There are three types of income; earned, business, and investment. I want to take a look at how I can become rich from having only earned income. Earned income is the income we receive from a working job. We have been taught that working hard at our jobs will eventually pay off in the form of becoming wealthy. Let’s take a look at how this can be true. For the purposes of this post being rich is having $2,000,000 invested.
The table above shows at a 7% growth rate, it will take 37 years to reach $2,000,000. This means if we start at 28 years old and invest $1,000 a month, we will have $2,000,000 by the time we reach 65 years old. I believe that this is fairly reasonable. I also think to in order to invest a $1,000 a month, we need to be reasonably in control of our finances. Now I want to take a look at the same initial criteria but assume an extra business income of $1,000 and $2,000 a month. Let’s see how much of a difference bringing extra income into our investment pool allows us to achieve our goal.
As you can see, investing $2,000 a month get us to our goal in 28 years.
Now, investing $3000 a month gets us to our goal in 24 years. If we started at age 28, we would be 52 years old with $2,000,000 invested.
Generating extra income is a powerful tool that allows us to achieve our financial goals a lot faster than just working our 9 to 5 job. There harder we work now, the less we will have to work in the future if we so choose. One of my favorite sayings is “Frontload your life!” This means, do all the hardest work in the front have of your life, leaving the back half to choose what makes us content.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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