio experience to start a podcast. Neither do you need broadcasting or acting experience to start a YouTube channel. Anybody can start a podcast or a YouTube channel.
Tech and the internet have created a wonderful permissionless society for historically marginalized groups. If you have kids, please teach them everything you can about the permissionless society. There are no gatekeepers.
The Inevitable Millionaire
In an ideal world, it would be wonderful if everybody could have an equal chance to become a millionaire by race, by age, and by educational achievement. Unfortunately, the system is rigged by the people already in power who naturally take care of their own.
It’s up to all of us to proactively enrich our minds with knowledge that can help us grow our wealth, regardless of circumstance.
Believe that becoming a millionaire is highly possible in your lifetime. And once you feel you’re on track to get to $1 million, you might as well shoot for $3 million due to inflation.
If you keep grinding long enough, maybe you might get to a top 1% net worth of $10 million! Once you get to a net worth of $10 million, you’ll be able to easily generate $250,000+ in passive income in a low-risk way.
Money does buy happiness because it helps you feel less stressed about money, especially during difficult times. Once you have enough money, make sure you do your best to preserve your capital. The last thing you want to do is go backward!
Readers, what do you think about the various chances of becoming a millionaire? Why do you think there is such a massive discrepancy in percentage chance for White and Black Americans with Master’s degrees? Any more suggestions on how to increase your chances of becoming a millionaire?
About the Author
Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that cover his desired lifestyle. He became a millionaire at 28 through aggressive saving, investing, and luck.
He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.He started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world with over 1 million organic visitors a month. You can subscribe to his free weekly newsletter where he shares more tips about becoming a millionaire.
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