Making your first million… is easy! (??)
"It is difficult to become a millionaire in the short term (a few years) working at a 9-to-5 job, unless you get lucky (win the lottery, inheritance, gambling at a casino, etc). However, if you max out your employer's Retirement Plan (401k, 403b) for the next 30 years, and you average a 5% rate of return on your investment, you will reach millionaire status.  Many people would consider this ""easy"" and ""automatic"". Of course, this assumes you are able to max our your retirement savings at the start of your career, and keep it going.  The idea is that if you get in the habit of saving early in your career and live modestly, it becomes an automatic thing. Unfortunately, the value of $1 million after 30 years of inflation will be eroded somewhat.  (Sorry.) If you don't want to wait 30 years, then you need to look at a different strategy.  Work harder or take risks.  Some options:" "I realize that ""a million dollars"" is   a completely arbitrary figure, but   it's one people fixate on. Perhaps   folks just meant it's getting easier   because inflation has made it a far   less lofty sum than when the word   ""millionaire"" was coined. Your point is correct - it' relatively easier as the 1 million dollar nowadays is no where as valuable as compared in the old days after the inflation adjustment. However the way to achieve that is easier said than done: The most possible way is to run your own business (assuming you will make profit). For most of the people running a job to earn a living - the job income is the biggest factor. Being extremely frugal wouldn't help much if you don't maximize your income potential. Earning a million dollar through investment? How much capitals are you able to invest in? 5k? 50k? 500k? I see no way to earn 1 million with 5k from investment, I wouldn't call it easy. This again depends on your income. With better income of course you could dedicate a larger portion to investment, without exposing too much risk and having to affect your way of life. (3) Invest some part of your income   over a long period of time and let the   stock market do the work I'd say this is more geared towards beating the inflation and earn a few extra bucks instead of getting very rich (this is being very relative).  Just a word of cautions, the mindset of investment being the shortcut to wealth is very dangerous and often leads to speculative behavior." Easy. Start with 2 millions and lose only one. Jokes aside, if you want a million USD, you should be asking yourself how you can produce products or services worth $5 millions. (expect the extra to be eaten up by taxes, marketing, sales, workforce...) If by investment you mean making risky bets on the stock market, you might have a better time going to Las Vegas. On the other hand, if by investment you mean finding something that will produce $$$ and getting involved, it's a different matter. "I think there's a measure of confirmation bias here. If you talk to somebody that started a successful business and got a million out of it, he'd say ""it's easy, just do this and that, like I did"". If you consider this as isolated incident, you would ignore thousands of others that did exactly the same and still struggle to break even, or are earning much less, or just went broke and moved on long time ago. You will almost never hear about these as books titled ""How I tried to start a business and failed"" sell much worse than success stories. So I do not think there's a guaranteed easy way - otherwise we'd have much more millionaires than we do now :) However, it does not mean any of those ways is not worth trying - whatever failure rate there is, it's less than 100% failure rate of not trying anything.  You have to choose what fits your abilities and personality best - frugality, risk, inventiveness? Then hope you get as lucky as those ""it's easy"" people are, I guess."
"I recommend a Roth IRA. At your age you could turn 25K into a million and never pay taxes on these earnings. Of course there are yearly limits (5.5k) on the amount your can contribute to a Roth IRA account. If you haven't filed your taxes this year yet ... you can contribute 5.5K for last year and 5.5K for this year.  Open two accounts at a discount brokerage firm. Trades should be about $10 or less per. Account one ... Roth IRA. Account two a brokerage account  for the excess funds that can't be placed in the Roth IRA. Each year it will be easy transfer money into the Roth from this account. Be aware that you can't transfer stocks from brokerage acct to Roth IRA ... only cash. You can sell some stocks in brokerage and turn that into cash to transfer. This means settling up with the IRS on any gains/losses on that sale. Given your situation you'd likely have new cash to bring to table for the Roth IRA anyway. Invest in stocks and hold them for the long term. Do a google search for ""motley fool stock advisor"" and join. This is a premium service that picks two stocks to invest in each month. Invest small amounts (say $750) in each stock that they say you should buy. They will also tell you when to sell. They also give insights into why they selected the stock and why they are selling (aka learning experience).  