Based on a conversation I had with about 80 street-smart people at the Learning Annex in New York, I challenged myself to devise a plan that anyone could use to acquire a million-dollar (plus) net worth is seven years or less.

In my most recent book on making money, Automatic  Wealth, I quoted several professional financial planners on what “wealthy” meant to them. Interestingly, their ideas ranged from $2 million to $10 million.

Two to 10 million is a big range. At the Learning Annex, we talked about that range. I asked how many millions they’d be happy with. “But before you answer too quickly,” I told them, “recognize that the more you want the more you’ll have to do.”

And that’s true.

If you set high wealth-building goals for yourself, you’ll have to:

  • Work more hours.
  • Accept more responsibility in your work.
  • Learn more financial skills.
  • Take more risk, which may make you uncomfortable.
  • Identify certain personality characteristics that might be holding you back and change them.

With those warnings fully disclosed, most people agreed that they would be happy with an investible net worth (your net worth not counting your house and personal possessions) of $2 million.

I thought that was a very good and reasonable number. If you could get a 10% return on that $2 million – and I think you easily can -you can enjoy a $200,000 a year pre-tax income without working and without cutting into your principle (the Golden Goose).

That kind of income will allow a couple to enjoy financial independence – i.e., the ability to work only for the pleasure of working – and all of the essential, meaningful amenities of a “wealthy” lifestyle:

  • Freedom from debt.
  • The comfort of knowing all the bills are paid automatically.
  • A nice, comfortable (even beautiful) home in a safe neighborhood.
  • Great food, fine clothes, good wine, etc.
  • Several luxury vacations each year.
  • A few toys such as a sports car or boat.

No, you can’t drive ANY sports car – nor can you own ANY yacht. But the difference between a $30,000 convertible and one that costs 10 times that much is 99.9% ego. In attaining financial independence, you will also – hopefully – be able to gain a little freedom from your ego.

I’m very excited about getting to work on this book. In future messages, I’ll try to work out my preliminary ideas with you. That way, you’ll be the first to hear about any techniques or strategies that can help you achieve your goals, and I’ll have the benefit of hearing your feedback from time to time. (i.e. “This idea worked well, but this one doesn’t make much sense to me.”)

Sometime in the next few weeks, I’ll be giving you some very important “rules” for developing this much wealth this quickly. Today, I’d like to give you an early look at those rules by showing you how your investible net worth might add up over the next seven years if you follow this program.

SUGGESTED: Everything You Need to Know About Wealth Creation 

To make the challenge hard (on me), I’m going to assume that you have a family income of only $50,000 and zero net worth. If you are in better shape than that, the program should be that much easier.

So let’s begin with a few observations:

1. You can’t amass a $2 million investment account in seven years on a $50,000 a year income. There are no secret formulas that will turn the $3,000 to $5,000 that you might currently have to invest into seven figures. (There ARE investment schemes that may claim to be able to do so, but you shouldn’t put too much faith in them.)

2. You must increase your income. Dramatically.

3. In addition to dramatically increasing your income, you must find a way to get a better-than-average return on your investments. An average ROI for stocks is about 9%. You’ll need to do a lot better than that.

4. To get a much higher ROI, you have to be prepared to get into real estate. I know that real estate is scary right now. I’ve been warning ETR readers about the bubble market for several years. Still, if you want to get 25+% ROIs on a portion of your investible wealth, you’ll have to figure out how to be in real estate. Justin Ford and I will be covering that subject regularly in future issues of ETR.

Regarding your income: In Automatic  Wealth, I devote an entire section to increasing income. I talk about how to boost your income at work, how to get a better-paying job, and how to develop secondary and tertiary income streams so that you can hold on to your current job while you boost your income by getting involved in some very interesting and rewarding part-time adventures.

Regarding real estate: There is a full section on that in Automatic Wealth, s well as Justin’s  Ford’s program, which I strongly recommend.

Okay. Now it’s time to ask yourself: Would you be interested in learning how to acquire a $2 million investment pool in the next seven years?

If you are interested, you’ll be very interested in what I have to say now. If I were broke and making only $50,000 a year, here is exactly what I would do to acquire a seven-figure net worth in seven years or less:

1. I’d devote 50 hours a week – five days at 10 hours, perhaps – to becoming my company’s number one employee. I’d find out exactly how revenues are generated and I’d come up with a bunch of new ways to boost that revenue. Then I’d figure out how profits are brought to the bottom line, and I’d become a key person in that pursuit as well.

If you’re unsure how to structure your day to accomplish this, read The Perfect Day Formula. (Here’s a free copy.)

2. I’d spend an extra 20 hours a week creating a side business for myself. Considering the size and scope of the Internet medium, I’d start by publishing an e-zine about some specific aspect of the industry I wanted to enter. For example, if I were interested in horses and wanted to start a business selling a certain type of saddle, I might make riding equipment the subject of my e-zine.

3. While developing the editorial quality of my e-zine, I’d aggressively build my list of subscribers. Early to Rise went from 56 readers to 418,000 in five years. We built our list using techniques that will be explained in detail at our Internet  Marketing Bootcamp next weekend. The important thing is that we never borrowed money to build that file. We did it all from the cash we generated along the way.

