When younger/smarter beats older/wiser

Recently, I read the following post on ETR’s Speak Out forum from Ryan Chludzinski, a young man who needs some direction.

He writes:

“I am a 21-year-old student who works over 40 hours a week to keep up with paying for bills, tuition, and living expenses. I need a way out of this ‘rat race,’ so I have turned my attention to investing.

“I read a lot of articles on investing in ETR, but most of them are written by people that are OLDER and ALREADY have success written all over their portfolio covers. How can a young adult like me, in the situation that I am in (No Family Support, No Assets, Not Wealthy) turn myself into one of those millionaires?

“NOTE: I have good credit, and only about $2,000 of my own money to invest. I also have about $10,000 available in credit cards if I need to use that to help build my portfolio.


Ryan Chludzinski
Philadelphia , PA

For someone like Ryan who is just venturing into the working world, I have the following advice. First, you must get real. You are just beginning your adult life. You’re just beginning your career. You shouldn’t want to get out of the “rat race” right now. You should be raring to get into it and win!

The rat race is the very competitive world of earning a living. To earn a higher income than your peers, you are going to have to spend a few years working a lot harder and smarter than 95 percent of those people who are in your situation.

The good news, though, is that you are 21 years old. Be happy about that. As I explain in Automatic Wealth for Grads … and Anyone Else Just Starting Out, being young is a huge – and I mean HUGE – wealth-building advantage.

When you have 60 years of life ahead of you, becoming wealthy is not just easy, you can pretty much put it on autopilot. One reason is because of the “miracle” of compound interest. Check out Message # 1701 for a detailed explanation of what compound interest can do for you. In a nutshell, each year’s wealth automatically builds more rapidly than did the wealth you had the year before.

So the key is time. And, as a 21-year-old, time is on your side. You can take full advantage of compound interest via the process of saving money over a long period.

That’s the good news. In the wealth-building world, you have a big advantage over everyone older than you. You have a big advantage over me, too, even though right now I may know more about wealth building than you do.

At such a young age, there’s no reason to focus your attention on investing. Investing is for old fogies and the super-rich. For a young person just starting out, the goal should be wealth building.

There’s a big difference between investing and wealth building. Investing is something that is usually done passively, with leftover money. (Not with money borrowed from your credit cards!) Wealth building is how you make the big money in the first place.

As I explain in Automatic Wealth for Grads … and Anyone Else Just Starting Out, there are basically three ways for a young person to get wealthy:

  • The Slow and Steady Approach

Using the miracle of compound interest and the leverage of an iron will, you (1) force yourself to save 15 percent of your gross income every year, (2) become your company’s best employee and thus get big, above-average raises, and then (3) invest all that good money in either a no-load index fund (for about a 10 percent ROI) or in a proven winner for a bit more (maybe a 12 percent to 15 percent ROI). Do this for the lifespan of a normal career (in your case, 44 years) and you’ll be worth a giant fortune by the time you are 65.

  • The Power-Charged Approach

You do what I recommend above with half your savings – but then invest the other half of your savings in quality rental real estate. Although many real estate markets are highly overvalued at the moment, there are plenty of good opportunities still available and many more that will be opening up soon. (You can learn about them in Justin Ford’s Secret Sunbelt Cities report By combining real estate with index funds, you could double your yearly ROIs – and have more money than Croesus by the time you’re in your mid-forties.

  • The Power-Charged, Pedal-to-the-Metal Approach

Find a business that you’d like to run, quit your job, and become its best employee. If, after five years, your boss doesn’t cut you in on the action, start a similar business on the side. After five years, you will have mastered the skills you’ll need to succeed. Plus, you’ll have developed a contact list that will make the transition easier. By getting into your own high-growth, high-profit business (and investing the profits as per the Power-Charged Approach, above), you’ll be a multimillionaire before you turn 30.

For details on how to implement all of these wealth-building approaches, you need to get your hands on a copy of my book. So what are you waiting for?