I think I have a fairly solid financial intelligence, although I am always on the lookout for learning new information on stocks, and real estate and the like. When I was a sophomore in high school I spent my saved money on stocks instead of a car like everyone else. But what I want to know, is how to START. It seems like you need money to make money, but right now I am just about to begin college, and while I have no intention whatsoever of spending my life (especially my youthful 22-40 years) working, right now I don’t have the money to buy real estate and begin to build an income generating property portfolio. In four years when I graduate, I will have no college loan debt, but I don’t want to “enter the workforce” because I will never get rich working for someone else. Do you think its possible to do something like 2 million in 4 years, so that when I graduate I will have enough money to use to make more money with? And if so, how do I start that now? I currently have about $16,000 in stocks.
So Alex wants to go from $16k to $2 Million in 4 years …
… as I pointed out to him, that’s a 400% compounded return. The stock market averages 12%; Warren Buffett averages 26%
But, I did point Alex to two places that can return 400% or even more: the lottery and business. I humbly suggested that he start the next Facebook.
Well maybe I was too hasty in throwing out the figure 2 million. I guess what i really mean is how do I build up a large enough sum of money to actually begin making money with? All of your “money making 101″ strategies seem to already require a sizable pile of money with which to begin implementing them. Also, the real estate strategy of building up passive income through rents is an extremely long term one. If I were to buy a $160,000 dollar house at 6% with about 30,000 down (assuming my 16k turned into 30k during my college years), my mortgage would be around 720 a month. Realistically, I could probably rent that property for about 1100 a month. So we are only talking about somewhere around $3600 per year. Its a strategy that takes over 25 years to really begin producing enough passive income to support just a modest, middle class lifestyle.
Now, I’ll let you in on a little secret, and the younger you are – College age is ideal – the better this works:
Skip Making Money 101.
There, I said it: don’t worry about all the save 15% of your salary stuff; all the pay down debt stuff; all the diversify into Index Funds stuff …
… simply forget all the personal finance blogs, altogether.
Jump straight to Making Money 201.
Start a business – the internet is ideal – because I can’t think of any other legal way to give you a shot at making millions … and, it’s clearly possible because others have done it.
But, wait … surely you can’t expect to create the next Facebook?!
No, you can’t … but, you won’t need to: you only need to focus on making as much money (income) as you reasonably can – while still concentrating on getting good College grades.
Here’s the SECRET:
While you are making oodles and oodles of cash (well, at least a few extra bucks), you don’t spend it … in fact, you don’t even tell anyone that you have it. Your business could be generating an extra $100 a week, $1,000 a week, or even $10,000 a week and you still don’t tell anybody.
Because your secrecy lets you keep living like a penniless college kid, mooching off family and friends like any ‘normal’ college kid does, while you’re busy investing 99% of what you earn.
Will this work?
Maybe … but, if you flame and burn [AJC: did I forget to mention this was high risk / high reward 🙂 ], so what?
As long as you’ve been careful to avoid accumulating personal debt, you’re still just as poor as your buddies; you learned a lot; and, you had a helluva ride …
… one that you would never had been able to take if you actually needed Making Money 101 😉
That’s why you take risks when you are young, before you are saddled with debt, commitments, and angst.