Low interest rates are a major tailwind for real estate. The jobs market is remarkably strong. Metrics such as mortgage applications and delinquencies are
I’m 22 years old and I want to become a millionaire by 35. How do I do this?
Your mileage may vary, but this is how I recommend you to do (the earlier you start, the better):
A. First: drastically reduce your expenses
- Sell all the stuff you do not need (TV, Xbox, PlayStation, etc.).
- Quit shopping for the sake of shopping.
- Do not smoke, drink alcohol, do drugs, etc.
- Remove the Facebook, Instagram, Twitter, Pinterest apps from your iPhone so that you can only access them via your desktop computer (you will automatically reduce your wasted time by at least 90%: nobody on earth ever missed anything by not staying enough on Facebook).
- Sleep 8 hours a day, consistently.
- Meticulously decide whether you really need new stuff to buy.
- Learn how to do your own taxes. Once you understand how taxes work in your Country, you can get an accountant (and be able to check what is he/she doing with your money and tax filings). Be very careful and timely with your tax filings. Keep redundant paper and digital records of your tax payments in case of future issues.
- Ditch fake friends, high maintenance girlfriends/boyfriends, and all other people that actively undermine your efforts. A positive, resilient & optimistic attitude from the people you surround yourself with is essential. It is by far better to be alone than being surrounded by negative / envious people. As in many other fields of life, opt for quality rather than quantity. In the relationships with those selected few worth of your time, be patient to the extreme with them and extremely demanding with yourself.
- Never shop for food when hungry. Make to-buy lists and buy in bulk. Do not snack between meals. Learn how to cook your own meals (do not eat out often). Do not buy bottled water, limit sugary drinks and other sugar-based stuff that only makes you fat. Limit red meat if possible, and prefer plenty of beans and vegetables instead. Learn to eat in moderation and not to overstuff your stomach.
- If you can, use the public transport or a bike. Accordingly, consider ditching your car (too expensive for the use we generally make of it) and motorbike (too dangerous). In the rare cases you will need / want to do a road trip, you can easily rent a car for a very reasonable sum without all the hassle deriving from car ownership.
- Do not upgrade your smartphone every year.
- Always pay your credit card in full at end of every month. Avoid loans and credit (i.e. paying interest to fuel expenses) like the plague. If something is out of the budget, you must mentally come to terms with the fact that you cannot afford it: move on. We do not need 90% of the things for sale out there, anyway (more on this below).
- Get a good health insurance with above-average coverage(the cheapest, lowest-bracket ones are almost useless in most real life times of needs and emergencies). Having a good health insurance will shield you (and your bank account) and allow you to avoid going bankrupt in case of medical emergencies (which occur very easily, even at younger age).
- Now that you are still young, take extra care of your ears, teeth and, very important, your . Exercise (weight-lifting or anything else at least moderately stressful for your body) regularly: at least twice a week (three times a week is better). The occasional jogging is not enough. Alternate saunas with cold showers regularly, if possible (many gyms offer both at no extra charge). Millennia of evolution made us hunters and traders: our bodies and brains are simply not made to sit in front of a computer screen, replying to emails 12 hours a day. Your body is actually like a spring: after appropriate physical stress (ie. it must be hard), it will recover and come back stronger. In a stronger body operates a much clearer mind. This is critical since — as impossible as it may seem to you now — you too will age and naturally lose physical (and mental) fitness.
- Be extremely curious about the world out there. Understand why things work in a certain way. Ask questions to knowleadgeable people you come across in life. Try to read many books (mostly non-fiction), especially in sectors out of your normal studies. Innovation comes from the ability to correlate information between different realms of knowledge. Once you spot the correlation, do not sleep on it: act.
B. Second: drastically increase your income
- Study Game Theory before looking for a job. After the Wikipedia page on Game Theory, I recommend you to start from (I have no affiliation with the author and I do not profit from linking this book in any way): you will understand how in a market of naturally conflicting interests, game theory and strategic moves will allow you to think rationally and achieve oftentimes optimal results with much reduced effort (compared to your peers). This will be a critical advantage for you down the road as it will allow you to efficiently exploit the strategic mistakes of your peers and competitors, their instinctive (but irrational) decisions and progress much speedier towards the final goal by keeping your focus on what is important and at the same time allowing you not to put effort on irrelevant, marginal, or already lost, causes.