They pick quality companies. So if the economy is down you will still own a quality company that will make it through the storm. Avoid the temptation to load up on one stock. Follow the small amount rule mentioned above per stock. Good luck, and get in the market." Use the chrome extension called Xray - the complete article is below  Why Goldman Sachs Seized a Client’s 217-Foot Yacht Wall Street banks’ latest gold rush is making loans to wealthy clients; collateral includes Warhol and rare wine collection The yacht ‘Natita’ is listed for $39.9 million. The yacht ‘Natita’ is listed for $39.9 million. PHOTO: DUTCHMEGAYACHTS By Liz Hoffman Aug. 10, 2017 5:30 a.m. ET 158 COMMENTS Goldman Sachs Group Inc. GS 0.33% owns hundreds of billions of dollars of stocks, bonds and commodities. Add to its portfolio: a 217-foot luxury yacht called Natita.  The story behind the boat begins with a 2014 loan to a prized Goldman client, billionaire Texas oilman William Kallop. It ends with Goldman suing its own client and the U.S. Marshals last month swooping down on a West Palm Beach marina to impound the yacht—which boasts a movie theater, Jacuzzi and helipad.  Goldman’s nautical trophy is a strange but inevitable outcome of Wall Street’s latest gold rush: lending to wealthy clients, the loans backed by everything from Warhols to wine.  These loans, which are growing quickly at firms such as Goldman, Morgan Stanley and UBS Group AG, are an exotic spin on the most basic thing banks do: lending money to people. They have the added benefit of building loyalty among prized, ultrawealthy clientele.  RELATED  Wall Street Needs You to Borrow Against Your Stock (July 27) Like any loans, though, they can go bad and leave banks holding assets that aren’t easy to value or sell. Goldman will likely auction Natita, which already has been on the market for almost two years with no takers.  A Goldman spokesman declined to comment on the case. Mr. Kallop didn’t respond to requests for comment. A lawyer for Mr. Kallop declined to comment.  “If you do it right, it’s a great business and clients will absolutely love you for it,” said Bruce Holley, a partner at the Boston Consulting Group who advises private banks on wealth-management strategy. “But there are a lot of ways to mess up.”  Banks pushed wealth lending in recent years against a backdrop of increasing deposits and tepid demand for traditional loans. Goldman’s private bank has quadrupled its overall lending balances since 2012 to $29 billion. Morgan Stanley wealth-loan balances are up 420% since 2012 to $74 billion.  The largest chunk of wealth loans are mortgages and loans backed by stock portfolios. A smaller but growing segment is secured by valuables such as classic cars, hedge-fund stakes, and even rare violins.  Wealth loans are especially profitable for banks because the revenue they generate is shared less generously with brokers than trading commissions and other fees.  Banks say these loans are safe because they already know the borrowers, their assets, and their ability to repay. And unlike, say, credit cards, these loans have collateral and often a personal guarantee as well. Goldman said in a February filing that the value of collateral in its wealth loans “generally exceed[s]” the loan amount.  Morgan Stanley and Deutsche Bank AG have lent against the art collection of hedge-fund billionaire Steven A. Cohen, who owns works by Andy Warhol and Pablo Picasso, according to Connecticut state filings. Top Blackstone Group LP executives including founder Stephen Schwarzman have borrowed from UBS against their stakes in the private-equity firms’ funds, New York filings show.  Goldman lent to natural-gas wildcatter Aubrey McClendon against his wine collection, according to an Oklahoma filing. Executives joked the collateral was “particularly liquid.” After Mr. McClendon’s death in 2015, the collection—heavy on rare Bordeaux—was auctioned for $8.4 million. Goldman made its money back.  Although not as well-known as those borrowers, Mr. Kallop was the kind of client whom private banks court.  In the 1970s, he joined a family-owned marine-services company called McAllister Towing &amp; Transportation. A legal dispute in 1993 resulted in a split of the company. The tugboat and ferry operations stayed with the family. Mr. Kallop took the offshore oil business, which he built over the next two decades into a portfolio of drilling rights, rig operators and construction arms.  He sold the business for nearly $1 billion in 2009 to a consortium of Colombian and Korean investors. Mr. Kallop then dabbled in investing, taking a 7% stake in energy company Quicksilver Resources and buying a 300-year-old liquor distillery in Peru.  He spent lavishly, acquiring three Gulfstream jets and at least eight residences, including a Peruvian mansion, two homes in the Dominican Republic and a working cattle ranch in Texas, according to property record, lawsuits and people who have worked for him.  