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Home>Daily Capital>Investing & Markets>How To Become A Millionaire

How To Become A Millionaire

According to a study conducted by The Boston Consulting Group, there are approximately 5.3 million, millionaire households in America as of year-end 2013. The country with the second highest number of millionaire households is Japan with roughly 1.4 million. Another study from Spectrem Group in Chicago highlights roughly 8.2 million millionaire households in America. Whatever the true number is, there are plenty of millionaires among us and the figure continues to grow.

Although being a millionaire isn’t what it once was due to the skyrocketing price of tuition, gasoline, food, and housing, becoming a millionaire is still part of the American dream. With a median retirement balance of only $3,000 among all households, as we’ve noted in our MyRA introductory post, it’s clear achieving millionaire status is not easy.

Today we profile a millionaire named Jeff to gain some insights into how the top 3% of our population beat the odds. Was luck a primary factor? What was their percentage savings rate? What was their big break? How did they invest? Did they marry rich or inherit their money? All these questions and more will be answered in our series.

Without further ado, please take a look at Jeff’s profile and our Q&A below about his journey to millionaire status. If you are interested in sharing your millionaire journey with Personal Capital, please feel free to leave a comment or let your wealth advisor know and we’ll get back to you.


Name: Jeff

Age: 39

Title: Commercial Bank Lending Manager

Years At Job: 9

Income: $180,000 a year

Estimated Net Worth: $1.3 million

Diversification of Net Worth: 40% property, 35% stocks, 25% in CDs and cash.

Occupation: Lending Manager

Industry: Finance

Location: Southern California

Education: BA in Economics from UC Berkeley

Sex: Male

Single Or Married: Married

Average Savings Rate: 35% of after tax income

Lucky Breaks: Bought $15,000 of Google 10 years ago that is now worth about $130,000. Found a job right out of college and managed to find another job for a 50% raise two years later. Bought first property in 2000 and another in 2003.

Big Mistakes: Buying a new Mustang with a loan at the age of 26 for $28,000 that could have been invested it in the market and grown to $65,000. Not negotiating as aggressively as he should have for a raise and promotion during his second job resulting in around $80,000 in lost income over three years.

Investment Strategy: Dumbbell approach. Very aggressive for 25% of his investments, conservative for the other 25% and balanced for the remaining 50%.


Daily Capital: Did you ever think you’d be a millionaire, or be a millionaire so quickly?

Jeff: Ever since I was in middle school, I always thought I would be rich one day because of all the people I met traveling around the world thanks to my dad’s job at The World Bank. That said, I never thought I would achieve millionaire status before age 40. Property is what really accelerated my net worth along with a consistent 35% savings rate. 

Daily Capital: What do you think about the trend towards job hopping? Why and how were you able to stay at your one firm for nine years?

Jeff: When I first graduated from school, I didn’t know what I wanted to do with my economics degree. I tried working for a research organization for a year, and then I joined a small boutique investment bank. After several years of working 80 hours a week I got tired and downshifted to a commercial regional bank where I’ve been ever since. I don’t make as much, but I’m happy because my day ends by 6pm. There’s never a need to work weekends, and I’m helping good people get loans to fund their dreams.

I’m a proponent of jumping around until you find something you really love to do. Life would be so sad if you had to go through the motions every day just for a paycheck and health care. Work isn’t perfect, but it pays enough and provides a good amount of mental enrichment and purpose. Once you find a place that consists of good people, try and stay there for as long as possible until you no longer recognize the organization due to a shift in strategies or management. The 401(k) matching, company stock, and goodwill you build over time becomes very valuable. 

Daily Capital: Do you think it’s better to include your primary residence as part of your net worth or not?

Jeff: It’s more conservative not to include your primary residence as part of your net worth, but I do because it’s an asset I saved up for which can be sold. If the government was to tax me on my net worth, I would obviously exclude my primary residence and argue that it’s an illiquid asset because I’ve got to live somewhere. The solution is to have two net worth calculations. 

Daily Capital: Please tell us more about how your net worth is divided?

Jeff: After taking my wallops during the financial crisis, I’ve become more careful in how I invest my money. Roughly 40% of my net worth ($520,000) is in real estate, which consists of one rental property and my primary residence. Another 35% ($455,000) consists of a diversified portfolio in equities. I’m a big believer in keeping investment costs as low as possible. Finally, another 25% ($325,000) of my net worth is in CDs yielding roughly 2.5% or $9,375 a year. The CDs are not a great return, but I sleep well knowing that I’ll have at least $325,000 if the stock markets and property markets implode.