- Have skills: study and understand the business niches where — based on your skills — you can get a better paying job that does not send you to mental hospital (your health must always be a priority). Once you get a job, look yourself around and focus on acquiring new, useful skills that are not common at your workplace: e.g. coding, learning to speak a new language proficiently, ability to effectively sell or market products, etc. Check what you are naturally inclined to or you excel at: this is normally a good starting point. It can be a neighbouring skill compared to what you are paid for or something completely dystonic. Do not underestimate the importance of learning a new skill. Once you spot a new, useful skill, learn to be amazing with it (ie. do not just learn the skill but achieve the ability to execute specific tasks flawlessly, consistently and autonomously). You do not need a degree for many highly important and well paid skills relevant in today’s job market. Relocate abroad if necessary or if your Country prevents competition, social climbing or innovation at home. Do not be scared. Be available to do risky jobs that your peers are not willing (or are too comfortable) to do.
- Learn how to solve problems at work. Employ your skills to find neglected niches at your workplace and fill the productivity gaps. While everybody at work just does barely “enough” (and limit themselves to complain when things do not work or plans do not pan out), you will quickly become essential as one of the very few who executes and solves problems in your niche. This works even if you are fat, ugly, inexperienced, too old, too young, whatever. Do not wait for your boss to ask you: proactive problem-solvers are golden nuggets in any business environment and rewarded accordingly (most of the people hate to solve problems — because it is hard work — but if you become the one that hunts down the problems without even being asked, you will become a star). It can be a boring, unfashionable, even totally detested niche of expertise but as long as your employer’s revenues and/or peace of mind depend on it, you will become a critically important employee.
- Survive the corporate environment. While you learn to be amazing at what you do, fly always one inch below the radar and do not engage in office politics: save your precious energy and let them think you are shy, naive, whatever. Do not join factions at work. Do not do gossip. Do not date a colleague. Always keep your word (people around you must be clearly aware that you do what you say). Treat everybody (from the nightly cleaner to the CEO) fairly, respectfully and kindly. Let the results of your hard work speak for you instead: a positive side effect of cruising undetected is that it will also allow you to easily take ownership of your own achievements as it will be more difficult for other people (or your seniors) to claim to be the father of your own victories: in this way, you will benefit of peace of mind while you work, and leap forward mightily once you will achieve the results. If you spot the occasional narcissist / psychopath at work (keep your eyes open: especially in big corporations, there are plenty of them the higher you climb the corporate ladder), immediately use the “ ” method (google it) so to promptly disengage and disincentivize his/her behaviour from the very start and maintain your long term mental and gastrointestinal health.
- Get what you are worth. Once you do all the above, slowly but surely you will start being outstanding at what you do (on the long term, your original talents have little importance — nobody is “born” amazing, while perseverance and strategy will have the stronger impact by far) and you will become one of the few “essential” employees. It will now be the time to employ Game Theory to force your employer to give you a better salary, better bonus, better exposure with clients, etc. Do it nicely but effectively. With a smile, you will be able to submit your employer into a so called “dominated game” where the only possible outcome is for you to get a better salary, etc. (please keep in mind that if you are a smart problem solver on a relevant niche, you are effectively doing your boss a big favor by not changing ship). If you are effective in solving critical problems and still do not climb the ladder speedily, it means that either the opportunities at your current workplace are hopelessly limited or your boss is mentally detached (not an impossible occurrence). If this happens you must realize that this is a “game” that you can only win by not playing it. Do not lose motivation, blame destiny or settle (playing a game you cannot win) like most people around you will do, just find a better job as quickly as possible. “Persist” is the keyword. Changing job has the oftentimes the side effect of accelerating your career: do not underestimate this.
- Set up an emergency fund. Once your salary starts flowing in, immediately set up an emergency fund in cash of approximately 6 months of salary (3 months if you are particularly good at avoiding emergencies). This is cash that you must not touch and must be readily available for emergencies: not to buy you a BMW. Do not stupidly inflate your lifestyle and continue to be cautious with the way you manage and spend your money.
- Save & invest, every month. Open a Stock Account with your bank and every month save 20%/30%/40%/50% of your net income and invest it in a low commission S&P500 ETF by Vanguard (like “ ” or “ ”: google them). Never touch this investment for at least the next decade. Save mercilessly and invest every month “no matter what”. Google: “ ” + “ ” in order to understand the benefits of this double-pronged strategy (in short: you will beat 90% of all the day traders & professional fund managers out there). Set up (both mentally and practically) a bare minimum that you must absolutely invest every month and deposit it into your stock account at the beginning of each month so that you will not be able to spend it to buy useless stuff. Start now (i.e. procrastinate on this for any alleged “reason”, equals to increased chances of failure of the whole plan) and after a few months, this habit will be totally ingrained in your brain (and the effect will start reflecting on your Stock Account) and it will seem lunatic for you that your peers are not doing it as well and are rather buying a car or a house with that money (in most cases, it does not make any financial sense). This will also do marvel to your sleep and to your income as long as you will be consistent, patient and NOT touch your investments for a decade or so.
