I know a lot of us (mainly when we’re young) have thought about what it’d be like to be a multi-millionaire. Heck, even a billionaire. What was it… three imaginary yachts? I’ll even admit, just a year or two ago, I set a goal of $5 million by age 30. Now, thank God it only took me a month to laugh that off, but the post I made is still on Blossom. You can read it to this day. Plenty of times in our lives, we underestimate the work required to do certain things. I severely underestimated the work required to make $5 million. More so within the time frame I gave myself. I see a lot of young people in their profiles, saying that they want to be a millionaire by 25, or by 30, or whatever it is. From my hindsight, I’d like to share why this is a negative view. Because I was there once and it’s a paradox. A dangerous one. If you read the stories of self-made young multi-millionaires, they didn’t have any life outside of work, up until their success. It wasn’t passive income, or investing in the stock market that brought them wealth. It was work. Constant working on their career instead of time with friends, family, or partying, which meant missing birthday parties, holidays, and more. Whether that “career” was a job, or working on a business, these people accepted a trade-off. They decided early in their life to use the time and youth they had to make money and work, instead of partying or spending time with friends and family. A lot of them failed multiple times, persevered, and won after a decade or two, or a little less, of hardship. They were paid well at the end of those decades, but it just took a decade of constant work. Time is the bringer of most success and all of life’s loss. Our loved ones will pass eventually, you will grow older, and the world will make money, all at the whim of time. I say this not to be crude, but to say: humans dramatically underestimate the work required. The average person would think this “hustle” type of obsession is a sad life and wasted youth, and a lot of times it is. But that’s the trade-off required for young wealth. A quote I read or heard somewhere was: “You either live up your twenties, or work up your twenties. Both are fine, but you can only choose one, and there’s no do-overs.” I find this to be dire, but it paints the same story you see throughout all of these case studies of young multi-millionaires. It’s a formula of “work, above everything, for a long period of time.” A popular goal for young people (one I used to have too) is $1 million by age 30. And at first glance, this doesn’t seem like a lot. But let’s run the numbers. Say you’re 17, about to graduate or already graduated from high school. Right out of high school, you’re not going to have a high-paying job. At best, you land a $20,000/y part-time job, which is great. Now, assume you go to college/university, and you stick with your part-time job until age 21 (when you graduate). Once you graduate, your pay bumps up to $50,000 as you enter the workforce. The average person enters a job that gives annual salary increases of 3%. Do the math, and you’d be at a $65,000 annual income by age 30. If you save 40% of your after-tax income (the average savings rate is 7% in Canada) throughout this entire time frame, adjusting for salary increases and investing at a 7% return since the beginning, you’d be left with $286,000 in savings by age 30, or $194,000 adjusted for inflation. Still great savings, but not $1 million. (That’s with investing in something like $XEQT or $VFV long-term.) There are arguments to be made about the career you go into, saving and investing more, etc., but this is just for reference to say: if you have extravagant financial goals, it’ll take time to reach them. The people who got to their financial goals earlier did something out of the ordinary, so they got extra-ordinary results. It’s like watching a marathon seeing a runner cross the finish line and saying “I can do that.” You only saw the finish, not the hour-long run until the ribbon broke. Or the days, weeks, month of practice. I’m not a millionaire, and I don’t wish to be one by age ___. That’s not a goal of mine. I don’t chase arbitrary money targets anymore, and I don’t think you should either. If you live a healthy life (eat well, sleep well, exercise often), work on something meaningful for as long as possible, and live amongst the people you love— that’s the jackpot. Money will come as a result of the work you do and the value you provide to the market. Placing deadlines on money goals, actually makes it harder to achieve those goals. If you’re 21 wanting $1 million by age 30 without any reason, unless you’re willing to make a trade, the shorter the time horizon you give yourself to reach the goal, the less it’ll actualize. So why place the goal in the first place? That’s not to say striving to achieve millions of dollars by a certain age is a bad goal. It’s just misunderstood. Could you achieve it in 9 years? Maybe. But in 15 or 20 years? It’s almost guaranteed assuming you improve your income and save rate with time. Having a goal to hit without knowing the effort is unreasonable. And when you realize how unattainable it becomes based on the effort required, you’ll hurt your mind. So, be realistic. Work on something meaningful. Earn income, save, invest, and live a healthy life long-term. Don’t set paradoxical expectations for yourself that you may or may not want. Thank you for coming to my TED talk. Happy investing.
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Nischal Bharatula
@krish15 · 10moEdited
I really resonated with "eat well, sleep well, exercise often, work on something meaningful for as long as possible and live amongst the people you love- that's the jackpot." @jacobb please do frame it. These words are diamonds mate! I totally agree. I don't expect to be a millionaire but I want to be a person who is there for my loved ones when they are in need. These words, doing something more than ordinary requires sacrifices. When I was 21-26 I sacrificed my time and was away from family and friends and went to work on oil rigs and offshore platforms that paid nearly $10K per month. For what!!? Missed family gatherings due to cancelled chopper that cant fly through shitty weathers! Missed festivals due to work schedules, lot of stress on mind and strain on my body! Yeah, i was a bachelor. Now time has changed, so did I. Now, I work at office. Giving time to my wife and family is my priority. Everyone is running in their own life, you have got your own race. Don't compare your race and results with others. For all, these lives are way different from one another. I am in content with what I have and am doing. I am also fortunate to have a job within my favorite industry that feeds my stomach and family. Sometimes, I feel just fine by walking for some distance than running.
Michael Conroy
@conroy119 · 10mo
There are a lot of good points in here. Its similar to the philosophy I had with my early life / goals. I don't think its the optimal approach though. I think you need to be ambitious. You need to try things and fail. The economic game is not the same as our parents had. Making 50k a year doesn't cut it nowadays if you have goals of having a family and owning a house for example. I do think setting ambitious goals can mostly be a good thing though. If you set the bar high versus setting the bar low - you'll generally do better setting the bar high. There are studies around this. Goal-setting theory and self fulfilling prophecy. Balance in life is key, but also no risk no reward.
Sarah Giver
@staystronggiver · 10mo
I love this post Jacob! It is especially appreciated from the perspective of someone who is older, and yet also people older than me have unexpected circumstances that force them to start over from nothing. Everything in balance, even ambition. Growing up in a family that lost millions, believe me when I say that you aren't your portfolio or your net worth. Work towards your goals but also be flexible and adaptable, that's the key to happiness.
Carter the Investing Cat@takoyaro · 10mo
I appreciate your perspective on this, but I also think it’s important to goal set and work towards achieving them. Maybe $1M before 30 years old is a bit ambitious. The key is setting a realistic and achievable goal while not sacrificing your standard of life. I started investing at 20 years old. My goal was $1M in 25 years… or my 45th birthday. I actually achieved it at 44. When I set that goal, my wages were around $13k a year. I didn’t sacrifice anything and still enjoyed a good standard of living. Now that I met my goal, I still feel it’s not enough to sustain my lifestyle. So I keep on grinding. But at this level, my money works harder than I do. I’ll probably break $2M in a few months… I’m currently 51.
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