Can You Really Become a Millionaire in 10 Years?

Summary

Money Guy Show: Can You Really Become a Millionaire in 10 Years?

Release Date: August 15, 2025

Hosts: Brian Preston and Bo Hanson
Description: Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

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Introduction

In the episode titled "Can You Really Become a Millionaire in 10 Years?", hosts Brian Preston and Bo Hanson delve deep into the feasibility of achieving millionaire status within a decade. They critically examine five commonly touted paths to wealth, debunking myths and laying out the realities behind each strategy.

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1. Chasing the Hot Trend: Speculating vs. Investing

Timestamp: [02:34]

Key Points:

• The allure of "get rich quick" schemes is prevalent, especially with the rise of social media influencers promoting hot stocks, cryptocurrencies, and options trading.
• Speculating involves short-term strategies aimed at quick profits and is akin to gambling.
• Investing is a long-term strategy focused on holding assets for years to generate sustainable growth.

Notable Quotes:

• Bo Hanson: “Speculating is definitely a short-term strategy that involves buying and selling assets in the hopes of making that quick profit. Investing is a long-term strategy that involves holding assets for years, if not decades.” ([03:04])
• Brian Preston: “Don't buy some stock or invest in some type of holding simply because someone told you it was the thing to do. If you don't know what it is you're investing in or why your dollars ought to be going into it, maybe it shouldn't take your time.” ([04:23])

Insights:

• The hosts emphasize the importance of distinguishing between speculative trading and genuine investing.
• They caution against following stock tips without thorough personal research and understanding.

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2. Leveraging in Real Estate

Timestamp: [05:06]

Key Points:

• Real estate is often marketed as a straightforward path to wealth, but leveraging (using borrowed money) introduces significant risks.
• High monthly mortgage payments can strain finances, especially if market conditions turn unfavorable.
• Real estate requires active management, including handling maintenance, vacancies, and tenant issues.

Notable Quotes:

• Brian Preston: “Levered debt has risk. And that's the big thing we're trying to make sure is that this fits into your timeline, your financial order of operations, so you don't get left holding the bag because you were skinny dipping and we're swimming naked without the resources to keep you safe financially.” ([05:53])
• Bo Hanson: “Real estate, when we talk about market recoveries, real estate can drag the bottom. All you have to do is go ask anybody from that period, from really 2007 all the way to 2011, real estate kind of struggled through that Great Recession period.” ([21:07])

Insights:

• While real estate can build wealth, it is not a passive investment and requires substantial financial resilience to weather market downturns.
• The hosts advise ensuring a solid financial foundation before venturing into leveraged real estate investments.

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3. Real Estate Flipping

Timestamp: [14:17]

Key Points:

• Flipping houses—buying, renovating, and selling for profit—can be lucrative but carries high risks and requires significant capital and expertise.
• The median house flip profit is around $72,000 gross, necessitating the flip of approximately 14 homes to reach a million dollars.
• Challenges include high upfront costs, potential market downturns, and the difficulty of scaling flips within a decade.

Notable Quotes:

• Bo Hanson: “It's not uncommon that in a bull market everything is going up. Those things that you speculated on may have worked and someone may talk to you at the cocktail party about the success that they had. And while it may be true, it's likely not replicable.” ([03:04])
• Brian Preston: “Every single time, you're going to have to come up with a down payment. Now, maybe you never buy the second flip until you've sold the first flip, but if not, you're going to come up with multiple down payments.” ([16:56])

Insights:

• House flipping requires meticulous planning, substantial funds, and the ability to manage multiple transactions simultaneously.
• The volatility of the real estate market can significantly impact profitability, making flipping a high-risk endeavor.

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4. House Hacking

Timestamp: [09:51]

Key Points:

• House hacking involves purchasing a primary residence and renting out a portion to cover mortgage payments, thereby accelerating wealth accumulation.
• This strategy combines property appreciation with cash flow from rentals.
• Assumptions in case studies often overlook additional costs like maintenance, property taxes, and potential vacancies.

Notable Quotes:

• Brian Preston: “This is the closest to the brochure. If you can find other people's money to help you buy your primary residence and you take advantage of the low interest rates plus the ability to bring this together, it can work out pretty nicely when you're easing into the wonderful world of real estate.” ([11:37])
• Bo Hanson: “There's also the missing costs. I mean, there's going to be closing, maintenance, interest because you're renting property. So this is, this is not a passive.” ([12:10])

Insights:

• House hacking offers a more sustainable approach to real estate investing by generating rental income that can be reinvested.
• It requires active management and financial readiness to handle unforeseen expenses and vacancies.

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5. Entrepreneurship

Timestamp: [23:34]

Key Points:

• Starting a business is often touted as a pathway to financial independence but comes with a high failure rate.
• Statistics: 20% of new businesses fail within the first year, 50% within five years, and only 35% survive beyond a decade.
• Success in entrepreneurship demands substantial capital, resilience, and a clear, purpose-driven approach.

Notable Quotes:

• Bo Hanson: “If you have an idea and start a business, it doesn't mean that starting tomorrow you're going to be profitable. Most small businesses take somewhere between two to five years before they even become profitable.” ([25:04])
• Brian Preston: “Make sure that you are patient when it comes to investing. We know that a lot of millionaires, that takes them about 28 years of saving, investing before they actually get their first million.” ([37:26])

Insights:

• Entrepreneurship requires a realistic understanding of the time and resources needed to achieve profitability.
• Passion and a strong conviction are essential to persevere through the challenges of building a business.