4. As my side business grew, I’d carefully invest in local real estate. My goal would be to purchase at least one well-priced  property per year. I’d mortgage the property to get the value of leverage. My target ROI would be 20%. If possible, I’d invest with a partner or two. That way, I wouldn’t have to find all the good deals myself.

This is rough thinking and these numbers and details are far from final. Still, I think they can give you an indication of how I’m going to approach this exciting challenge in my next book and what you should expect to have to do if you want to come along for the ride.

SUGGESTED: Do This Instead of Investing Your Money

Here are some more preliminary numbers. This is what might happen to you in the next seven years if you follow the plan:

YEAR 1

  • Get income up to $150,000 a year ($12,200 a month) by the 12th month.
  • Get spending down to the minimum so you can save $75,000 of the $150,000 and invest that extra income the following year.
  • Develop at least one financially valuable skill.
  • Decide on a home-based business. Learn everything you can about it. Create a five-year plan for it.
  • Learn as much as you can about real estate.

Year 1 Invested Net Worth: Zero


YEAR 2

  • Start first business with $25,000 of your $100,000 in extra income.
  • Invest the other $50,000 in real estate.
  • Continue to develop skills.
  • Continue to learn about business and real estate.

Year 2 Invested Net Worth: $75,000 total

  • $50,000 in real estate
  • $25,000 in business

YEAR 3

  • Pay yourself $50,000 from your first business.
  • Put half of that into starting a second, offshoot business that can be run by you and your existing staff.
  • Reinvest the other $25,000 in bonds.
  • Put most of the extra profits from the first business into expanding it, but set aside $25,000 for bonds.
  • Invest $75,000 from your extra income in a second real estate property.
  • Continue to develop skills.
  • Continue to learn about business and real estate.

Year 3 Invested Net Worth: $290,000 total

  • $140,000 in real estate (including appreciation)
  • $75,000 in first business (3 times earnings)
  • $50,000 in bonds
  • $25,000 in second business

YEAR 4

  • Consider quitting your day job.
  • Raise your pay to $50,000 from your new business. Invest that in real estate.
  • Take out $75,000 in profits. Invest that in bonds.
  • Invest the extra $75,000 in real estate.
  • Take out $25,000 from your second business. Invest it in bonds.
  • Continue to polish your skills. Consider adding another skill.
  • Keep up to date on business and real estate.
  • Devote extra time to starting a third, similar business, run by someone you have identified as a superstar. Invest $25,000 in it.

Year 4 Invested Net Worth: $845,000 total

  • $370,000 in real estate (including appreciation)
  • $225,000 in first business (3 times earnings)
  • $75,000 in second business (3 times earnings)
  • $150,000 in bonds
  • $25,000 in third business

YEAR 5

  • If you haven’t done so already, quit your old job.
  • Raise your pay to $75,000 on the first business. Use the extra money to improve your lifestyle.
  • Take out $150,000 in profits from your first company. Invest it in bonds.
  • Take out $50,000 from your second company. Invest it in real estate.
  • Take out $25,000 as a consulting fee from your second company. Invest it in real estate.
  • Reinvest all profits from your third company into expansion.
  • Start a third business … if it seems like it would be fun.

Year 5 Invested Net Worth: $1.5 million total

  • $525,000 in real estate (including appreciation)
  • $600,000 in first business (3 times earnings)
  • $150,000 in second company (3 times earnings)
  • $75,000 in third company (3 times earnings)
  • $300,000 in bonds

YEAR 6

  • Raise your pay to $100,000 on the first business. Use the increase to improve your lifestyle.
  • Take out $200,000 in profits from your first company. Invest it in bonds.
  • Take out $75,000 from your second company. Invest it in real estate.
  • Raise your consulting fee from your third company to $50,000. Invest it in bonds.

Year 6 Invested Net Worth: $2.8 million total

  • $800,000 in real estate (including appreciation)
  • $1.2 million in first company (3 times earnings)
  • $225,000 in second company (3 times earnings)
  • $150,000 in third company (3 times earnings)
  • $550,000 in bonds

YEAR 7

  • Raise your pay to $125,000 on the first business. Use the increase to improve your lifestyle.
  • Take out $250,000 in profits from your first business. Put it in bonds.
  • Take out $100,000 in profits from your second company. Invest it in bonds.
  • Raise your consulting fee from your third company to $75,000. Invest it in bonds.

Year 7 Invested Net Worth: $3.21 million total

  • $960,000 in real estate (including appreciation)
  • $1.2 million in first company (3 times earnings)
  • $300,000 in second company (3 times earnings)
  • $225,000 in third company (3 times earnings)
  • $975,000 in bonds

That’s more than $2 million. So shoot me.

Seriously, these are – as I said – very preliminary numbers. They may even contain arithmetic errors. But if they are wrong in the details, I think they are essentially right in strategy.

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Mark Morgan Ford

Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Wealth Builders Club. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.