And he bought yachts—at least seven of them over the past eight years.  In addition to Natita, which he bought in 2010 and named for his mother-in-law, Mr. Kallop’s fleet includes Bad Girl, moored in the Dominican Republic, and Honey Fitz, a 93-footer used by President John F. Kennedy that he bought at Sotheby’s Camelot auction in 1998 and restored.  Another yacht, La Diva, which was once owned by Ivana Trump, was destroyed in a fire.  A few years ago, Goldman came calling. The Wall Street firm’s private bank manages some $450 billion in assets for 11,500 ultrarich clients, and was developed in the 1980s to help business owners like Mr. Kallop manage their windfall after a sale.  Mr. Kallop became a client. In 2014, he borrowed $21.2 million from the bank to buy a 12,000-square-foot Tahitian-inspired oceanfront mansion just down the beach from Mar-a-Lago, President Donald Trump’s private club in Palm Beach, Fla., county records show.  In 2014, Mr. Kallop borrowed $32 million from Goldman against the Natita and Bad Girl, court records show. The loan, the maritime equivalent of a home-equity loan, carried an interest rate of three percentage points above the London interbank offered rate.  But then Mr. Kallop hit money troubles, according to former employees and acquaintances. He put off upgrades to the boats, which were showing signs of wear—bad enough for a March 2016 charter group to walk off Natita in Nassau, a former crew member said.  Goldman ordered periodic valuations of the yacht after making the loan, according to the crew member.  Mr. Kallop laid off crew members and put Natita up for sale in 2015 for €59.5 million ($67 million at that time), then dropped the price to $57.5 million last year, according to court documents. He sold a second Palm Beach house in April 2015 for $19 million. Goldman alleges he stopped paying back on the loan last November.  Three crew members, including the captain, were recently awarded roughly $90,000 in back pay by a Florida court. A Texas judge last month awarded his former bodyguard more than $500,000 for unpaid services. Mr. Kallop also owes the Florida marina where Natita is docked hundreds of thousands of dollars in fees, employees said.  Eventually, Goldman filed suit in a Miami federal court to seize the boat in a maritime version of a foreclosure. Acting on a judge’s orders, U.S. Marshals impounded Natita at a West Palm Beach marina, where it remains.  Goldman’s first move as owner-in-waiting: buying $67,000 worth of fuel to keep the yacht’s generator running, according to court filings.  Today, the yacht is listed for $39.9 million, according to broker​Worth Avenue Yachts. The outstanding balance of the loan owed to Goldman is roughly $28 million.  Write to Liz Hoffman at liz.hoffman@wsj.com They actually do handle large scale natural disasters. However this is when the Insurance companies' reinsurance contracts kick in. One insurance company can have multiple reinsurance contracts to help them mitigate disasters like this.    The insurance company might be on the hook for the first 25 million of a catastrophic event, then a reinsurance company A will be on the hook for the next 50 millions in excess of the first 25 million, then reinsurance company B will be on the hook for the next 25 million in excess of the first 75 million, etc. Reinsurance is essentially insurance for insurance companies (joking called insurance inception). Additionally reinsurance companies can get reinsurance, called retrocession.   Source: I work for a specialized insurance banking and finance group in Dallas. Our clients have exposure on the Texas coast and Houston. "You are at the point that many millions of people are at (and where I used to be) - you have no idea where your money is going. You just spend, spend, spend until there's nothing left, and/or you borrow more to keep going.  There are general rules of thumb on how much house and car you can afford, but there is a great deal of personal variation. Housing and utility costs vary greatly from location to location. City-dwellers can use public transit instead of buying and maintaining a car. How much other debt do you have that you need to pay off? Do you have expenses that are not common (e.g. medical bills)? A more personal approach would be to figure out your own budget. The first step is creating a written budget. Figure out how much you can spend in total (i.e. your take-home pay) and the start allocating that money to expenses until you run out. I started by looking backwards.  