Becoming a millionaire is a goal for many people, and there are numerous paths to achieving that financial milestone. In this article, we’ll explore some of the most common ways that people become millionaires, backed up with real data.
Starting a business
One of the most well-known paths to becoming a millionaire is starting a business. Entrepreneurship can be a risky endeavor, but the rewards can be substantial. According to data from the Small Business Administration, there were over 30 million small businesses in the United States in 2019, and they employed over 60 million people. Furthermore, data from the Global Entrepreneurship Monitor shows that the rate of entrepreneurship in the US has remained stable over the past decade, with around 15% of the adult population starting a business each year.
Of course, starting a business is just the first step. To become a millionaire, you need to build a successful company that generates substantial profits. Data from the National Bureau of Economic Research shows that the median annual income for small business owners in the US was $48,000 in 2016. However, the top 10% of small business owners earned over $500,000 per year.
Investing in the stock market
Another common path to becoming a millionaire is through investing in the stock market. Over the long term, the stock market has historically delivered substantial returns. According to data from the S&P 500, the average annual return for the stock market has been around 9% over the past 90 years. While investing in the stock market can be volatile in the short term, over the long term, it has proven to be a reliable path to building wealth.
To become a millionaire through investing, you need to start early, be disciplined, and take a long-term approach. According to data from the Investment Company Institute, the average investor in a stock market mutual fund held their investments for 8.1 years as of 2019. Furthermore, data from the Consumer Federation of America shows that investors who start saving for retirement in their 20s and continue to do so until their 60s are much more likely to become millionaires than those who start later in life. See our article on “How millionaires stay rich” for more tips.
Real estate investment
Real estate is another popular path to becoming a millionaire. Investing in property can provide substantial returns, especially if you’re able to purchase properties that appreciate in value over time. According to data from the National Association of Realtors, the average annual return on investment for rental properties in the US was 9% between 1985 and 2019.
To become a millionaire through real estate investing, it’s important to have a long-term perspective and to diversify your portfolio. According to data from the Joint Center for Housing Studies at Harvard University, the median net worth of households that own rental properties is nearly $250,000, compared to just $97,000 for households that do not own rental properties.
High-paying careers
Finally, becoming a millionaire is possible through hard work and dedication in a high-paying career. According to data from the Bureau of Labor Statistics, the median annual salary for workers in the US was $39,810 in 2020. However, there are many high-paying careers that offer the potential to earn significantly more. For example, data from the BLS shows that the median annual salary for doctors was $208,000 in 2020, while the median annual salary for dentists was $174,000.
To become a millionaire through a high-paying career, it’s important to choose a field that you’re passionate about and to continually develop your skills and knowledge. It’s also important to be disciplined with your spending and to save and invest a significant portion of your income.
Conclusion
In conclusion, becoming a millionaire is a goal for many people, and there are numerous paths to achieving that financial milestone. From starting a business and investing in the stock market, to real estate investment and pursuing a high-paying career, there are many paths to building wealth. However, the key to becoming a millionaire is a combination of discipline, hard work, and a long-term perspective. By starting early, being strategic, and staying focused on your financial goals, you can increase your chances of achieving financial independence and becoming a millionaire.