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6. Index Investing

Timestamp: [30:10]

Key Points:

• Index investing is presented as the most passive and achievable path to wealth among the five discussed.
• To become a millionaire in 10 years through index investing, one would need to save approximately $5,000 monthly and achieve an average annual return of 10%.
• Flaws: Market volatility can impact returns, and saving such a high amount monthly may not be feasible for most individuals.

Notable Quotes:

• Brian Preston: “Assuming a 10% annual rate of return, if you invest $4,882 every month over the course of the next 10 years, you would have a million bucks.” ([30:56])
• Bo Hanson: “Index investing is probably the most passive. Where you can decide how much you need to save and then automate that process, you're probably setting yourself up for the most automatic way to get to your goals and build these assets up.” ([33:04])

Insights:

• Index investing emphasizes steady, disciplined contributions and compound growth over time.
• It requires realistic expectations regarding savings rates and market performance, highlighting the importance of patience and consistency.

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7. Building a Financial Foundation

Timestamp: [36:13]

Key Points:

• The hosts advocate for a strong financial foundation before pursuing aggressive wealth-building strategies.
• Key components include increasing income, reducing expenses, disciplined saving, and investing wisely.
• Understanding and managing risk is crucial to prevent financial setbacks during economic downturns.

Notable Quotes:

• Brian Preston: “Figure out ways to increase your income. The bigger your shovel is, the more useful your shovel can be.” ([36:13])
• Bo Hanson: “Make sure you are patient when it comes to investing... If you get to the first million, the second million comes out much easier, the third million even faster.” ([37:26])

Insights:

• Wealth building is a marathon, not a sprint. Incremental progress through disciplined financial behavior is key.
• Automation of savings and investments can significantly enhance the effectiveness of financial strategies.

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Concluding Thoughts

Brian Preston and Bo Hanson conclude the episode by reiterating that while becoming a millionaire in 10 years is possible, it requires a combination of disciplined saving, smart investing, and realistic expectations. They emphasize that passive strategies like index investing offer a more sustainable path compared to high-risk ventures like speculative trading or real estate flipping. Additionally, they highlight the importance of building a robust financial foundation to support long-term wealth creation.

Final Notable Quotes:

• Bo Hanson: “You control that through how you field general your army of dollar bills to maximize this moment, building wealth does not have to be incredibly complicated.” ([39:02])
• Brian Preston: “Do not quit just because the market goes down 20% or 25%. Take that financial mutant perspective and see it as an opportunity to get more value instead of quitting.” ([35:01])

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Key Takeaways

1. Distinguish Between Speculation and Investment: Focus on long-term investing rather than chasing quick profits.
2. Understand the Risks of Leverage: Real estate leveraging can amplify returns but also increase financial vulnerabilities.
3. Realism in Entrepreneurship: Starting a business requires patience, capital, and resilience due to high failure rates.
4. Embrace Index Investing: A disciplined, automated approach to investing can yield substantial growth over time.
5. Build a Strong Financial Foundation: Increase income, reduce expenses, and invest consistently to pave the way for wealth accumulation.
6. Patience is Crucial: Wealth building is a long-term endeavor; maintaining discipline through market fluctuations is essential.

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For more insights and resources on building your wealth, visit moneyguy.com.

Disclaimer: Abound Wealth Management does not offer personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only and does not constitute financial, tax, investment, or legal advice. All investments involve risk, including the possible loss of principal.

Transcript

[A]

Support for this podcast and the following message comes from America's Navy. The Navy offers new graduates hands on training and experience in careers like computer science, aviation and medicine, plus education. And sign on bonuses. Parents help your grads start their career [e-mail] bundle and safe. With Expedia, you were made to follow your favorite band and from the front.

[B]

Row we were made to quietly save.

[A]

You more Expedia made to travel savings vary and subject to availability.

[B]

Flight inclusive packages are at all protected. All over social media you see stories of get rich quick success. We want to give you a peek behind the curtain to see the reality of these strategies and their opportunities.

[A]

Brian, I am so excited about this because the Internet is full of gurus and talking heads telling you that there are shortcuts to financial freedom. And today we're going to see if they're actually true.

[B]

We're going to examine five supposedly easy paths to wealth that people often claim will make you rich. Quick, quick. Reveal what it actually takes to accumulate a million dollars through each of these methods and share the crucial information you need to know before pursuing any of these strategies.

[A]

And with that, let's jump right in. So, Brian, you know, and we talk about this all the time, that when it comes to building wealth, we think that there are three key ingredients to wealth creation.

[B]

Yeah, let's think about this. Discipline. Living on less than you make you turn that into the margin or the money, that if you give it enough time, it can actually create your wealth. But Bo, if you're going to speed up this very important process, you're obviously going to have to lean very hard into that discipline component.

[A]

Yeah, you're decreasing the amount of time so you have to increase some of the other components. So we're going to walk you through these five different ways that you can make a million dollars inside of a decade. And we're going to walk through what the brochure says and then what you actually didn't know about it. And this first one, Brian, I think this is one that's so popular and people, I think they get caught up in this early on in their financial journey and it's chasing the trend.

