Does it take luck to become a millionaire?

[midnight]

Re: Does it take luck to become a millionaire?

I don't know anything about investing, but I would like to be a millionaire. This may be a stupid question so if it is, I'm sorry. If the S&P 500 fund averages more than 10% a year, why would I want to diversify? Will diversification earn me more than 10% a year?

[JLP]

Re: Does it take luck to become a millionaire?

I think the numbers show that some luck is involved. If you by chance happened to start your 30 years of investing on 2003 rather than 2000, your money would be worth much more. I've been reading and it seems that the first 5 years and the last 5 years are crucially important.

You also mentioned the need to diversify. Isn't what you happen to diversify into luck? If you happen to hit the right spot, then you win and if you don't, you can lose big. I think it's very misleading when people throw out the 10% average because if your % gains are negative for the first five years and the last five years, you aren't going to be anywhere near $1 million.

Well, the likelihood of having 5 straight bad years is pretty slim. I'm not saying it can't happen, but I don't think it is very likely.

No, diversification is not luck. Rather, it is using wisdom. Wisdom tells us that it isn't wise to put all your eggs in one basket.

It all boils down to the fact that you shouldn't worry about things you can't control.

JLP

[JLP]

Re: Does it take luck to become a millionaire?

I don't know anything about investing, but I would like to be a millionaire. This may be a stupid question so if it is, I'm sorry. If the S&P 500 fund averages more than 10% a year, why would I want to diversify? Will diversification earn me more than 10% a year?

A lot of people just invest in the S&P 500. I personally like the Dow Jones Total Market Index better because it includes the total market (including small and midcap stocks).

The point of diversification is that it "smooths" out your returns, which gives you less chance of losing a lot of money on one idea.

JLP

[akaivyleaf]

Re: Does it take luck to become a millionaire?

The S& P is diverse. It is comprised of 500 stocks from different sectors. So investing in the S$P500 is picking 500 distinct stocks. What are sectors? Technology, pharmeceuticals, oil, etc.

[JLP]

Re: Does it take luck to become a millionaire?

Although the S&P 500 is diverse, it isn't as diverse as the Total Market Index, which is composed of over 1600 stocks organized in the following ten sectors:

Basic Materials
Consumer, Cyclical
Consumer, Noncyclical
Energy
Financial
Healthcare
Industrial
Technology
Telecom
Utilities

JLP

[The Budget Man]

Re: Does it take luck to become a millionaire?

The S& P is diverse. It is comprised of 500 stocks from different sectors. So investing in the S$P500 is picking 500 distinct stocks. What are sectors? Technology, pharmeceuticals, oil, etc.

It's interesting that people are talking about having a diversified investment strategy and then discussing the different types of shares on the share market.

As well as shares ther is property and savings.

Being diversified can also include investing in your own assets and having only managable debt levels.

For me, being able to survive if any section of my investments goes bad is a key.

Enjoy your money
The Budget Man

https://www.PersonalityBudgeting.com

For when you want the freedom of enjoying your money

[Snoopy2645]

Re: Does it take luck to become a millionaire?

Well any of my relatives or people I know who are actual millionarires didnt get thier by luck they got thier by lots of hard work!! They all own businesses of thier own & most built from the ground up. Most had some money not much though given to them somehow or someone gave them thier first break to get it going. So I think becoming a millionarire takes alot of work & scrimping & saving & its possible!!

[starving_student]

Re: Does it take luck to become a millionaire?

It takes time and hard work. I think anybody that doesn't screw up can be a millionaire even if they don't own a buisiness and do not have terrific investment.

[Ima saver]

Re: Does it take luck to become a millionaire?

I know that every young person that wants to, can become a millionaire. It is as simple as saving a few dollars away every day and never touching it until they retire. It is not that hard to save 2 or 3 dollars every day and letting compound interest do it's work.

[baselle]

Re: Does it take luck to become a millionaire?

Look..if you work full time at a job making at least $34,000/yr for 30 yrs, someone at your job will pay you a million dollars over the course of your career. At least a million dollars passes through your hands during your lifetime.

Of course you can't save all of it, but if you can save 10% of it, and put it in different places that will earn money for you. If you keep it in those places long enough so that you're getting interest on the interest or rents on the real estate or dividends on the stock reinvested from dividends, you'll get there. All of the charts that model the growth of the net worth of your portfolio are exponential...it means that most of your growth will happen in the last year or two.

So yes, if we're in a recession or a depression in those couple of years that's a risk. Does it mean that I'm not going to save and invest? Nope.

The big worry that is even worse is inflation - that a million dollars is not what it used to be.

[MarshallMiddle]

Re: Does it take luck to become a millionaire?

No it does not take luck to be a millionaire. It takes determination and consistency. If you save more than you spend and start a Roth IRA early enough, you will easily be able to amass a million.

[more freedom]

Re: Does it take luck to become a millionaire?

millionaires are not that rare.

In north america every 12min there will be a new millionaire.

The bottome line is if you work hard you will find yourself LUCKY.
HEHE

[Duchesse]

Re: Does it take luck to become a millionaire?

It takes self-control, self-discipline, self-determination, and last but not least, persistence.

[The Budget Man]

Re: Does it take luck to become a millionaire?

Our local paper featured the story of some people who are having their land resumed for a new dam. All of a sudden these people will have cash.

If I was a betting man, I'd bet that most of these people will fail to turn their compensation into a long term benefit. The precedent is less than 5% will use it wisely.

I think it is a combination of luck and hard work to make a million.

Enjoy Your Money
The Budget Man

https://www.PersonalityBudgeting.com

when a budget matters

[jmjj215]

Re: Does it take luck to become a millionaire?

I'm reminded of the quote "The harder I work, the luckier I get."

And I believe that holds true.