7 steps to millionaire by 35

Becoming a millionaire by 30 puts you in the top 1% of people your age.

But let’s be honest, at this point…how many of us can really hit millionaire status by age 30?

It’s possible, but it’ll be tough.

But by age 35?

That’s much more manageable.

And here’s how I’m going to do it.

But first, a word from this week’s sponsor:

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1. Buy what you know

When you don’t understand your investment, you won’t understand the risk it poses.

You need to know the weak points of your investments.

• How does the company make money?

• How can it lose money?

• What are the threats to the business model?

• What are its advantages?

Hidden risks are how investors lose money.

But you can uncover them by investing in companies you understand.

2. Invest what you can afford to lose

You’re never guaranteed to make money investing.

Sometimes you might even lose money.

So when you invest money you need in the next 1-5 years, you could end up with less than you originally invested.

Then when you go pull out your funds, you create a taxable event, and/or end up with less than you started with.

So do yourself a favor, and only invest money you don’t need in the short term.

Keep the rest in cash or cash equivalents.

But how do you know whether you’ll need the money in the short term?

3. Know your time horizon

Rules of thumb I follow religiously:

• Don’t invest money you need in < 3 years. (Keep it in cash or cash equivalents).

• Don’t put money in 100% stocks if you need it in <5 years.

• And anything 10+ years can be invested however you want.

4. Do your own research

Just because someone else did the research doesn’t make it good research.

And just because a stock price is high (or low) doesn’t mean it’s worth buying.

Research will tell you whether to buy or sell. But only if you did it yourself.

Other people have different investment goals, skills, and risk tolerances.

And their research is a product of this.

So just because their research works for them doesn’t mean it will work for you.

It rarely does.

5. Be patient

Investing is a get-rich-slow game.

If you don’t need the money in the short term, you shouldn’t try to get rich quick.

And if you do need the money short term, you shouldn’t have invested in the first place.

Investing is 80% patience and 10% everything else.

If you can wait, you can succeed with investing.

6. Selling appropriately

There are only 4 good reasons to sell a stock:

• Portfolio rebalance

• Met goals

• Fundamentals changed

• Better opportunity

Notice how the stock price is missing.

That’s because price is a poor reason to sell a stock.

7. Removing emotion

Investing with emotion causes you to:

• Cut losses prematurely

• Take losses unnecessarily

But emotions are hard to overcome.

So get a better understanding of your risk tolerance and invest with that in mind instead.

You will make more money relying on your risk tolerance than you will relying on your emotions.

And you’ll sleep better at night too.

That’s it for this week’s issue!

Catch you in the next one.

Wolf