[B]

Yeah. By the way, this will, we will choose for here. I think we're going to use the example of chasing a hot stock. But it could, there's been so many different things and even my own lifetime that you see, it's always chasing the hot dot. What's the popular thing? It might be a crypto One year, it might be options. Another year, it might be a single stock this year. The big thing is these are things that are supposed to make you rich really quick.

[A]

So what does the brochure say? It says, hey, finding this next hot stock, finding the next Palantir, the next in video or the next Rocket Labs and figuring it out before it takes off is going to be the thing that's going to lead to wealth. But unfortunately that's not actually as easy as it sounds. When someone tells you, hey, I've got this stock tip. Hey, I've got this hot thing, hey, I've got this thing that you need to know about, they're not actually giving you an investment tip, they're actually giving you a speculating tip.

[B]

And that's why it's important for our audience to know there's a huge difference between investing versus speculating. And we actually pulled the definitions for this is that speculating is definitely a short term strategy that involves buying and selling assets and in the hopes of making that quick profit. That doesn't sound like a long term investor. And that's why you then look at the other side of the coin. Investing is a long term strategy that involves holding assets for years, if not decades. But the way I would kind of sum this up, one is kind of gambling, hoping for the big score, the other is hopefully buying something of value and then watching that grow, overturn and getting the fruits of that investment.

[A]

But see, here's the problem. Bull markets can, can, can sometimes blend these together. It's not uncommon that in a bull market everything is going up. So those things that you speculated on may have worked and someone may talk to you at the cocktail party about the success that they had. And while it may be true, it's likely not replicable. So before you jump in and before you try to implement this, you need to do your own research. Don't just buy some stock or invest in some type of holding simply because someone told you it was the thing to do. If you don't know what it is you're investing in or why your dollars ought to be going into it, maybe it shouldn't take your time.

[B]

Well, that's why always is it part of your financial order of operations? Where does this fit into your plan? Because if you're jumping in to options, crypto and all, and you haven't even funded your Roth IRA yet, I mean, what are we doing? Don't, that's what, don't fall for the brochure. You actually need to build your financial foundation.

[A]

And then if you are going to chase something and you do want to do some level of speculative investing, make sure that you're using fun money. This needs to be the vacation money, not your retirement money, not the dollars that you're depending on for your well being. Again, don't mishear us. We're not saying that speculating in and of itself is bad, but gets bad when speculating actually replaces long term disciplined investing.

[B]

So Bo, we just heard about the chase, the hot dot or get on this trend and you'll be rich. The next one I see a lot of is using a tool called leverage where you can go buy this investment with borrowed money and because of that leverage, it's going to amplify your rate of return. And there's no better example than how many people are out there pushing real estate.

[A]

You hear about it all the time. And if you watch any level of social media, there is no shortage of folks telling you how they made all of their millions of dollars through these different real estate strategies. What the brochure will tell you is that if you want to be wealthy, if you want the real and true path to wealth, real estate is the best way to do it. So you better jump on board.

[B]

Now, don't mishear us, we actually love real estate.

[A]

Sure.

[B]

It's just that there's a time and a place for for real estate into your investment portfolio if you jump on this way too soon. Levered debt has risk. And that's the big thing we're trying to make sure is that this fits into your timeline, your financial order of operations, so you don't get left holding the bag because you were skinny dipping and we're swimming naked without the resources to keep you safe financially.

[A]

But again, we said that real estate is a way to build wealth. So if your goal were to become a millionaire inside of 10 years, we're going to walk you through using real estate, how that might happen. And the first one might be, and this is the one that I think is the easiest and conceptualize, I'm going to buy a piece of real estate and 10 years in the future when I sell that piece of real estate, I'm going to be a million dollars wealthier based on the price appreciation on that house. Well, that's easy to think about conceptually when you actually look at the numbers, it gets a little bit harder to do.

[B]

Yeah, let's walk through a case study on this and we think what would you have to actually do to get a million dollars from a piece one real estate transaction? And we're using the example of your primary residence.

[A]

So if we know that over the last 20 years, real estate averages about 3 1/2% price appreciation per year. In order to be a millionaire after 10 years, we would need to go buy a house today that cost a little over $1.7 million. So if we're going to assume a 3% down payment right out of the bat, we have to come up with $52,000. We know that the house will appreciate about 3.5% each year over the next 10 years. So over that 10 year period, we're going to have about $700,000 of price appreciation. Well, because we took a mortgage out on this and we're making principal and interest payments every month on an amortizing loan, we are going to be paying off some principal. So over that 10 year period, we would have paid off about $236,000 of principal. So if you add up the $52,000 down payment of equity plus the $700,000 of growth, plus the $236,000 of principal payments, that in and of itself would give you equity in the home of $1 million after 10 years.

[B]

Now look, when I see this example, my why are they using such big assumptions? Remember, this is how to make a million dollars in 10 years. So it's going to. Just like we talked about, there are three ingredients to wealth building. If we're going to do this, this fast, we've got to do it outside of the box. That's why it is going to require something like this. But this seems like a lot. I mean, when I was looking at this case study, the fact that the monthly payments were going to be, I mean, we'll cover that. But let's talk about what are the flaws with this. And the first thing is that down payment, you have to come up with $52,000 even just to make this happen.

