Updated on 07.13.15

How to Get Rich Quickly!

Trent Hamm

Here’s how to get rich quickly.

Whenever you receive income of any kind, immediately put 25% of it into a savings account. Whenever that savings account reaches $5,000 in total balance, invest it in something, ideally something different than what you’ve invested it in before. Buy stocks. Buy CDs. Buy commodity or precious metal or land ETFs. Buy shares in individual companies that you believe in. Then just watch it grow.

Wait, that sounds like normal investment advice! How will that help you to get rich quickly?

It’ll get you rich much more quickly than almost any other plan out there. You just need to re-evaluate your idea of quickly.

In terms of building wealth out of nothing, it doesn’t happen overnight (unless you happen to have a brilliant idea and the skills to perfectly execute it, which happens only a few times a generation). It takes time. It also takes discipline. Most of all, it takes patience.

Patience is a virtue that’s often overlooked. When people think of getting rich quickly, they think of buying a lottery ticket and having $50 million next week. They think of having some sort of secret insider information that will double their money in a month (like those endless penny stock scams that constantly float around). They think of arrangements where they hand their money to a guru who will magically cause it to multiply several times, never asking themselves why that guru even needs their money (hint: money gurus can’t perform magic).

In the real world, building personal wealth doesn’t work that way. It usually comes through saving up your money over a long period of time and putting that money to work over that same long period. However, the more diligent you are about the saving and putting that money to work, the quicker you will get rich.

Let’s say you have someone who is making $40,000 per year. They have no debts, but no assets, either – a net worth of $0. Let’s also define “rich” as being having 20 times your annual income in investments, which means if the investment earns just a 5% return, you can live on just that return in perpetuity.

If they save 1% of their income each year and put it in investments that earn an average of 7% per year, it will take 74 years to cross the “rich” mark.

Bump that savings up to 2% per year (from $400 to $800 per year, or from $15.50 per biweekly paycheck to $31), it will take 63 years to get there. Add 1% and you subtract nine years off of the time it takes to become rich.

Let’s bump it up to 5% per year. It then takes only 50 years to get there.

10%? It takes only 41 years.

Let’s say you’re a prodigious saver and save 25% per year. It takes you only 28 years to get there. Start at age 25 and you’re retired at age 53 on your own investments. When Social Security starts rolling in, it’s icing on the cake.

This really is the recipe for success. If you make $40,000 a year, live as though you make $30,000 a year. If you make $80,000 a year, live as though you make $60,000 a year. Bank 25% of your paycheck and live on the rest.

What you’ll find is that your lifestyle adjusts when your checking account does. The perks of life become actual perks that you appreciate instead of just a static routine of disposable pleasures. You can look forward to a future that involves doing whatever you want instead of working at a job until you’re unable to work any more.

If you want to get rich quickly, you already have the tools you need. The question is whether or not you have the courage to do it.

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  1. CClio333 says:

    What if you DO have debt? Should the 25% be a combination of debt payments and investments? Or should you still try to set aside 25% just for investments, while also paying down debt.

    In our household our total monthly income currently breaks down like this: bills – 20%, debt (including mortgages) – 40%, savings and investments – 10%. The remaining 30% is for things like food, dry cleaning, pet care, Netflix, etc.

  2. Phil says:

    That is one of the few articles that I find extremely energetic; I like it. It makes you feel like you should and you can act now.
    I also like that there is constant reminding that any amount works.

  3. The Alchemist says:

    Great advice. Here’s a question for you Trent: Does the money contributed to 401k, etc. count towards this “25% heuristic”? (rule sounds too strict :)

  4. almost there says:

    quicker. That word reminded me of the SNL skit on the take off on paper towel slogan, “the quicker picker upper”. Quicker refers to speed and sooner refers to time. So get rich sooner is more appropriate but that wouldn’t tie in with the saying of “Get Rich Quick” as per the schemes.

  5. Zepiyin says:

    I love these type of articles. Good jobTrent.

  6. chuck says:

    Saving 200% of your paycheck will get u there even faster. i think I’ll start that next week.

    i do wish there was a real get rich quick method. i guess thats why we all keep searching for one.

