Most people don’t become a Millionaire for a very simple reason, they don’t believe they can! They don’t really believe that they are going to become the next Bill Gates, Donald Trump, or Warren Buffet. The Truth is, they are probably right. Yet, great Wealth and Success are available to anyone willing to take action. (See my previous blog post about SMART Goals and you will see the importance of ACTION.)

One of the first examples I use in most of my business classes is the $500/month investment. If you start out by investing $500/month, every month, for 30 years at 12% annual interest you will accumulate

$1,747,482.

Most people look at these numbers, and don’t believe. 12% is not an impossible goal. Neither is the $500/month. This is only 10% of your income if you make $60,000 per year. 10% is the accepted minimum for anyone serious about the goal of Financial Independence. Well, what if you only make $30,000? Get married to someone also making $30,000. People always think I’m joking, but it is just as easy to fall in love with an employed person as an unemployed one.

As a Ph.D. in Finance, I understand that the average for the overall stock market is slightly under 12% over the last 70 or 80 years. Although technically the past return is certainly no guarantee that 12% will be the return in the future, it would be reasonable to make this assumption. Any one or two stocks may not, but a well diversified portfolio may replicate the rate of return of the market.

Do you have to be a stock guru, great stock picker, have lucky timing, or even inside info? No, simply invest in a stock market index fund. The first and oldest is the Vanguard 500 Index. According to his will, when Warren Buffet dies, this is how his money is going to be invested on behalf of his wife. If good enough for Warren, it’s good enough for me! How about you?

The key is to invest $500 every month no matter what, and keep your hands off the money in the future no matter how tempting that really cool car may appear. This discipline will make you rich, and give you the advantages of dollar cost averaging regardless of whether the market goes up or down over the years.

$1,747,482 sounds good, but it gets even better. This little nest egg translates into

$17,974 per month!!!!

What could you do with this kind of money? Retire, quit your job, or pretty much anything you really want. Please note that in retirement you will be making over $17,000 per month, while you never made more than $5,000 per month during your working years. This is really cool and why it is so great to understand money!

Beyond the marriage option, how else can the average person come up with the $500/month?

Cut the amount from your current budget. This may sound painful, but look at the reward. Financial Freedom.

You and/or Your Spouse get part-time jobs or work overtime. Financial Freedom

Improve your education to make you more valuable at your existing employe. Financial Freedom.

Start a Home-Based Business out of your Garage. This is how Apple Corporation got their start.

Start a Network Marketing Business and Use the Profits for Your Investment Portfolio.

​Get really good at sales and marketing which will make you more valuable to your existing employer, or allow your business idea to prosper.