[A]

And then another thing we did is this is a very simplified, simplified dial down example. So we haven't talked about all the additional costs like the closing costs associated with buying a home, the maintenance to take care of the home over that 10 year period, or even property taxes or real estate taxes associated with it. So there are a number of costs that weren't even factored in. What we showed you here was pretty much the best case, simplest type scenario.

[B]

And then the two things that came to my mind, it's going to be hard to find a lender to give you this big of a house for this little bit down. So Getting loan for 1.7 million and then here's the biggest one, Bo, to see that your monthly carry costs, your payments that you're responsible for would be close to $11,300 a month. Wow, that is a big check to write each month.

[A]

So if you think about this, right, you're going to make this mortgage payment for 10 years or 120 months, that's $11,296 every month. If you think about the total capital outlay just in those payments over that 10 year period, it is $1,407,650. You had to outlay $1.4 million in order to have a million dollars equity in this home.

[B]

So I mean, look, we know like I said, to get there in 10 years, we had to do some crazy assumptions here. Most people really don't probably see this type of success or this type of equity buildup unless they got 15 plus years to build. So let's actually, let's do a different example. How about if you did a much easier and more approachable house hacking where you're buying a primary residence, but then you're also going to rent out a portion of that as well.

[A]

So let's think about how this might work. If you were going to house hack and you were going to try to get a million dollars of net worth Inside of 10 years, you could go buy a house that is $523,000. And when you think about the down payment that you would have to do at 3% down, plus the price appreciation on the house of 3 and a half percent annualized over 10 years, plus the principal payments you've making on the mortgage, those three would add up to about $301,000. But remember, you're house hacking. So let's assume that you have someone in the house covering the mortgage. The rent you charge them covers the mortgage. That's going to be another $409,000 of cash flow that you have coming in. And because you have that cash flow coming in, let's also assume that you take those rent payments and you can invest them earning 10% rate of return over that 10 year period. So that $409,000 you get in rent then earns $289,000 over that 10 years. So you made $301,000 of equity in the home, you got $400,000 of rent payments, and you invested those rent payments and you made about $289,000. You add up all three of those and there's your million dollars in equity.

[B]

Now this is one BO that I don't mind. This was probably the closest to the brochure.

[A]

This is the closest.

[B]

I mean, because I will say we're going to now give you the flaws with house hacking, but it is probably closest to the brochure. If you can find other people's money to help you buy your primary residence and you take advantage of the low interest rates plus the ability to bring this together, it can work out pretty nicely when you're easing into the wonderful world of real estate.

[A]

But there is still some friction. I mean, one of the very first things is you still have to save up for down payment. You still have to have some capital available in order to go out and buy this property. That in and of itself is going to take a little bit of time.

[B]

You also have the missing costs. I mean, there's going to be closing maintenance, interest because you're renting property. So this is, this is not a passive. Despite what the brochure says, there is going to be some active involvement for you because you're doing rental property.

[A]

The other thing in our scenario, we assume that you had no vacancies over a 10 year period. So not only did you have it rented the entire time, you had really good renters in there for every month of all 120 months. Well, anyone who's ever owned real estate knows that there's likely going to be some period of overlap as tenants change as people move in and out where you're not going to have full 100% vacancy.

[B]

Well, it's not only just having renters, you're having renters that are coming in paying top dollar because they were able to the rental rate match your mortgage, which typically look, rents do go up over time. But as anybody knows, when they get into rental real estate in the beginning, your spread might be very low, but you're over time with inflation that rent eventually gets bigger and bigger. So we made a big jump here by just assuming that it was going to work right from the gates.

[A]

And then remember you had rent coming in that you were investing, so you were still responsible for the mortgage payments since you were investing the rental proceeds. So you also have to come up with $3,408 every single month over that 10 year period to make sure that you had cash flow to keep the mortgage afloat while you were investing the rental income.

[B]

And I like you're just reminding people because we were talking about behaviors you have to do to do things in 10 years. You have to do things like no one else in a lot of ways and a lot of ways this may not fit into your lifestyle. Because realize what we're saying here is when you pull up in the driveway with your kids and your groceries in the messy middle, there might be a tenant sitting out on their front porch who's got a problem with their sink or there's something and you don't get to get away from them. There's also, because remember, I have the same kids that you just unloaded out of the car and you got the tenant with the plumbing problem. Sometimes you got to think about school zones. You got to think about what's the best bedrooms for the kids. It just might not fit in your lifestyle. But that doesn't mean, like I said, that it's not something to at least consider but know what you're getting into.

[A]

Okay, so we've talked about buying a home and becoming a millionaire based on price appreciation. We talked about house hacking where we live in a home but we also rent out a portion of it. You may be saying, okay, guys, I figured it out. I know the golden ticket here. I'm just going to do the short term transactions. I, I am going to be a house flipper. I am just going to buy something and I'm going to quickly turn it over and make my profit. I'm going to do it again and again. Again. Well, we know right now the median house flip right now in 2024 made about $72,000 gross. You want to make sure that you keep that marked in your mind, but let's just assume that that was the number you were going to use. 72,000. That means in order to make a million dollars and you would need to flip 14 homes at $72,000 each to cross over that million dollar mark.