  7. As you bump up your savings rate, there’s a nice double whammy: you’re saving more while reducing your annual spending. This means your “I’m rich” number can be reduced and you get there faster too.

    All the best,

  8. Steven says:

    If we’re just going to change definitions of words, why not redefine “rich” as well. That’ll get you there even sooner…

  9. Kim says:

    “having 20 times your annual income in investments, which means if the investment earns just a 5% return, you can live on just that return in perpetuity”.

    Someone is going to have to explain this in detail because it sounds impossible. The rule of thumb is that you can spend 4% of your next egg in retirement with a balanced portfolio earning 6% or 8% and your money will last 25-30 years. How can living on a 5% return allow your nest egg to live forever? What am I missing? Is inflation being taken into account here?

  10. Andrew Schwartzmeyer says:

    It certainly made me act. I quite literally opened up a new savings account to do this exact thing right after reading this article. (I’d already done the research for the best account). Thanks!

  11. Gerald says:

    I love this principal, it’s work doubly better when you have a spouse that is doing the same thing.

  12. *pol says:

    I love this post, it’s got a great kick in the butt to remind me that there is a reward to this saving thing!

  13. Other Jonathan says:

    Kim – If you have 20 times your income, that means that one year of income is equal to 5% of your investments. If your investments return 5% every year, you can withdraw that amount each year (equal to your original income) and still have 20 times your income remaining invested.

    The “rule of thumb” is quite conservative, in my opinion, but accounts for the fact that investment returns are not necessarily that consistent (see the past 4 years). If you’re living off of your investments, you have to draw from them in good times and in bad. If you had 20x your income in 2007, it may have gone down to only 12x your income in 2008; but you still need to withdraw the same amount, so you really reduced your net worth by 8.5% that year, not 5%.

    One quibble – it should read “20 times your annual EXPENSES.”

  14. almost there says:

    #6, Kim this is just on paper “what if” by Trent. He assumes a 25% contribution rate earning 7% but once the nest egg has grown to 800K dollars it earns 5 percent return and the person earns the original $40K in interest that his pay was at the start 23 years ago. It doesn’t factor in inflation or the growth of wages, etc. Just showing the younger you start and the more you save the better off you will be. Kind if like a life insurance policy quote I am looking at in front of me. If I pay $639.80 per month for 20 years (total premiums $153.553) It would earn a guaranteed 4.5% having a cash surrender value of over $206 thousand dollars in 20 years time and no more premiums. By 33 years of coverage it would be guaranteed cash value of over $271,000. Where they hook you is with the projected current earnings rate of 6.875% and the cash surrender value of over $500 thousand dollars with a death benefit of over $591,000 dollars on a $350,00 face value policy. In the past 18 years the earnings rate has fallen from 8.5% to the current rate. Not bad but a good example of showing one cannot base future earnings on current ones.

  15. My first comment after reading your site for years. Thanks for the great article. I have paid down debt from 22,325 to 9,875 (yea, I rounded it off). The Simple Dollar has given me inspiration when I couldn’t find it any place else. Thanks!

  16. Thomas says:

    30 years is still too long – after that ammount of time, most people are too fragile to actualy enjoy that kind of money and will spent most of it on just keeping them alive.

    What we’re looking for is achieve this goal in 5-10 years, so we can enjoy it in this lifetime.

  17. deRuiter says:

    Dear Thomas #10. This is easy, marry someone who is rich, don’t sign the prenup, and you will be rich over night.

  18. Walter says:

    Wish I had started this when I was younger. This is great advice and I hope you will soon do a artical on creating income with investments after retirement for us lower income folks.

  19. lurker carl says:

    #10 Thomas – If your thirty year savings goal begins at age 60, you are correct. There is a simple solution for this. Just save about $400,000 each year for five years to make up for all that lost time.

  20. valleycat1 says:

    #10 Thomas – In Trent’s post, he posits starting at age 25, so taking 30 years brings his hypothetical person to 55. Do you seriously consider a 55 year old “too fragile” to enjoy life? I’m beyond that & far from being on life support! I’m guessing you didn’t start at 25 and now need to accelerate your retirement funds. I’d like to see your (or anyone’s) plan for achieving financial independence in 5-10 years – I doubt most people can or would be willing to save/invest for only 5-10 years and end up with enough to live on for the rest of their lives.