- Adapt along the way. As soon as your career will progress and you will earn more, be careful to also proportionally increase the amount of your monthly savings: this strategy will prevent you to fall into the “increased lifestyle” trap (where you spend more money on useless items just to show your status to your peers (who could not care the less) or because you become lazy). If you are doing everything right and then increase your lifestyle you could save all this effort as you will never achieve any financial independence and self reliance goal anyway. As a rule of thumb: do as you prefer, but you must find a way to erect a mental dam completely impermeable/anelastic against peer pressure (which is admittedly very powerful in most cultures and social environments), otherwise there is no way to make this plan work. As you should already know by now: nobody cares about what you own anyway. Also: if you get the occasional bonus at work, get a tax refund, inherit any sum from a distant relative, invest it straight away as specified above, in order to prevent spending it for useless “euphoria-triggered” stuff (euphoria will pass after a week or so anyway regardless of what you bought, while maintaining this approach steadily will greatly accelerate the achievement of the final goal for good). Some people in the comments claimed that we “deserve” to use these sums as a “reward”. I disagree: there is no reward in buying yourself useless stuff. The reward is making the money work for you instead, so that you can win this “game”.
- Start a side business. Once you have 200k/300k USD invested in a Vanguard ETF like VOO or VIG and they are pumping approximately 30k USD a year as compound interest (on the ETF shares’ historical trend of market appreciation year-over-year) and dividends (which you are NOT touching at any cost, but simply re-investing in the same ETFs, thus further magnifying the compound effect), you are able to focus your attention in order to start a side business to corroborate your income. Most of the people around you will dismiss this (and/or its urgency) but, in the current, extremely volatile, economic environment (where decades old “moats” are suddenly eroded and even long-standing business giants get disrupted by little known companies which did not exist 18 months ago ), if you do not start a side business, it means that you are happily obtaining your whole revenue stream from a single umbilical cord, thus effectively allowing your employer to automatically dominate your whole game (you should think and work very hard for the opposite to occur) and de facto reducing to zero your chances to achieve your final goal.
- Keep your current job while you start working on your side-project. Keep the two (mentally and practically) separated: maintain your above-average performance level and do not try to get your coworkers as customers. Work at night, on weekends and holiday to kickstart your side business.
- Focus on getting the first 3 customers for your new side business (friends and family do not count). Once you get 3 customers (which is an amazing achievement!), focus on how to make 30. If in 3 months you are not able to reach the 1.000 USD / month threshold, you must focus on finding better cash-flow generating business ideas: do not fight on price, the margin is essential. Learn from your mistakes (you will do many: be easy on yourself and on the people close to you). Take low hanging opportunities that others do not see. Study quirky, even awkward & ridiculed (by your “friends”) market niches, that oftentimes are a goldmine for those able to satisfy them (you).
- Once your side business starts making 10k USD / month you can start evaluating if your current salaried job is worth the effort / time / hassle. If not, make the jump to the self-employed world and focus on increasing the income from your side business to 30k USD / month.
- Sooner rather than later you will be a millionaire. The first million is by far the absolute hardest.
Thank you for reading my answer.
Let me know in the comments if you need any clarification.
For more posts like this, you can check my blog at.
*** 1st Update, 20 February, 2018 ***
I am humbled by the extraordinary response I have received to my answer and I must thank you all for the fantastic comments and suggestions. I am trying to respond to all of them and I have slightly revised a few of the points above to better clarify my thinking. I also added a book recommendation on Game Theory as so many asked in the comments for that (no affiliation).
