While browsing the internet, I always come across content that promises to reveal how people can achieve a certain amount of money. However, these contents are generally very vague and none of them take responsibility for what they convey. Therefore, I decided to create a plan so that anyone can reach $100,000 in their bank account.
Note that this post was written based on Portuguese reality and in the euro currency.
THE SCENARIO
This plan was designed to cover as many scenarios as possible. However, as you can imagine, we don't all live in the same situation, and it's important to understand that depending on your circumstances, it may be more challenging to reach the desired goal, but that doesn't mean it's impossible.
STEP I - Starting From Zero
There's no point in teaching you the next steps if you're buried in debt or have unhealthy financial habits like impulsive buying or spending money where you shouldn't. Therefore, the first step is to ensure that your account is at least at zero, meaning no debts, so we can start seriously.
STEP II - Embracing the Spirit of Sacrifice in the First Steps
If your account is at zero or below zero, it's important to understand that this phase will likely be the most challenging. In many cases, this phase separates those with some money from those without. As you've already understood, the first thing you need to do is clear your debts if you have any. To make this happen, you need to find a source of income. The most accessible way to do this is to get a job so you can pay off your debt as quickly as possible and move on to the second step as soon as possible too.
But before anything else, it's necessary to understand why you have debt and what you can do to avoid it in the future. And you know how things work here; I don't want excuses! It might be necessary to have two jobs, work more hours, work on your days off, etc. I know it's exhausting, but it will be worth it.
STEP III - Raising the Bar
If you've secured a job and are earning at least the minimum wage, it's important not to settle for that and, above all, not to repeat the mistakes of the past. Therefore, it's important to raise the bar, which means doing the best job possible, educating yourself, and improving your personal and professional skills so you can either get a salary increase or perhaps a better offer from another company.
I know that many companies struggle to increase salaries, which is why you should raise the bar so that another company that values your work can hire you and pay you a higher salary.
STEP IV - Learning to Save and Live with Less
I don't want you to live a life of misery, but often just to appear good, we end up overindulging, from buying a car beyond our means to having a drawer full of fifty utensils when only four people live at home. The problem here isn't the excess itself, but understanding that you're not rich enough to have them, understand? Why do you need twenty shirts if there are only seven days in a week and most of the time you wear the same ones? Why do you need a high-resolution camera phone if you spend most of your time on WhatsApp and Facebook messaging and care little about photos?
And then you come all sad saying you're struggling because you don't have money to take care of your health? How do you expect me to help you with the unexpected car repair if you keep subscribing to Netflix? WAKE UP!
STEP V - Creating an Emergency Fund
Bad things don't just happen to others, so it's imperative to be prepared. Therefore, it's important to start putting money aside as quickly as possible so you can build your Emergency Fund, which should be around $5,000.
It might seem like a lot of money, but if you save $100 every month and invest it in the iShares Core S&P 500 ETF, which tends to yield an average of 10% per year, in 18 months you'll have your emergency fund worth $5,000.
Very important: the emergency fund should only be used in extreme cases, almost life-or-death situations. For other expenses like a flat tire, a last-minute gift, a doctor's visit, etc., use the remaining money from your salary.
CENARIO UPDATE:
By this time, you have a job, but you need to keep pushing yourself because what you have isn't enough yet. However, at least now you can sleep peacefully because if any unexpected event occurs, you have your emergency fund worth $5,000, still yielding 10% per year.
STEP VI - Learning to Invest
You need to be very careful at this stage because seeing money come into your account every month, plus the $5,000 emergency fund yielding 10% per year, might give you the feeling that you have enough money. You might think you can dine out without looking at the prices on the menu or travel without worries. But be cautious; you're still poor if you don't have $100,000, and money can easily disappear from your bank account.
Investing may seem complicated at first, and it could be said that when you reach this stage, you're at a new level where you'll need to learn various things about investments. It's important to understand that investments aren't just about the stock market or cryptocurrencies. Investing in a product, starting a business, is also an investment. In fact, one of my first investments was creating a business where I made bamboo cups to sell to cocktail bars. Of course, I did all the studies and homework to see if it was worth it or not, and then I launched the product, and it was a success. Of course, not everything was perfect, but it also gave me experience for future projects.
In this particular case, I had to invest in equipment, raw materials, labor, among other things. And that's what you need to understand about investments; they are like seeds we plant in the ground so we can reap the fruits in the future. So, it's important to know which are the best "seeds" and if your "land" is "fertile" and capable of developing these products.
