Readers of my books and blog know my mantra: Live Well, Stay Rich, Never Retire. I put “live well” first, because having money isn’t about having money. It’s about being the best version of you: realizing your dreams for your life, your relationships, and your recreation.
In second place, “stay rich” refers to how to hold onto as much of your money as possible, so it can continue to grow, bringing you security and freedom.
Last, I say “never retire,” for two main reasons: one, your income is reduced, and two, what makes life challenging and interesting is also often reduced. Instead of retiring, hold on to the part of your work you love the most and keep doing that while you also enjoy new adventures.
Nowhere do I say “get rich quick.” Because it generally doesn’t work that way. Achieving financial independence is, for most of us, a longer, slower road. And it can be an enjoyable journey.
Barring inherited wealth, an unusually lucrative career event, or a winning lottery ticket, “rich” and “quick” don’t generally come together—and when people try to make it happen, elevated risk and the potential for error are always just around the corner.
What is the more steady-paced, sustainable and practically guaranteed way to get and stay rich?
- Enter a career field with above-average salaries.
- Stay away from bad debt.
- Pay off student loans quickly.
- Put aside 20% of your gross income for retirement savings and invest some portion in the stock market.
- Spend less than you earn.
- Don’t buy cars and houses you can’t afford.
- And do all of this throughout your entire adult life.
But what if you want to move at a faster pace? Increase your wealth quicker? Be richer younger?
There are some ways to do this that are low risk and some that greatly increase risk. I’m not a person who recommends rolling the dice on risky investments or propositions. But they do exist as options.
Here are five ways to accelerate wealth accumulation and become richer at a younger age.
1. Make more money.
If you make more money, you can save and invest more money. But obviously, this is not a snap your fingers and ye shall receive scenario. Making more money generally means working harder at what you do and putting in longer hours.
If you own your own business, you could take on more of the responsibilities, farm out less work to others (thus saving those expenses), take on more clients, and put in more hours. People in their younger years tend to be more willing to adopt this lifestyle—or perhaps just have to, in order to get established. As we get older, with families and other interests, it gets harder.
Alternately, you could add in a second job of some kind. That could range from earning income from a hobby (writing, photography, web design, etc.) to working for a friend or another business.
Firefighters are famous for taking on second jobs—carpentry, roofing, real estate, personal training—though their work schedules often make this easier than finding extra time would be for me or you.
If you’re particularly entrepreneurial, you may even be able to create a full-fledged second business rather than sell your services on a site like Upwork, hand-crafted items on platforms like Etsy, or work for someone else.
All of these options take a lot of time. That is their main drawback. But if you have time, there is a good chance you can convert it into income and, therefore, additional investments.
2. Radically underspend.
Yes, spend less than you earn goes on the “get richer at a moderate pace” list. Spend radically less goes here. It may not be an exciting option. But it has zero risk and can speed up your journey to wealth.
So instead of putting 20% of your gross income into savings and investment, you would increase that to 20% of net income. Or 30%. Or 40%. The trick is, you have to live very simply and modestly.
You can visit a site like Networthify to play around with how savings rates impact your years until retirement.
For example:
Assuming a current portfolio value of zero (just for the sake of illustration), if you earn $100,000 per year and your savings rate is 20%, you can expect to work about 36 years before having enough to retire. If your savings rate is 30%, that’s 28 years. If it’s 40%, that’s 21.5 years.
Obviously, those numbers change dramatically depending on your portfolio value and your yearly expected expenditures (i.e., lifestyle). But you can see the impact of radically underspending.
The concept really boils down to radically saving and investing as a result of radically underspending. If you like living the simple life, this could be a great option for you.
3. Get as much as you can out of your money.
You want your money to make money for you. And to work as hard—or harder—than you do. What are some options?
One is to be more aggressive in the asset allocation of your portfolio. Yes, this means taking on more risk. It also means more potential reward.
Consider the historical returns from 1926-2019 of the following portfolio models:
- 100% bonds: 6%
- 50% stocks and 50% bonds: 8.6%
- 100% stocks: 10.2%
Few people choose either of those 100% options, but if you increase your stock to bond ratio from 60/40 (9% return) to 80/20 (9.7% return), you can likely knock a year or two off your working life. You have to be able to accept the additional volatility and resist selling during a downturn. That may be difficult, depending on your personality.
You can also choose riskier stocks, but they don’t always pay off. This isn’t something I would recommend for the average investor. But then again, I’m not really a get-rich-quick kind of advisor. I’m just sharing a few tactics here that some people deploy.
4. Use more leverage.
Leverage refers to using borrowed money to purchase an asset, such as real estate. The most straightforward example is a mortgage on your own home. Another is to use real estate purely for investment.
Let’s say you purchase a property with cash. If it doubles in value over the next 25 years, you have doubled your money. If you purchase the same property with 20% down and 80% borrowed, you will have increased your return by sixfold (minus what you’ve paid off on the loan).
Leverage sounds pretty good—unless the property falls in value by 20%, in which case you have a total loss. Purchasing in cash obviously incurs only a 20% loss.
There is potential for a good return when real estate values rise, as they tend to over time. But you never know what the next five or ten years will bring. Leverage works better in real estate markets that are likely to rise in value over the long term—though depending on how long that term is, your riches may not arrive as quickly as you would like.
5. Keep your nest egg for yourself.
Another way to get your hands on more money is to keep it all for yourself rather than leave any to anyone else. That means not leaving the equity in your home or your life insurance to someone else, such as children.
This is certainly not a path I would choose, but it exists as an option.
You can borrow against your home or sell it and rent instead, using that money for yourself. You can borrow the cash value of your whole life insurance and use that money to retire earlier.
Basically, this approach is all about living off of everything you have and cutting out inheritances. Hey, some people do it.
So what do you think of these “get richer quicker” strategies?
- Which appeal and which don’t?
- Which make you uncomfortable with the risk involved and which don’t?
- How do you feel about keeping all of your money for yourself?
I can help you to assess which—or whether any—of these options could work well for you. And how to put them in place as advantageously as possible. Give me a call any time.
Never Retire Profile
It seems that The Boss just never quits. From his debut album, Greetings from Asbury Park, NJ in 1972 until this year with the release of Letter to You, Bruce Springsteen has been putting out original music for almost 50 years. Known especially for his strength as a songwriter and his creative collaboration with the E Street Band—including the “Big Man” Clarence Clemens on sax, for many years—Springsteen is working as hard as ever in his 70s. His 2017-2018 run of live performances, Springsteen on Broadway, mixed music with stories from his life and earned him a Tony Award, and the subsequent album gained a top-ten ranking. The “working class poet” and recipient of the Presidential Medal of Honor is planning to tour again in 2022, illustrating just how much Springsteen was born to run.
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