“Become a millionaire not for the million dollars, but for what it will make of you to achieve it.”
― Jim Rohn
I was once asked by a reader through email that since my strategy was so simple, does it mean everyone in this world can retire a millionaire?
The answer is a definite Yes. It is possible for all middle-class Malaysians and Singaporeans to retire a millionaire even though you are just an average income earner.
But it is definitely not going to happen because there are a lot of people out there still believe in a special formula/scheme rather than a simple path of getting rich slowly and surely.
Three types of millionaire
We all know at the end of the day, three factors determine the wealth of an individual- income, investments, and expenses. According to the Department of Statistics of Malaysia, in 2019, the mean income in Malaysia was MYR7,901 while Malaysia’s median income recorded at MYR5,873. The Malaysian saving rate is an impressive average of 29.3%.
The Singaporean saving rate is an unbelievable level of 43.2%, as compared to the US saving rate of 7.9%.
Let say an average Malaysian back in 1988 religiously invested every month 25% of his income of MYR5000 ( about MYR1750) to an index fund (presumably an S&P500 index fund) when he started working, over the period of 30 years, he would have invested a total of MYR630000. The total portfolio value after 30 years was an astonishing amount of MYR 3.06 million.
There are three types of millionaires in this world. Those who are born with a silver spoon will not be included here.
First Type of Millionaire – The Optimizer and Saver
According to Kristy Shen, this is the first type of millionaire she calls Optimizer. I term them as Optimizer and Saver. Any average Joe or Tom can do this. You only need one simple strategy- be an average wage earner, save diligently and invest religiously in a low-cost index fund/ETF and wait patiently.
There are countless stories of people of modest income who by way of fugal living and dedicated savings became millionaires eventually. You do not need a special formula, and certainly do not need an IQ of 160 to do it. What you need is just patience, obsession with controlling your expenditure, and eagerness of investing your saving in low-cost index funds/ETFs.
The optimizer usually has average income and investment return but exceptional savings.
Second Type of Millionaire- The Investor
The second type of millionaire is the one that catches the spotlight in the investment world. People know Benjamin Graham, Warren Buffet, Charlie Munger because they turn money into even more money in a very short period of time.
When we are talking about an average investment return of 6-8%, this type of investor is not impressed at all. Their average returns are 20%, 40%, or even 100%.
The investor millionaire has special investment skills. Can you learn this skill? Yes, you can but you might not grasp the essence of it even after losing a big chunk of your savings. The pathway to becoming a millionaire by using this pathway is only for those who are gifted and risk-takers. They read annual company reports, analyze financial statements, and use debt properly to maximize their returns.
The most dangerous thing about this pathway to millionaire is that you might think you are the gifted and skillful one but actually your previous wins were mere luck than just anything else.
A lot of people have a delusion that they are gifted and this is the correct pathway. Unfortunately consistently successful investors are rare.
The investor millionaire usually has an exceptional investment return but average income and savings.
Third Type of Millionaire- The Inventor /The Fast-lane Hustler
The fast-lane hustler is the champion of all the pathways and admired by everyone. Their main source of wealth comes from their ability to earn money through innovation and creativity.
They are entrepreneurs, inventors, writers, sportsmen, famous writers, businessmen, etc who can make infinite money fast by influencing millions of people.
Classical examples of this type of millionaire are Mark Zuckerberg of Facebook, Steve Jobs of Apple, and Cristiano Ronaldo of Juventus.
They have skills or products that amuse millions of people. They become millionaires in a remarkably short time. I term them as fast-lane millionaires.
This is the most difficult pathway to riches that everyone dreams of. The hustler millionaire has exceptional income but average savings and investments return.
Conclusion
You have seen people getting very wealthy using the second and third pathways but not all paths were created equal.
The surest pathway of becoming a millionaire by far is the first pathway. It is reproducible no matter who and where you are now. It is mathematically reproducible if you follow this simple path of becoming a millionaire.
Whether you are a Malaysian, Singaporean, or any nationality with an average income, if you follow the same formula outlined in this blog by investing in a low-cost index fund and proper asset allocation, you would retire a millionaire sooner or later depending on how much you save every month!
