Short answer, yes – it can!
“Can investing make you rich?”
This was one of the first questions I had when I started my financial journey. When I first started getting into investing, it was so confusing. There seemed to be people becoming millionaires from the stock market and making a full-time income out of trading stocks. I often wondered, was this do-able for the average person?
I felt that a lot of time these “investors” made more money from selling courses on how to invest rather than the investing itself. Looking around, I also saw that a lot of “boss babes” and “entrepreneurs” who claimed they quit their 9-5 to pursue business were just a part of a multi-level marketing scheme.
So, is investing a legitimate way to create wealth?
Here’s the good news. Investing is a legitimate way to become a millionaire. I started investing five years ago and not only will I become a millionaire in my 30s (while earning an average income), but currently my passive income stream pays for many of my bills including:
- Electricity bill
- Water bill
- Internet/wifi bill
- Mobile phone bill
- Car insurance
- Spotify subscription
I know “passive income stream” has become a bit of a buzz word, but what does this actually mean? When you go and work a job, you are creating “active” income. This is income where you need to perform labour. If you don’t perform this labour, you don’t get paid. However, passive income is about creating an income without having to actively earn it. It’s all about making money while you sleep.
This might sound too good to be true, but it really isn’t. Have you ever heard the saying “money makes money”? It really is true. By investing, no matter if it is real estate or the stock market you are putting your money to “work” for you. Therefore, your passive income or portfolio growth isn’t money magically appearing out of thin air. It’s income that your money makes for you.
You may be thinking that this sounds amazing. However, while it is simple – it’s not easy. Here are some things to keep in mind that a lot of these “millionaire investors” won’t tell you.
Making money through investing takes time
Unless you’re a stock-picking genius, making a lot of money through investing takes time. It takes literal years before you start seeing decent returns. It took me over five years of budgeting, saving and investing to build the passive income stream I have today. Don’t let this dishearten you, especially if you are in your 20s and 30s. Starting now will ensure that you will be able to build substantial wealth in the future. Having time to invest is a luxury that can make you millions.
However, this does mean you need to start ASAP. Even if it’s $5 or $10 into a micro-investing app, just starting will mean you can take advantage of one of the biggest secrets to making money – time.
I’ve met a lot of young people who put off investing, saying it’s something they’ll worry about when they are older. But, by doing this they are missing out on decades of gains. Even if you make more money in the future and are able to invest more, your portfolio will struggle to catch up with an investor that invests a lot less, but started over 20 years ago.
And here’s the thing, you don’t need to wait until you’re a literal grandma to start enjoying the work you have put in. Even though I am only in my mid-20s, I have built a passive income stream that already pays for many of my bills. Even if I never contributed to my portfolio again and blew every pay check, it will still automatically grow to a million dollar portfolio before I turn 50. Building this financial foundation was not easy but now it allows me to relax and put my time and energy towards other things than money. For those of you who have been broke know how insanely stressful it is to always be worrying about money and bills – not having this burden is a wonderful feeling!
You need money to start investing
Here’s a bit of bad news.
You do actually need money to start investing. And, if you want to build a large passive income stream or see a large return – you need to invest a lot. However, this doesn’t need to be $10,000 or $20,000. As previously mentioned, you can start with a smaller amount. Instead, it is important to invest consistently and be disciplined enough to grow your portfolio every month.
Even investing $50 a week, will amount to over $326,000 in 30 years. This means this investor made over $248,000 of passive income. What needs to be noted is that this portfolio was contributed to consistently e.g. every week $50 was invested and it was given time, over 30 years.
Now, what if this investor had a higher disposable income and could contribute $500 a week? The results get kind of crazy. The investor would make just under $2.5 million in passive income.
Therefore, the first step to investing is saving in some format. Before you start investing, I think it’s a good idea to have an emergency fund that will cover your expenses for 3 – 6 months just in case something happens.
Here are some of my previous articles that will help you with saving:
You can play around with the investment calculator I have used here:
What Do I Actually Invest In?
You may be wondering, why won’t she tell me what to invest it?!
I get it.
When I started investing, I was reading all these articles but I couldn’t figure out what to invest in. Here’s the thing, since I’m not a financial planner I unfortunately can’t tell you!
What you invest in depends on many factors and to get started I would start by thinking about:
- Risk tolerance – how much risk would you be willing to take?
- Investment horizon – how long are you planning to invest your money for?
- Interest – Are you interested in real estate, stocks or maybe even precious metals?
Two of my favourite companies that offer investment products in Australia are Vanguard and Betashares, you can check them below:
I also post publicly about what I invest in, so make sure to check out my Instagram if you’re interested by clicking here.
Can investing make you rich?
To wrap it all up – can investing make you rich? Yes!
Starting early, investing often and being disciplined financially will put you on the path to build wealth. I hope this article has helped you navigate the intimidating world of investing a little bit better and as always if you have any questions, you can shoot me a message by clicking here.