On Quora, somebody asked for “something I can learn in 10 minutes that will make me rich?”
The obvious answer is: “not much”.
… this is my blog, and I’m up for a challenge.
In fact, I think you can learn pretty much everything that you need to learn about getting rich in just 10 minutes.
Unfortunately for me, if I’m right, you’ll know everything you need to know in just this one post, so you’ll have no need to keep reading …
… and, if I’m wrong then you’ll simply delete your bookmark to this blog, as it will prove I can no longer deliver.
It appears that I lose either way 😉
Even if this puts this blog out of business, I’m willing to take the 10 Minute Challenge because it also puts every other best-selling ‘get rich’ spruiker – and, let’s face it, most of them are crooks – out of business, as well.
And, that’s worth the sacrifice …
So, here goes:
I think the number one thing that you can learn in 10 minutes is: “what is your Number?” … in other words, how much is ‘rich’ for you?
For example, think about how much annual income you would need (start with $250k p.a. and work your way upwards) and multiply that number by 20.
[AJC: the question was about “rich”, so the answer needs to be $5m to $10m++ … but, this exercise is still valid even if your Number is based on 20 times $50k or $100k]
Once you have that Number in your head, think about how long you are prepared to wait before becoming ‘rich’ (if you are prepared to wait more than 5 to 10 years, surely you can give this exercise longer than 10 minutes)?
Once you have those two numbers, a few minutes playing with this Compound Annual Growth Rate calculator will tell you what % return you need on your investments each year, over that time frame.
Finally, 30 seconds with this chart will tell you everything that you need to know about how you can get rich, which was your original question:
[Source: Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire (Agora Series): Michael Masterson: 9780471786757: Amazon.com: Books]
Now, as promised, this really is everything you need to know in order to become rich …
… but, I’m not worried about losing readers, because – now that you know what to do – you’ll want to bookmark this page so that you can keep reading to learn how to do it 😉
I’m going with the “Real-estate together with Stocks and Small Businesses”.
The small businesses alone is the riskiest (in some ways), and I don’t want to give up my day job yet, so I have to do it part-time.
But in some ways it isn’t about the number, but about the monthly income. If you can get $250,000 year on less than $6.25M, then you are also at your number.
@ Neil – Not if the $250k comes (in part) from a business or other active investment … no business lasts for ever, no market stays up.
Adrian my number would be 3-4 million. I feel a mixture of real estate, stocks, and my business would be the perfect mix. However I would want to have those in addition to having the 3-4 cash on hand. Gaining just 2% interest I would get 80k per year and by then I would have all my bills paid off except rental properties. I would want to count on always having an up market or business because they come and go.
@ Thomas – Imagine that you owned $3 million of real-estate outright and had another $500k in cash “for a rainy day”.
Let’s say that you collected the rents, paid out the taxes and whatever outgoings the tenants didn’t pay. Let’s say that you put aside 25% of whatever’s left to add to your “rainy day” account (and to cover repairs and maintenance and vacancies, etc.).
My question is: would 75% of the net rents from a $3m property portfolio sustain you? [remember, as your expenses rise with inflation, so do your rents … nice, huh?].
If not, then your Number is higher than $3m …
Once you reach your Number you can also have as many businesses and other active investments as you like, to keep you busy (just remember that they can disappear overnight in market crashes) … me, I prefer a beach chair and a pina colada.
I can certainly expect to be owning real estate into my retirement – that is my main source of income. Directly managing them is a different issue.
@ Neil – I’d rather give up a few % of the return than manage any of my RE, leveraged or unleveraged. The minute I start managing them myself, I reduce the number that I can have in my portfolio, and turn what’s left from an investment into an owner/managed small business.
I’m into RE and starting a business. The funny thing when I did this exercise several years ago was the before me was seeing this large figure and then trying to understand where it came from. 250k per year…I recall saying “whoa -now what”?
I would recommend sitting there with your number and absorbing why you came to its conclusion. You might just realize that you have a lot to offer or that you deserve more than you are currently are receiving Best of luck.
Adrian, VERY curious… as a % of your rent what does the typical property manager charge you? What about expenses how do you keep the property manager in line with keeping “fixing” and improvements expenses low? Do you tied the property manager to the profitability of the property?
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Nice food for thought. However, you could not pay me to own real estate. Dealing with tenant problems is a non-starter for me after some nightmarish experiences. The only way for me to invest in real estate would be at a passive level whether it be a real estate mutual fund or a true net net net lease of commercial property. Even the latter has its own headaches and concerns.
@ Steven – I like real-estate; sure, I pay quite a whack off the top for good quality property managers, but since I buy cheap and add value and/or reduce my leverage by borrowing less and having greater equity (more of the latter than the former as I have now reached my Number) it’s not that difficult to obtain a positive return with minimal effort, even in expensive R/E markets like Australia.
In the US, where interest rates are so low – and, can be locked in for so long – you ARE being paid to own real-estate 😉
For business owners that have not invested in stock and are not familiar with stocks, what would you say is the best place to go to learn about what stocks to invest in?
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