Look back at how much you spent on each category each month. List them in order of priority (e.g. food, health, housing, utilities, transportation, entertainment, everything else). If the money runs out you either stop spending or reduce spending in another category (e.g. can you cook a few extra meals at home instead of going out? Can you take lunch to work instead of a drive-through?) The amount you have left over now indicates how much more house and car you can afford. Once you get to a point where you can budget comfortably then you can start looking at saving for retirement and other long-term goals. This worked for me (and highlighted some areas where I overspent) because I had good categorized records (ironically because I used credit cards incessantly, which I mostly stopped once I created a budget). If you don't have good records, then you have to estimate.  How much do you think you spend on food, gas, etc. each month?  Then set aside that much and once it's gone don't spend anymore.  Now obviously you're not going to stop eating, but the idea is to plan ahead and realize ""I have only $20 left to spend on food this month - maybe I shouldn't go to the movies"". It takes lots of practice, and you won't get it right very often. If you have enough left over, you can set aside some as a ""cushion"" in case you do go over your budget, but if you want true financial discipline you should start by reducing other categories first. This is not easy by any means. It will take moths of practice and trial-and-error to get to a point that you're comfortable with the lifestyle that you can afford.   So in the end, there are only two variables in your equation - income and outflow.  Do you want more house? Either spend less on other things or increase your income." Is this the case for self made guys like Elon Musk? He built his fortune himself but was lucky enough to be born an ambitious super genius in the right place and time. Reminds me of something Buffet said about how his investing skills would be useless if he were born to a poor family in a developing country. Your initial investment in this case is $9 on the first morning. Every other morning you are using part of your profits to buy the new piece of jewelry, so you are actually not investing any new funds. So each day you are effectively keeping $1 of your profits and re_re-investing $9. But your initial investment of your own funds is only the first $9. In other words if you only had $9 in the bank at the start of the year you could make $365 profits during the year and finish up with $374 in the the bank at the end of the year. It is worth noting first that Real Estate is by no means passive income.  The amount of effort and cost involved (maintenance, legal, advertising, insurance, finding the properties, ect.) can be staggering and require a good amount of specialized knowledge to do well. The amount you would have to pay a management company to do the work for you especially with only a few properties can wipe out much of the income while you keep the risk. However, keshlam's answer still applies pretty well in this case but with a lot more variability.  One million dollars worth of property should get you there on average less if you do much of the work yourself.  However, real estate because it is so local and done in ~100k chunks is a lot more variable than passive stocks and bonds, for instance, as you can get really lucky or really unlucky with location, the local economy, natural disasters, tenants... Taking out loans to get you to the million worth of property faster but can add a lot more risk to the process.   Including the risk you wouldn't have any money on retirement.  Investing in Real Estate can be a faster way to retirement than some, but it is more risky than many and definitely not passive. Charles ponzi invented the Ponzi scheme (also known as the pyramid scheme) in the 1910 area before ww1 I believe. He got a bunch of people to invest in postage stamps and get other people to invest as they promised a huge return. Charles kept the money for himself and when people started wanting their money back it all came tumbling down. There is a movie on Netflix about how Charles got caught and the man who caught him.  This is different than the Direct Selling industry (also known as multi level or network marketing) which is a legal multi billion dollar industry with brands like Mary Kay and Amway. There are three parameters that make a company an illegal pyramid: 1) only money is distributed. There are no products or services being rendered. 2) you can never make more money than the person who sponsored you into business. 3) you get money from the registration part of signing people up.  Personally I am part of the fastest growing and most successful organization that utilizes this model. It is an organization called World Wide Dreambuilders, a mentorship and training organization that teaches people how to make a profitable business that distributes Amway products in a legal way with high integrity.   Honestly 80% of the industry is people trying to hype up and sign up their friends and family and it's pretty lame. I can only speak for the Seattle area but my sponsor is making over $150k a year and has a strong organization with over 100 people in it. He built this business part time and is about to walk away from his day job in September and its freaking rad. Hope all this answers your question.