[B]

And I don't know if it's because I come from a public accounting background, but I always. That word made is doing a lot of heavy lifting because it's a lot of times people, and this is the first flaw is they don't know the difference between revenue versus profit.

[A]

That's right.

[B]

And so a lot of people will say, hey, Yeah, I made $72,000. But I'm like, oh, just because it's $72,000 over what you paid, that's not necessarily profit because you have closing friction costs. You have what you paid for the renovation, you have all the taxes, you have the carry costs. Make sure you understand because sometimes this is something I see people on social media do all the time, is that they will do creative accounting and then assume that they can just replicate it. Over and over again.

[A]

Yeah. I think one of the things that is so outside the realm of reality is that in this assumption, it's assuming that you have to either flip 14 homes in quick succession all at once, or if you're going to do it strategically, you have to do that every eight months. Well, I don't know if you've walked through a lot of real estate transactions, but finding a property, closing on a property, working with the banks, figuring out all the logistics of closing and being able to not only work through one transaction, but two transactions in order to flip it is not a super fast process. So it seems a little unrealistic that inside of 10 years you'd be able to do 14 of these.

[B]

Well, and that's why it's that boom, bust cycle where because you have to find 15 quality deals and buyers. And yes, you might have, you're going to have successes, but you're also going to have some that you get stuck with that just don't work out as well. And that's what, like I said, boom or bust. You're always worried about what happens if the music stopped on real estate. And we had one of those periods where it just wasn't working as well also.

[A]

And again, as you're buying these houses, every single time, you're going to have to come up with a down payment. Now, maybe you never buy the second flip until you've sold the first flip, but if not, you're going to come up with multiple down payments. So there is going to be capital required throughout this process that there's a good chance you likely haven't accounted for.

[B]

And then I always think about the experience with real estate as we've even had people on the show with making a millionaire and so forth, where they talked about their first one, they didn't put the right tenant. And then I also think about the people share. They just didn't know when the plumbing goes bad, when the electrical is bad, you got to. It takes a while to build up your holding of who's your quality network, who are your people who go repair things, who are the people who are going to come in and help you out. Because real estate is far from passive if you're doing it right.

[A]

And maybe one of the biggest flaws in this entire flipping scenario is the idea that home prices only go up in order for flipping to be successful. I need to buy the home for less money today than I can sell it for in the future. And then rinse and repeat, rinse and repeat, rinse and repeat. Well, that would suggest that real estate prices are always moving up into the ride, but we know that's not necessarily the case.

[B]

Yeah, this is one of those that I think it was a great education post great recession that because, you know, you always heard the adage God ain't making more real estate. Well, the problem is is that that doesn't mean there's not inefficiencies built into the pricing of real estate. Because look at what happened from 2007 to the end of really 2009, early 2010, and we probably could have expanded. It was close to a 20% loss. That's right. There was trillions of do of value loss in real estate as an asset class. Same thing happened back in 2022. There was a 13% drop in those values.

[A]

Imagine if you were trying to flip during those time periods.

[B]

Here's another point that I think that it's not even we're talking about the. You have to be worried about the downturn. But I want people who can actually see the visual here to notice. Also look at what happens with the returns. We talk about how what's great is that rate of return is because you're getting to lever this return where you turn 3% into 12% just because you have debt on it. Look at how uneven these rates of returns. Really if you think about the fact that of the big run up 65% of the appreciation of real estate in the last five years has come up from the pandemic because we had this huge inflation thing that happened and that's why I don't know that you can always count that it's going to come out in these perfect periods where you hit it right and you get that run up where it happens overnight and you're an instant success.

[A]

Now don't mishear us. What we're not saying or what we're not saying is don't invest in real estate. We actually love real estate and we're proponents for real estate investing. However, before you buy real estate, there are some things that you want to make sure you do. There are some boxes you want to make sure you check. And one of those is real estate has some phantom costs. There are other things you need to account for when it comes to purchasing real estate other than just the purchase price or the sales price of the real estate you're buying.

[B]

Yeah, I mean you've got to have a lot of assets underneath you. There's a reason when we talk about the financial order of operations besides outside of house hacking, really, I Want all other type of real estate investing to be a step eight because it allows you to have the financial foundation of steps one through seven underneath you. So you actually have the ability to, to handle whatever real estate comes your way. If you think about Graham Stephan, great real estate investor, but even Graham admits when he started his real estate journey he had over $200,000 saved up, including a portfolio of investments and index funds foundation. And that's why something that blows my mind and people use stats. You always have to be careful of statistics in some ways. How often do you hear the quote about real estate where 90% of wealth was created? This is Dale Carnegie who supposedly said 90% of wealth was created through real estate. And they always say yeah, if you look at wealthy people, they have real estate. But was what came first the chicken or the egg? And I always remind people real estate, yes is even wealthy people will have real estate. But if you look at it's a time and a place. We want you to have real estate in your portfolio from a diversifier standpoint. But don't make it the whole way, don't make it your entry point. Because what your risk with real estate is is because of that levered debt, you're taking on additional risk that you got to make sure you're funded up enough to cover when the music stops. That's the biggest thing we're trying to protect you from.

