In this article, I’ll give you a roadmap to build a $1 million USD net worth in 48 months.
Not by luck or crazy speculation but following a simple strategy of building a small startup on the side, investing the income in an ETF, and compounding your wealth. After 4 years, you sell your tiny startup and reach millionaire status with a ~$10k per month passive income from your investments.
I’ve done it. There’s lots of material on how to build such a small startup — I assume you’re NOT an expert but you accomplish only a small fraction of the success of expert founders that would be sought-after by Silicon Valley VCs like YCombinator:
💡 Graham: “A good growth rate during YC is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing.” (source)
For our little project to $1M, I do NOT assume you reach a wild 5-7% growth rate per week or ~20-28% per month. Let’s leave those big growth rates for the big guys in Silicon Valley that target billion-dollar valuations.
We’ll cut the 7% weekly growth rate by half and then by half again to target a 7% per MONTH growth rate. That’s absolutely achievable with a bit of elbow grease.
We’ll assume a 40x multiple on MONTHLY profits. Most online businesses have a multiple of roughly 40x. It’s more towards the low end. For example, see these two businesses from Empireflippers:
Finally, we’ll assume you accumulate an investment vehicle that grows like the NASDAQ (16% compound annual growth rate). A simple ETF will do.
You can make these assumptions happen. You can do it!
Here’s the four-year plan:
- Months 1-7: Figure out what you’re doing. $0 income.
- Months 8-12: Scale your monthly income to $1600 through hustling and iteration.
- Months 13-47: Just focus on one thing — keep your monthly growth rate at 7%. Do all it takes to maintain this rate. It’s not a crazy growth rate — you can do it!
- Month 48: Sell your online business on an online marketplace (e.g., Flippa, Empireflippers, …) and buy the remaining investments from the proceeds of the sale. Voilà, you’re financially free with $1 million in a passive investment vehicle!
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