  21. Chere F says:

    I can attest to the truth of this article. In my mid20s I began putting HALF of EVERY RAISE into savings. Trust me, my raises weren’t much but I made it a habit. When I had enough to toss into a money market stock, I’d do that or something other investment. But hubby and I kept tossing that amount into savings.

    We lived within our income (no excessive credit card amounts, drive my cars until they die, use up and reuse if possible, etc.) but we didn’t deprive ourselves. We took amazing (but economical) vacations – family camping tours of the Alps and in Greece. Home swapping with a new friend in France. Camping and canoeing all over the US. Many, many great memories shared with new and longtime friends.

    I retired at 49, hubby retired at 55 to make sure we have health insurance until Medicare kicked in. Our time is our own to do as we wish. We’re doing much the same as before.

    We still live frugally. Recently we spent 4 weeks in CA dog/house sitting for a new friend who needed someone during a hospital stay. We’ve been invited back anytime – just to visit and stay and hope my new friends visit me in FL sometime. Later this year we’re camping and canoeing 4wks in Utah w/ friends.

    It wasn’t hard once we got in the savings habit – and kicked the habit of “buying buying buying” stuff we didn’t need and really didn’t want. Even with our frugality our 4b2b home is packed to the rafters with too much stuff – we are now trying to downsize and get rid of all this “stuff”. I’m giving lots away to friends (via FBook) that say they could use it.

  22. Juliana says:

    Regardless of some of the more negative comments, this plan is a starting point that I find helpful. The recommendations give a perspective on what is possible. Thinking of possibles lead to more possibles. The word impossible only lead to a downward spiral. Starting somewhere is better than not having a plan at all. Thanks for putting it in a doable formula, Trent

  23. svwashout says:

    It worked for me. BTW I don’t call this “rich”, just financially independent.

  24. The IIIrd says:

    Nice post Trent. I love how you put it “getting rich quickly” in drop dead simple terms we all can understand…

  25. dave says:

    Im suprised at the negative comments. This is an easy to use approach. I would add to have an investment that the investor is interested in. This is crucial for a young investor. I always liekd investing in real estate because it is tangible. The investor can see his property and have pride in the ownership. Stocks are a piece of paper and less tangible. For a young investor, I like using an IRA to invest in real estate. Companies like http://www.capitalira.com are very effective at this.

    Overall, great article! Thanks

  26. Rick says:

    ’30 years is still too long ‘
    Instead of 30 years, how about 5 years ?
    Check out Early Retirement Extreme by Jacob Lund Fisker – both the website and his book. He lived on 20% of his income, saved 80%, and retired in just over 5 years !

  27. getagrip says:

    Actually, if you are willing to really cut back what you think you “need” to live, you can be financially free in under ten years aka extreme early retirement (you can check out the blog to see how one guy did it). You have to really minimize your expenses and maximize your savings, but it can be done. The problem is that most of us, myself included, don’t want to go to that extreme. Thus Trent’s examples offer a reasonable middle ground as long as you keep in mind you are deciding on these wants and deciding on what you consider “rich”.

  28. Tom says:

    Steve Martin said it best: the easiest way to become a millionaire is, first, get a million dollars…

  29. lurker carl says:

    If your thirty year savings goal begins at age 60, Thomas is correct. There is a simple solution for this. Just save about $400,000 each year for five years to make up for all that lost time.

  30. donald t. says:

    Yes this is good advice – work for 45 years, squirrel away your income the whole time, and when you are ready to die, you will be rich (*disclaimer – rich in 2011 dollars, maybe not so rich in 2043 dollars)

  31. jackowick says:

    @ #16 Thomas – 30 years is too long? If you start working at 20 full time and can retire at 50, you can do plenty.

    Tom Cruise is 48. Brad Pitt is 47. Robert Redford is 74, so think about 20 years prior to that.

    I think this comes down once again to people not wanting to wait…

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