[A]

Another thing is when you become a real estate investor, we really want you to be in it for the long term. And everything we laid out right here was doing this inside of this very consolidated inside a 10 year time window. But realistically there's a good chance that you're not going to see all of the benefits from real estate investing until after that 10 year mark. Because think about it, if you think if you're trying to scale tons of real estate, it's going to take tons of capital, it's going to take a lot of time to do that. This is a long term process. It's not a get rich quick scheme. If you're trying to get rich quick in real estate, there's a really good.

[B]

Chance you're setting yourself up well, you're amplifying the risk. Because if you're doing levered debt products and you go by scale, do more and more, you really do run the risk that if any hiccups happen, where if the economy goes down or anything and you quit getting rent payments coming in, you're left, you have to not only cover the rent, you have to cover the Maintenance you have to cover and your own living expenses. You can quickly see where people get caught very easily. And by the way, real estate, when we talk about market recoveries, real estate can drag the bottom. All you have to do is go ask anybody from that period, from really 2007 all the way to 2011, real estate kind of struggled through that Great Recession period. If you weren't well healed enough to survive, you got yourself in a pickle of a situation. This is why, and here's what's crazy, and this is why wealth building is so mean, but awesome in its own way. If you're well healed, it not only lets you survive, but it also lets you prosper because you took advantage of of all those people who lost the real estate, you got the best deals of your lifetime by the people who gave up real estate during that exact same bust cycle.

[A]

Yeah, if you're only in it for the money, that's a great example of being if you're only in it for the money, there's a really good chance that you're not going to have the staying power. Because real estate is not often a truly passive endeavor. It does take work and it's not always necessarily a positive thing. So you want to make sure if you're getting into this, there are reasons why you're doing it besides just the money. Because if you are someone who's just in it for the money, when things get hard, there's a good chance you're going to be one of those investors that is dumping property at the world's worst time. And the people that Brian are talking about are the ones sitting in the wings ready to take advantage of the mistake that you made.

[B]

All right, we've covered chasing the hot dot, we've covered real estate. Bo, how about the wonderful world of entrepreneurship?

[A]

Yeah, this is a big one. You know, starting a business is a pretty exciting thing. I mean, here's what the brochure tells you. It says you'll never be wealthy. You're never going to be able to reach financial independence. You're never going to be able to have all the things you want financially if you're working for someone else. If you're showing up to a 9 to 5, it's not going to be possible.

[B]

By the way, I hate to ruin it because we're going to give you some the flaws here, but we have an entire wealth management firm, not all, but a large portion of our clients w two employees, nine to five jobs. So that is a. I'll just go ahead and Ruin it right there. So let's kind of jump into the flaws because this is the part and I love entrepreneurship, we resemble this, but it's just a lot of people just don't know what they're getting into. And the stats, if you look at what this Small business administration, the SBA says about this, realize 20% of new businesses fell in the year that they start. If you want to. If that doesn't scare you, how about the fact that half of businesses fell in the first five years and then typically over a 10 year period, only 35% of those small businesses are actually still in existence a decade in the future. So very quickly you realize some of this reward is built upon that there's extreme risk in this process.

[A]

And it's one of those things that just because you have an idea and start a business, it doesn't mean that starting tomorrow you're going to be profitable. Most small businesses take somewhere between two to five years before they even become profitable and profitable, meaning I have more money coming into my business than I have flowing out of my business. So a lot of folks, because they don't prepare and don't plan, it is difficult to weather that storm of getting there. I mean that's. Brian, your experience was it wasn't something that just took off right overnight.

[B]

Yeah. This is something that I think a lot of businesses fail because people don't realize how much capital it's going to take or cash to make it through that three to five year valley that you have to make it through. You really are going through the gauntlet that if you, you could be, have the most talent in the world, you could have the passion in the world. But if you ain't got the capital, the cash to actually pay the bills, to cover your living expenses, cover the business as you're building up, trying to build this thing, it will fail. And a lot of I think that's why those small business stats are out there and, and they show that for myself, I saved for over a year, built up a large pot of cash and I used every bit of that cash in the first three years bridging it. And I've even looking back, I'm just telling you my own journey and this is why it's so much more just not think I want to do this for the money. It's got to be a passion, it's got to be driven, a conviction that you have to make success is I look back and you wouldn't even see that I had a successful business until I was probably in year 12. So we've already blown up the premise that the best path to building a million dollars in 10 years. I'm not so sure that a lot of businesses show that in year 10. I think it's probably you get the exponential dividends of success probably in years 12 and beyond.

[A]

And then even the idea of starting a business takes time and planning. At least the successful ones take time and planning. It's scaling isn't as easy as, okay, I'm just going to going to sell a $5,000 product 200 times. You actually have to go design and build and come up with a $5,000 product. And then you have to figure out how do I create that, how do I manufacture that, how do I provide that service in a cost effective manner and then how do I do that over and over and over again. Having an idea is one thing, but being able to actually turn that idea into a reality that you can market and go out and put out in the economic environment is a totally different thing.