Daily Capital: What does your wife currently do?

Jeff: She is CEO of our household and two young children. She gave up a career in finance after our second child was born. Without my wife, we wouldn’t have been able to achieve the net worth we have today. Her work is easily worth $80,000 – $100,000 a year. 

Daily Capital: What’s your advice on how to become a millionaire?

Jeff: It really takes a focused desire to make money. How many times have you taken out some money at an ATM and wondered where all the cash went just a couple days later? This is why it’s important to keep track of your finances with tools such as Personal Capital’s dashboard

When you have a desire to make money then you’ll naturally study subjects that help you understand strategies to make money. You’ll also enter professions that tend to pay more as well. I think everybody would like to make more money, but I don’t think everybody is doing everything possible to try and make more money. Being a teacher is wonderful. Unfortunately, it’s very difficult to earn an outsized income as a teacher. There are clearly professions that pay handsomely such as medicine, engineering, banking, law, management consulting, and high tech. Look for a profession that best suits your interests.

Being disciplined in your savings and investing process is also a must. You can make a million dollars, but if you spend a million and one dollars a year you’ll go broke. I encourage everybody to save at least 20% of their after tax income come rain or shine. The more you make, the more you should try to save. 

Sooner or later your savings and investment returns will compound to larger figures. Be on the right side of inflation by investing in assets that will help you build wealth. 

Daily Capital: What do you think of the mantra, “Follow your passions and the money will follow?”

Jeff: Unfortunately, I think it’s a lot of bunk said by people who are already rich and successful such as Steve Job’s during his commencement speech. The better advice is to go work in fields where you are most needed and most wanted. In your spare time, work on your passions. Many people have moonlighted while working to pay the bills and have gone on to do great things. 

Daily Capital: Do you think it’s harder or easier to become a millionaire today?

Jeff: The way I look at it is that there’s more people than ever to sell something to or serve. As a result, it should theoretically be easier to become a millionaire today with a US population of 313 million vs. a US population of 250 million in 1990 and just 200 million in 1970.  

On the flip side, globalization really hurts wages as we’ve seen the median household income decline from $57,000 ten years ago to just $51,000 today. Employees are getting squeezed, but employers are becoming wealthy. Hence, the solution is to figure out how to become an asset owner.

The internet is clearly one of the best ways to meet growing demand. The tricky part is coming up with an idea that sticks. Money is as cheap as its ever been with the 10-year yield at 2.7%. My advice is to leverage cheap money to buy assets that are proven to inflate over time e.g. property, public companies, and corporate bonds. 


Deloitte Consulting and Oxford Economics projects there will be roughly 20.6 million millionaires by the year 2020. That’s roughly 5.5% of the entire estimated US population. Thanks to inflation, free financial tools by the likes of Personal Capital, and increased education on wealth management, chances have never been better for Americans to reach millionaire status. Hope you will be one of them!

Number Of Future Millionaires Chart

If you want to get a better grasp on your finances simply:

1) Sign up with Personal Capital to access our free financial planning tools.

2) Aggregate all your financial accounts in one place so you can develop a holistic view of your finances. It’s important to understand how your net worth is divided in order to properly asset allocate.

3) Run your 401k or retirement portfolio(s) through our Portfolio Fee Analyzer to see how much fees are robbing you of your retirement. I ran my 401k through Personal Capital’s 401k Fee Analyzer and discovered $1,700 a year in fees I had no idea I was paying.

4) Run your investment portfolios through our new Investment Checkup feature which analyzes your portfolios for sector exposure, stock concentration, and style to ascertain risk. Over time, your investments will become unbalanced due to gains and losses. Our tool makes it easy to rebalance.

5) Manage your cash flow by keeping track of your income and expenses over time using Personal Capital’s award-winning software.

Photo: One of Larry Ellison’s yachts docked in SF, Sam.

Track your financial assets towards millionaire status with Personal Capital today.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Sam Dogen is the author of the new personal finance book "Buy This, Not That: How To Spend Your Way To Wealth And Freedom." Sam has been using Personal Capital to keep track of his finances for 10 years. He is the founder of Financial Samurai, one of the largest independently-owned personal finance sites with over one million visitors a month.
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