A million dollars doesn’t go as far as it used to – inflation and whatnot. But it’s still a lot of money. And there’s just something nice about that title.

Millionaire. Has a nice ring to it, doesn’t it?

Well, I have great news for you. Becoming a millionaire is actually pretty simple. Almost anyone can become a millionaire. You don’t need special skills, a college education, or even a big pot of money to start with.

I say that as someone who grew up on welfare in Detroit, doesn’t have a college degree, and never had a high-paying job. Yet I was able to become financially independent and retire in my early 30s – even after starting out relatively late in life.

So if you don’t need much to become a millionaire, what do you need? That’s what we’re here to get into.

Today, I want to tell you how almost anyone can 10x their money and become a millionaire.

Ready? Let’s dig in.

So what’s the first thing you need? A plan. How does the old saying go? If you fail to plan, you plan to fail.

But that’s not all. Of course, you need the right plan. Now, there are a number of ways to become a millionaire in life. But many of these paths are esoteric and difficult to replicate for the average person. For instance, building some popular app that goes on to make you a ton of money. How many people can build that app? Not many. So what kind of plan works for the other 99% of us?

Consistent, long-term investing. That will work for just about anyone and everyone. Have you ever heard of someone who consistently invested for years of their life only to suddenly go broke? That would be an incredibly rare story.

It almost never happens. And if you think I’m wrong and it’s not the correct plan, let’s take the inverse of it. What would be the opposite of consistently investing over the long term? It would be inconsistent, short-term speculation. Yeah, good luck with that. Just say that out loud: “I want to be an inconsistent, short-term speculator.” Sounds ridiculous, right? That’s because it is.

How many lottery winners go broke not long after they win? Exactly.

There are a lot of people with FOMO, chasing the next shiny object. The problem with this is the mentality that one builds around it, which is focused on the reward, not the process. And so even if one does win the lottery, which is nearly impossible, they end up like the dog who chased the car and actually caught it; they have no idea what to do with what they’ve got. Why? There was no plan in place. No system. No process. It’s inconsistent. It’s oriented around the here and now. And it’s speculation. That leads to failure.

I certainly don’t want failure for you. I want you to succeed. And we can succeed.

Almost anyone can build sustainable wealth and passive income, achieve financial freedom, and become a millionaire. If you can intelligently invest capital over a long period of time, you can end up with a lot of money. I mean, a lot. A million dollars? Sure. And more.

But it’s so important that you start as young as possible. If you’re already 60 years old and just now thinking about investing, that’s not the optimal position to be in. At an advanced age, you just don’t have a lot of time. And time is a critical ingredient to the wealth-building cake. This is another thing you need.

It’s said that time is money. But I disagree. Time is worth a lot more than money. We can always make more money. Money is a renewable resource. However, we cannot make more time. Time is a finite, non-renewable resource. And we’re slowly running out of it every single day.

I mean, Warren Buffett is worth more than $100 billion. But he’s also 92 years old. How much do you think he’d give to be 30 years old again? I think he’d pay every dime he’s got for that. What you want to do with time is, value it highly while you’re young and turn into exponentially more money with the passage of time. Wait, exponential? What’s that all about? I’m talking about the process of compounding, which is something else you’ll need.

People think of numbers in linear terms. It’s almost impossible for the human mind to fully grasp compounding. Compounding is so powerful and impressive, it even blew away Albert Einstein. Einstein was able to understand, visualize, and explain extremely complex and abstract concepts, like spacetime and time dilation.

Yet compounding blew him away. Einstein reportedly said the following: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Believe me, you’d rather earn it than pay it. And how do you earn it? That goes right back to my initial point: You must consistently save your money and intelligently invest that capital for the long run. This will take advantage of compounding over time. In order to do this, what do you need?

You need patience, persistence, and perspective.

You need the patience necessary to delay gratification, consistently save your money every month, and intelligently invest that capital for rewards that are way down the road.

Persistence allows you to overcome the inevitable obstacles that will invariably enter your space over the intervening decades.

And maintaining a long-term perspective will help you to ignore the short-term noise and volatility that you’ll encounter.

There’s nothing complex about any of that. It’s actually very simple.

But simple doesn’t mean fast or easy.