[B]

Now I feel like we've thrown enough cold water. Let's actually tell people how to do this right, because we would be hypocrites if we didn't tell you all this negative stuff, but then tell you it's also awesome because you build something yourself. And then when you get to the graduation point, what I love is all the employees we have. I love how many babies come out of our employees. Growing the houses, they buy, the cars. It can be awesome. But here's the first thing you need to do if you want to start a business. Put on your 3D glasses. A lot of people daydream, meaning they put together the plan of the dream plan that they're going to be rich by doing this. Hence the show it being here. You're going to make a million dollars in the first 10 years. That's your dream. The reality is that you're going to have the down to earth plan. This is what you think is going to happen. So create that business plan. Create the spreadsheet that actually shows this is what you think is going to happen, with some good stuff happening, but also some negatives. And do not, I repeat, do not, do not skip the doo doo plan. This is the plan that when everything goes the opposite of what you're hoping. Because what I want you to do is be able to address that on paper versus in reality. So you got to do a little preparation.

[A]

Another thing to do when you start a business is come up with your minimum viable product, your minimum viable service and Actually test it out. Make sure that this idea you have is something that the world actually wants to buy and actually wants to consume for you. I see so often someone come with this amazing idea and they've got the idea and before they sell the first product, before they provide the first service, they go build the slogan and they work on the logo and they build the website and they do all this other stuff before they've actually tested to see if it is a true, real viable business. You want to make sure that this thing has some staying power before you dump a lot of resources into the stuff that doesn't matter a ton at the beginning.

[B]

And then I've mentioned this, but it's worth an echo for sure, is have the savings set aside. If it's gonna take you three to five years to get back to where you started, know that on the front end so you can actually fill in that chasm of money with cash savings so that you give your business that much better of an opportunity of being successful.

[A]

And then make sure that you do have some larger purpose. Make sure there's a why behind the reason that you're doing this. Because it's often not gonna be good, it's not gonna be fun, it's not gonna be easy. You want to have that purpose drive behind you to keep you on that path when everything's not all rainbows and butterflies.

[B]

Oh, I love that we've. We've set this up. We've. We've had some good and we've had some bad, like chasing the hot dot. I think that's bad.

[A]

Not bad, but not good.

[B]

Real estate, entrepreneurship, there's a lot of good. It's just risky, you know, so that's why hopefully we laid that out this last one. We've tried to put it on autopilot or the easy street as much as possible, and you guys can probably see what we're setting up. How about the wonderful world of investing through index investing?

[A]

I love it. This is the idea that I can make my money work harder than I can and I can make some small decisions today. And if I do that over a certain amount of time, it will have a big payoff. Well, we don't have all the time in the world. Again, our goal here is we want to become a millionaire inside of a decade. So what would that take? What would be required in order for me to be a millionaire inside of 10 years if I'm just going to go invest in index funds? Well, here's the way the math plays out. If you could start today and you could say $4,882 every month over the course of the next 10 years. And your investments could earn 10% on average over that time period. Then after 10 years, you would have a million ducks.

[B]

Million ducks.

[A]

You would have a million bucks. That means that you saved about $585,000. But the rest of that million dollars is all from earnings and all from growth. You just had to save a little under $5,000 a month.

[B]

Now, look, we're going to give you the flaws, but I think when I see this, and if you're somebody. Now, we're going to probably put this into highlights or so forth, but I'm recalling if I was thinking about buying a primary residence and trying to get $1 million, the carry costs on a piece of real estate was over $11,000 a month. When I see that now, look, this is a big bite of the apple. To save close to $5,000 a month is not easy. But man, does it sound so much more approachable than what you would have to buy and pay in a mortgage to do this from a primary residence. So in that way, it seems very approachable to me to save close to $5,000 a month. And by the way, you don't have to do this all at once. Now, we're going to use it in the example for 10 years because that's what we're trying to do for this show. But your journey, you're going to get addicted to this. It might start off at $100 a month, and then you're going to celebrate when you get to $1,000 a month and you start having success eventually, at some point in your career, you probably will be saving something like 5,000, potentially a month. But it doesn't have to be that way.

[A]

But doing this inside of 10 years, there are some flaws. One of the very first flaws is that assuming a 10% annual rate of return. Now, look, obviously when we know that over a long time horizon, The S&P 500 has delivered somewhere between 9 to 11% rates of return. So it's not unrealistic. But there are periods, if you look at the early 2000s, where returns might not be that frothy. So if you're basing your strategy on financial independence, strictly and solely on rate of return, you may be doing it wrong. That's one of the flaws inside of this assessment.

[B]

The second one, we've kind of alluded to this, but you. Your yearly investment is close to 60 grand. Very few people starting out or even 10, 15 years in the future are not going to have the income to do that. And that's okay. I'm just telling you we did this as a very back end of the math for a 10 year millionaire. The good news for you, you don't have to do it this fast, but it's worth sharing that $60,000 is a lot of money.

[A]

Well, yeah, if you're doing what we say and you're saving 25% of your gross income, that means your annual income would need to be 230, $34,000 in order to save that $60,000 a year. Now obviously, yeah, you could have a lower income and save more, but that's going to cause, or that's going to require you to ratchet up that discipline, which is a pretty difficult thing to do. Now this was how to become a millionaire in 10 years. I think for most folks it's not absolutely necessary to be a millionaire inside of 10 years. So there are some things that we want you to think about even before you start investing.

[B]

Yeah, what I like about this because we heard a lot of the brochures that they, they seem very active to me. Meaning there's nothing passive about real estate investing. Definitely not passive about starting an entrepreneur endeavor or even a buy sell speculative process. But this truthfully index investing is probably the most passive. Where you can, if you could decide how much you need to save and then automate that process, you're probably setting yourself up for the most automatic way to get to your, your goals and build these assets up.

