The financial information/ideas in this article is general only. Before making any financial decision you should seek the advice of a professional.
A lot of people want to be multi-millionaires and billionaires. But they don’t realise how this breaks down into numbers.
When you think about how billions or multi millions breaks down into yearly amounts you realise how unlikely it is that you will be worth this huge amount of money.
For the average person, a net worth of 1 million by 40 years old is quiet achievable (although still challenging)
From that point on if you work really hard, smart and make sacrifices you may go on to be worth 5 million in your 50s and 60s.
If your goal is to be worth 10s of millions +++ the probability goes down and the risk goes up.
To be worth this amount you will usually need to own a system (a business) that is capable of generating that amount of dollars!
You need to generate large amounts of profit year after year while cutting expenses to eventually be worth millions.
To become a billionaire you usually need to own something that has explosive growth or if it grows slower you will become a billionaire at an old age but this is still very improbable.
But most people don’t understand this breakdown because they don’t think about it. They post pictures on Instagram of huge mansions, private jets, big boats, exotic cars with a couple in their 20s/30s with the caption “goals” (like the photo on this article)
But they don’t realise that a lifestyle like that is highly unlikely by the time you are old let alone in your 20s and 30s.
I’m not saying you should give up if you want to become a multi-millionaire I just want to get your head around reality.
Let’s have a basic look at breaking down some net worth estimations by 45 provided you started at 25 (20 years)
Obviously when you are younger or your business is newer your income and wealth building per year is going to be less than it is in later years but in these examples I’m simply averaging the net wealth goal by the 20 years to make it simple.
The annual amount is how much wealth you build per year after all your taxes and expenses etc.
Net worth $1 million by 45 = $50,000 per year.
Something like this could be achieved by having a good paying job or small business, and/or the help of some investments like property/stocks.
Net worth $5 million by 45 = $250,000 per year.
At this level you need a big income, around 500k per year before tax, this looks like having a very high paying job like being a general practioner doctor, very successful real estate agent or CEO, besides jobs you will probably need to run a business capable of 500k a year.
Net worth $10 million by 45 = $500,000 per year.
At this level you definitely need a business capable of $1 million a year income.
Net worth $100 million by 45 = $5,000,000 per year.
At this level you need a very successful business capable of 10 million a year.
Net worth 1 billion by 45 = $50,000,000 per year.
At this level you need an extremely successful business capable of 100 million a year in income. That’s insane.
You want to pay off your home, be worth a million by 45 and eventually be worth up to 5 million when you’re old? You can get there by working a job or running a small business and invest in properties and/or shares.
Check out my article An effective plan to get rich where I break this down here
You want 5 million by 45 and eventually maybe 10 million when you’re old? If you don’t have an extremely high job income like doctor/ceo you need a highly profitable business.
You want more millions than that? You need a VERY PROFITABLE BUSINESS.
So there you have it guys, I don’t mean to be a negative dream crusher and by all means if your goal is to get really rich then go for it I just wanted to make it more clear what it actually takes to get there.
Thanks for reading.