- Investing in the Stock Market
Obviously, it's challenging to teach you how to invest in the stock market here and now, which is why we have the TRADE CAGE WARRIORS course at MONEY MAGNET ACADEMY. This course enables you to learn how to invest and enter the stock market without making beginner mistakes and losing a lot of money. But since I know you want to know exactly where to invest, I'll give you some products that are part of my portfolio so you can sow and reap just like me. And why not start by putting part of our money into the same ETF where we have our emergency fund? That's right, you can continue to invest in the iShares Core S&P 500. Besides this product, you can explore options like investing in stocks such as Ferrari, Pepsi, RBC Royal Bank, NVIDIA, and Regency Centers. WARNING! Once again, I advise you to study before you invest. There are platforms that allow you to create a demo account where you can invest with fake money and learn from mistakes. One of the secrets to avoiding losing money is to invest regularly and diversify.
LET'S DO THE MATH!
If you invest $150 per month in the iShares Core S&P 500 for 10 years, at the end of this period, you could have an amount of over $30,000. Then, you can choose to invest smaller amounts in the other stocks I mentioned above or even others that you think are worthwhile.
If instead of $150, you decide to invest $250 per month for the same 10 years, the final amount will be over $50,000.
-Investing in Cryptocurrencies
This might seem like unfamiliar territory for you, and just like I have a course tailored for those who want to learn to invest in the stock market, I also have one for those interested in investing in cryptocurrencies. However, be very cautious if you don't know exactly what you're doing; you could end up losing a lot of money. The world of crypto is very complex, and often only success stories are showcased. But know this: for every success story, there are thousands who lost everything they had. This didn't happen because of cryptocurrencies themselves, but because they didn't study or inform themselves enough about the crypto market and were deceived by false promises from something or someone.
Those who know me know that for me, there's only one cryptocurrency worth investing in, and that's undoubtedly Bitcoin. You can invest in other cryptocurrencies, but to me, that's more like placing a bet rather than investing in something that will yield fruits in the future. I would easily invest $1000 in Bitcoin, whereas investing in any other currency would be considered madness from my point of view. Our goal here is to create a plan where the probability of reaching $100,000 is high, not a matter of luck or chance.
-Investing in Bitcoin
Bitcoin, despite being said to be very volatile (ups and downs), tends to appreciate significantly in the long term, and every four years due to halving, it can appreciate to the point of tripling your invested money. But wait, let's not dive headfirst. To invest in Bitcoin, you can do the same thing you do with the iShares Core S&P 500 and invest $150 per month for 8 years.
LET'S DO THE MATH
If you invest $150 per month in Bitcoin and it has an average annual growth of 5%, which is not unlikely, you could end up with over $8,000 at the end of 4 years. After that, halving could triple this value to over $24,000. If we continue with an average annual growth of 5% over the next 4 years, you would end up with over $37,000 at the end of this period. Again, if halving fulfills its duty, tripling this value would give us around $111,000. Even if it doesn't have a 5% annual growth and even if it doesn't triple every 4 years, but doubles, the value obtained at the end of eight years is still around $42,000.
UPDATING THE SCENARIO:
At this point, you have a job where you earn a little over €1000 per month. You lead a simple life without excesses, constantly seeking improvement and growth each day. You know that despite seeing good numbers in your bank account, you can't relax. You invest around €350 monthly and are willing to do so for a period of 10 years, in order to reap the rewards of your effort and dedication.
GOAL ACHIEVED!
With the $111,000 you obtained in Bitcoin, plus the $50,000 in iShares Core S&P 500, investing only $300 per month, not to mention other products like Ferrari or RBC Royal Bank stocks for example, and also not counting your emergency fund, you have long surpassed the $100,000 goal. If you notice, the only thing I asked of you was to invest $300 per month. If your salary is $1000 per month, by investing $300 you still have $700 to live your life. I know it's difficult to live on $700, but it's even more difficult to never reach $100,000.
NOTE: It's important to be responsible for what you do and understand how the market works. I've tried my best to create a plan for you to reach $100,000 regardless of your financial situation, but there are several factors that can either hinder or favor you, from your own limitations to the outbreak of a war that can ruin or even boost a stock you hold. The question you have to ask yourself is: WHAT DO YOU HAVE TO LOSE?
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