[A]

Another thing that we want you to think about before we invest is fill out, figure out what a realistic rate of return is. If you go into your investing journey, say you know what, I'm going to go make 20% per year. Every year there's a good chance that you're going to be let down because that's not the way that the real world works, that's not the way that the market works. So make sure you set realistic expectations so that you have the staying power to stick with it. One of the things that breaks my heart the most is when I finally convince a friend to max out their Roth ira and they do it one year and it just happens to be the year before a downturn. It just happens to be the year before the market goes down. And in their mind they thought they were going to make 10% but the market ended up down 3%. They didn't actually have a realistic understanding of how market returns work. So before you start investing, make sure you understand what it actually is you're going to see inside of your portfolio.

[B]

And you really, you're setting it up is that you do need to expect those downturns is because one of the reasons we do this premise of that you're going to build this million dollars in 10 years. But the reality is for most people, you don't see the exponential value of your army of dollars until years 15 plus. There's a lot of quit in that first 10 years because when you compare and contrast the amount of your contributions versus the market value of your assets after 10 years, you're going to see that yes, there is some compounding growth, but it's only 10 years worth. So it's not overwhelming. It's really once you get to years 20, 25 years 30 that you all of a sudden say, whoa, can you believe 90% plus of my account value is actually the growth of these portfolio assets, not just my contribution. That's not in the first 10 years. So just don't quit during those downturns. I know a lot of you will see the brochure, you'll get excited about this content and just like Bo said, don't quit just because the market goes down 20% or 25%. Take that financial mutant perspective to where you're saying, yes, it's down, but I'm going to buy more at these lower prices and treat it as a mutant opportunity to get more value instead of quitting.

[A]

So if I want to be a successful investor and I want to go down the that that path, and I want that to be one of the ways that I build wealth, what are the key things I need to think about or what are the things that I need to do to impact that? It's pretty simple. The first is figure out ways to increase your income. The bigger your shovel is, the more useful your shovel can be. So what are things I can be doing at work to be as viable as possible? What are things I can do to actually have a career and not just a job? Are there ways that I can go out there and set side, hustle or do side gigs or figure out other ways to create income? How can I make myself as valuable as I can be so that my shovel can be as big as it can be?

[B]

And then also make sure that if you're increasing your income, you're spending less? I actually want you to turn that into investments. I mean, one of the things that breaks my heart is I see people who maybe are disciplined and actually make more income. They live on Less they make. But if you never actually put that money to work and put it into investments, it doesn't actually unleash the power of your army of dollars. I grew up in a household where CDs were our investments. That is not the way to unleash it. It might be a part of it with your cash and your emergency reserves. But make sure you understand the power of investing and actually putting that money to work.

[A]

And then maybe the most important thing is make sure that you are patient when it comes to investing. We know that a lot of millionaires, that takes them about 28 years of saving, investing before, before they actually get their first million. But do you realize if you just get to that level, if you just get there and you can, you can invest those dollars for an additional seven years, that 1 million can turn into 2 million? What took you 28 years to do in the front end might only take you seven years on the back without having to save another dollar. The bigger the numbers get, the bigger the numbers get. But you actually have to give it time to get there.

[B]

Well, Bo, I mean, you even. Let's amplify this another. To go from 2 million to 3 million only takes a little over four years. No, I mean this thing. That's why when all my trolls, my inflation trolls come out, go. $1 million is nothing. I'm telling you, if you get to the first million, the second million comes out much easier, the third million even faster. So how do we get here? Let's talk about the reality of becoming a millionaire. And Bo's already kind of unloaded on it and shared that for the typical. This is typical. You don't have to be typical because you're a financial meeting. You don't have to be average, but it takes 28 years. 80% say they were part of their employer retirement plan. The average crossing age is around 49 years of age and 69%. Now, look, we do an annual survey of our millionaire clients. 69% of our clients said that they reached a million dollars through steady saving and investing. Look, if you look at that 28 years and that turns you off because you're part of this fire movement or you just want to be able to have more flexibility that much sooner. You can do it faster.

[A]

Sure.

[B]

You control that through how are you the field general of your army of dollar bills? To maximize this moment, building wealth does.

[A]

Not have to be incredibly complicated. And while, yes, there are ways and there are methods, you can do it inside of 10 years, they're not easy. But if you have a long time horizon and you give yourself the time to actually build wealth, it's not an incredibly difficult process. So if you do what we've said when it comes to index investing and staying consistent and exercising those three ingredients of wealth creation, discipline, money and time, there's a great chance you can set yourself up for big time financial success.

[B]

So a lot of you are probably watching this going, man, I like that passive path. It just seems like I said it, forget it. And this thing's going to unlock my future opportunities. Go to moneyguy.com resources we have wealth multiplier. We have, you know, all kind of research opportunities for you to figure out how you can maximize your army of dollar bills. Because we do believe there's a better way to do money. I'm your Host, Brian Preston. Mr. Bo Hanson.

[A]

Moneyguy team out the Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.

[B]

You say you'll never join the Navy.

[A]

Never climb Mount Fuji on a port.

[B]

Visit or break the sound barrier. Joining the Navy sounds crazy. Saying never actually is. Learn [e-mail] America's Navy forged by the sea.