*** 2nd Update, 10 March, 2018 ***
Re: Real estate investments. Many asked about real estate investment. A few suggested to stick to it as “the only asset that always has value”. I am aware that this may be a controversial point but I purposely did not include the real estate investment among the points above. Obviously there may be exceptions, but I would recommend against doing any real estate investment before you have already reached any solid financial independence goal. I am well aware that I may hold a contrarian view on this (we all know that everybody buys a house these days) but I recommend you to check the following factors before purchasing any real estate:
a) purchase price (including fees & commissions);
b) mortgage cost for the whole life of the repayment plan (10–30 years);
c) insurance cost;
d) initial refurbishment & maintenance cost;
e) taxes (when you buy it, while you own it, when you sell it);
f) impact on your financial flexibility (including on your ability to diversify your investment in the future) for the whole mortgage repayment plan and relevant opportunity cost;
g) estimated profitability (ie. potential future asset appreciation);
h) monthly mortgage instalment cost vs. rent;
i) vanity factor / peer pressure: how important is for you to show to your peers that you finally “made it” and bought a house with a 30y mortgage of your life?
I did these calculations myself and, at least in big city centers (in USA, Europe and Asia, in cities where somebody may actually want to relocate and live, not just enjoying for a two weeks holiday), never I could find a real estate investment that could match the profitability of the S&P500 with the same degree of flexibility of investment/disinvestment, coupled with the (priceless) mental freedom coming from the fact that if I want to liquidate my whole investment tomorrow, I can do it in a whim (basically suppressing any opportunity cost). Since most of us have normal jobs and are not real estate professionals with asymmetrical knowledge of our local real estate market (i.e. which entails ability to buy real estate at heavily discounted prices), in the long run a real estate investment is normally a huge bloodbath compared to the stock market. I would thus recommend to stick to the investment plan as outlined in the point 6 above and search patiently for a place for rent that is both very cheap and not too far from your workplace.
*** 3rd Update, 20 March, 2018 ***
Re: Marriage. Many in the comments asked how to make this plan work if one gets married. I am aware that a marriage may impact on this plan and, potentially, even disrupt it completely (naturally, this applies (even more so) if you wish to make a baby whom you will be bringing into adulthood under your and your partner’s responsibility). For these reasons, I would advise the following:
- Choose your partner wisely: if your partner is unable to share your goals (and/or work ethic) and is only happy living a lavish lifestyle there will never be a salary good enough for the two of you. This is probably the quickest road to financial and emotional misery. Be careful.
- Do not marry too early: it is better to be safe than sorry. Be wise, and only marry once you are sure that it is the right thing to do. Postpone if you are not sure. Break-up if your partner is not the right one: being single is an order of magnitude better than being together with the wrong partner for the rest of your days.
- When you do get married, do not feel trapped by the idea that you must impress anyone with a wedding ceremony: be aware that 3 days after your wedding, people will plainly forget about it and move on with their lives. I have read that in New York the average wedding cost is above 70k USD: you will agree that this kind of expense for a signing ceremony, some flowers and a fancy dinner is totally nonsense. Invest this money wisely instead, so to accelerate the snowball effect to your advantage.
- Skip the whole “diamond ring” scam.
If you follow the above, you will be fine.
*** 4th Update, 15 August, 2018 ***
I have tried to learn from all the comments below and I have slightly revised a few of my points above, especially on the second part.
*** 5th Update, 19 February 2019 ***
10k upvotes, 0.4 million readers! I have slightly expanded a few of the points above and added a few more, particularly on the second part. As usual, please let me know in the comments if you find anything unclear. Thank you again for reading my answer this far, it is much appreciated.
For more posts like this, you can check my blog on.
*** 6th Update, 13 March 2019 ***
Again, regarding Real Estate, I have been confronted by many people dissenting my opinion of being cautious with investing in real estate.
Their criticism is along the following lines:
a. If you buy the house where you live, you “save” every month the amount that otherwise would have been “thrown away” as rent;
b. I had allegedly underestimated the appreciation of real estate value (ie. the ultimate ROI) and I overestimated the taxes when comparing these investments with the Stock Market.
I checked the “numbers” again and my response has been the following:
a. When you pay a “mortgage” instead of a rent, you are simply investing in the underlying asset by paying the bank a certain interest. This investment makes sense if there is such a substantial appreciation of the underlying asset to repay all mortgage interest and any other expense attached to the property. If this appreciation is not there, the investment will have negative yield. Regardless of potential profitability, on the long run the stock market consistently outperformed the real estate market (there is no way around it);
b. I recommend to check carefully the taxes and maintenance expenses (very high) and potential for further appreciation (limited) for real estate in many urban centres. I noticed that people that invested in real estate oftentimes were tricked into thinking that taxes and maintenance expenses would be very low and potential for appreciation extraordinary: this is a sort of wishful thinking that does not match the numbers (unfortunately for them).