Here are the 3 most basic routes to making your first $1 million

As you have probably already figured out, making $1 million dollars is no simple task.  For most people it is something that they do not even plan on attempting.  Not only do they have no idea where to begin, but they figure that $1 million is so much money that it is completely out of reach. 

The reality is that in todays dollars, $1 million truly isn’t a lot of money.  Of course I say this in comparison to the wealth of today’s top 1%.  Thirty years ago, $1 million was a lot of money, however $1 million today has about the same purchasing power as just $466,000 in 1987 (courtesy of the BLS inflation calculator). 

Still, making your first million is a huge milestone and in comparison with everyone in the middle class, $1 million is still a large sum. 

So let’s look at your main three options on how you can make your first $1 million.  I think it is safe to say that at least 99.9% of self made millionaires made their first million (and second, third, etc) via one of these three categories.  Now of course, within each category there can be countless sub-categories you can take, but for purposes in this article we are going to discuss the three general paths you can take. 

  1. Business


This should come as no surprise.  People who start their own business and are driven and motivated to see their business grow and become profitable are bound to make a lot of money.  With that said, many have heard that 9 out of every 10 businesses fail within their first 5 years.  To the best of my knowledge this is true.  However, keep in mind that this statistic includes EVERYONE who starts a business.  It includes the mom and pop who start a sandwich shop on the street corner and who know nothing about business, have never operated a business, and have never worked in the restaurant industry.  Their odds of success are slim to none. 

So how do you increase your odds to numbers closer to 50-50 or better?  Here are a few suggestions that I believe can do just that:

  • Start a business in field that you are an expert in, or at least have a decent amount of experience in.
  • Spend some time learning about business; get a degree in entrepreneurship, enroll yourself in business seminars, read books on how to start a business, or get educated in some way.
  • Find a mentor who has started several successful, profitable businesses who can guide you in the right direction when you need advice.
  • Save up a good amount of your own money and get started. In other words, bootstrap the business.  Don’t start with borrowed money that you will have to pay back, this will slow down your profits until you have the loans paid back.  Use that profit instead to reinvest in the business to grow. 

If you do these four things, you will already be way ahead of the pack and have much better odds of success than at least 50% of every other business start up. 

Millionaires are being made every single day in the United States and around the world from people starting businesses.  Starting a business from the ground up is a great way to make your first $1 million.  This path is probably the fastest route to making your first million as well. 

  1. Real Estate


The industrial age business titan Andrew Carnegie once famously stated “90% of all millionaires became so through owning real estate.”  There are very few people that argue that statement even today. 

So maybe you are not sure about starting your own business from the ground up.  The odds seem too sketchy, or you flat out have no idea what to start a business on.  If you are looking for something that is probably a more for sure thing (albeit maybe not quite as fast as starting a business) then buying and holding income real estate is probably your best bet. 

Imagine having someone else pay a portion of their income into a savings account for you.  So, side by side, you and this other person are both saving money and putting it into your savings account.  Wouldn’t that be nice?  Now imagine having 100 other people each putting a portion of their incomes into a savings account for you.  How quickly do you think you could reach $1 million?  Does this seem to good to be true?  Well, owning real estate can do this for you. 

When you buy a rental property, most smart investors use the rental income from the tenants to pay their mortgage payment.  This means that with each monthly rent check that is collected, it is used to pay the monthly mortgage payment, effectively paying down a small portion of your mortgage principle.  So basically your tenant is putting a small deposit into your equity savings account each month.  If you buy smart, your rental income will be more than the mortgage payment and all of the other monthly operating expenses and produce a “positive cash flow” on top. 

So what are you waiting for?  How quick can you get to 100!?  The more properties and tenants you have, the quicker you will build up $1 million in equity from mortgage debt pay down.  Not to mention properties tend to appreciate in value over time!  This is what makes real estate such a perfect wealth builder and why so many millionaires made their money in real estate! 

Although I also have 2 small start up businesses, real estate is my preferred path to building wealth.  All of the money that is generated from my businesses I dump into rental properties for the reasons stated above. 

  1. Investing

Wall Street

When I talk about investing I am talking about paper assets.  These consist of assets such as stocks, bonds, mutual funds, ETFs, REITs, options, notes, currencies, commodity futures, and many others. 

This path is certainly not for the faint of heart in my opinion.  Many seek this path because they perceive it as the “easiest” way to get to $1 million.  When I say easiest, I mean having to do the least amount of work.  Starting a business and buying rental properties can require a lot of work.  Buying and selling stocks can be as simple as reading a few financial statements and clicking the “buy” or “sell” button on your computer (obviously it is not just that simple, but it is often perceived that way by most beginners). 

Based on my experience and observations over the years, in the long run, the main people who making a killing in this path are the brokers, investment bankers, and fund managers.  There are certainly investors and traders who make it big buying retail investment products, however if you look at the odds they are pretty close to betting on the slots in Vegas. 

So if you are/were a finance major at Harvard, Yale or Princeton and you have made a killing over and over again in your stock investment simulator… maybe you are onto something.  But for the rest of us, it might be prudent to avoid the lure of easy money on wall street and stick to hard work in business and/or real estate.  Of course this is all subject to argument and reflects my personal opinion. 

 Making your first $1 million


So how are you going to make your first million?  Will it be in business, real estate or investing?  Or maybe a combination of the three?  One thing is for sure… one common denominator no matter what path you choose is that you need to acquire assets.  Whether you build your own assets (like starting a business) or buy them (like buying a rental property or buying stocks), obtaining them is an absolute must.  You need to accumulate assets. 

I personal have built my small growing fortune in the first two categories.  I do not currently have a single penny in any paper assets.  Maybe one day if we see interest rates up in the 15%+ range again I may consider putting some money in some stable bonds or bank CDs… but until that day comes I will pretty much steer clear of investments that offer me little to no control.  Business and real estate is what I have used and what I will continue to use going into the future. 



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