If it were easy, everyone would already be a millionaire. It’s in the same way that you can point to the top of a mountain and see a simple path up, but actually getting up there is a journey. Becoming a millionaire is also a journey. And if you try to take a shortcut by following some get-rich-quick scheme, you’ll probably end up broke fast.

No, simple can be difficult. And, in this case, it is. It’s difficult to put a plan together and stick to it for years and years of your life, through the ups and downs, no matter what. But anything worth having in life is worth working hard and waiting for. Nothing good comes easy. You need to recognize this. But one thing you don’t need? A lot of money.

It’s crazy, but you can become a millionaire without investing a lot of money.

This is due to the immense power of compounding. Compound interest is interest on interest. Compounding is exponential, even when your contributions remain linear. It might take a little while for that exponential curve to reveal itself. But when it does reveal itself, it’s going to blow you away.

Here’s what I mean. Let’s say someone is 22 years old and starts out with a long-term investing plan right out of college. This person will invest just $2,100 per year, which is only $175 per month, over the course of 40 years at a 10% compound annual rate of return – roughly in line with what the US stock market has done over the last 100 years. What does this person end up with at the end of those 40 years? Slightly over $1 million.

This person is a millionaire retiree. 62 years old. Ready to retire with $1 million. And it didn’t require anything crazy to get there. It was very simple.

This person consistently invested just $175 per month for the long term and let compounding do its magic. Now, that is not a lot of money to invest. Yet this person still ends up with a lot of money at the end of it. This difference between what is invested and what is ended up with is massive.

How massive? Well, the exponential curve of compounding is so powerful, this person only invested a total sum of $84,000 to end up with more than $1 million. That means they more than 10x’d their original investment! More importantly, the contributions stayed linear, but the gains became exponential.

That’s right. This person 10x’d their money and became a millionaire. I get it. Maybe you’re not in your early 20s. And that’s okay. You would then simply have to invest a higher amount per month. Everyone has a different financial situation, but it’s the concept that’s important.

Furthermore, this concept is universal. And here’s another thing to motivate you, even if you’re getting a late start: You could do even better than I’m laying out in terms of the investment performance. I assumed a pretty standard long-term rate of return, based on the entire US stock market. So it’s average. But there’s no rule that states that you can’t do better than average. 

To that point, our channel frequently highlights high-quality dividend growth stocks. These stocks have proven their ability to outdo the broader US stock market over the long run.

This potential extra rate of return could be incredibly beneficial, especially if you’re starting out with investing later in life and have less time for the compounding process to work for you. Combining a higher monthly investment sum with a higher rate of return could dramatically change your financial outcome and allow you to catch up to, or even surpass, the results I already laid out.

I think of high-quality dividend growth stocks as the golden geese that lay ever-more golden eggs.

The golden geese are world-class enterprises that can produce ever-more profit by providing the world with the great products and/or services it demands. They’re able to sell ever-more stuff, to ever-more people, at ever-higher prices. The golden eggs are the dividends that these companies pay out to shareholders. And because we’re talking about ever-more profit, shareholders tend to get paid ever-more dividends.

High-quality dividend growth stocks take compounding to the next level. That’s because you can reinvest growing dividends from high-quality dividend growth stocks back into more high-quality dividend growth stocks also paying growing dividends.

It’s growing dividends buying more growing dividends. And because these stocks tend to have higher yields than what the broader market offers, you don’t necessarily have to sell your stocks and drain your wealth in order to pay your bills. You’re able to instead put yourself in a position to live solely off of your ever-growing pile of golden eggs. Why slaughter the golden geese and risk potentially running out of both golden geese and golden eggs?

Warren Buffett has likened the long-term compounding process to building a snowball. Imagine starting at the top of a very long hill. You take some snow, ball it up, build a small snowball, and start rolling it down the hill.

Before you know it, the snowball starts to gather more snow, getting bigger and rolling faster all by itself. After a while, you don’t even have to push it anymore… if you don’t want to. It becomes a self-sustaining monstrosity of ever-larger proportions. Buffett believes in this analogy so much, his biography is titled “The Snowball”.

So get busy building your own compounding snowball.

— Jason Fieber

P.S. Would you like to see my entire stock portfolio — the portfolio that’s generating enough safe and growing passive dividend income to fund my financial freedom? Want to get an alert every time I make a new stock purchase or sale? Get EXCLUSIVE access here.

Source: Dividends & Income