How to Make a Million Dollars Through Investment (and Other Ventures)

If you’re set on the idea of earning a million dollars, there are likely tons of people out there telling you that your goal is unattainable.

They’re wrong.

Making a million dollars is feasible as long as you know what you’re doing and have a plan on how to get there. If you’re not sure where to start, check out the following methods and tips on how to earn a million dollars.

Save Your Money

Image via Flickr by kenteegardin

Do you want to earn a million dollars without putting very much extra work into it? Then cut back on your spending habits and put your cash in the bank. If you simply put $5 in a bank account each day with 10 percent interest, you’ll have a million dollars after 42 years. Want to make it quicker? Save even more money.

This tip isn’t all about putting your money in the bank, however. You have to live a frugal life, and most people who succeed at this live below their means. Drive used cars, cut coupons, watch for sales, skip cable, forget the morning coffee — following these frugal tips can help you save to your first million.

Invest in the Stock Market

The stock market could help you earn dollars without stashing it all away. Instead of just saving it, you’re making it.

If you start out with $5,000 and invest $500 per month, perhaps your goal isn’t that far-fetched. If you average 10 percent annual yields, you could reach your goal in 29 years. That’s not a bad retirement fund.

If you do choose to invest in the stock market, it’s a good idea to head to an investment agency such as Fisher Investments to help you manage your portfolio.

Invest in Real Estate

Image via Flickr by Philip Taylor PT

There are many options that you have for making money in real estate, and each method could put you on your way to your first million. Check out these ways you can make money with real estate:

  1. You can purchase homes, fix them up, and make profit by reselling them.
  2. You can rent out your property. You can expect as much as 8 percent annual returns on rent.
  3. Make profits from business ventures that take place on the property, such as farming or mining.

Start a Business

In the book The Millionaire Next Door, the authors state that most millionaires lead normal lives, not the fancy life you see portrayed by Hollywood. The authors outlined several characteristics that they noticed most millionaires share. Among these characteristics, the authors found that most millionaires own their own business and they love what they do.

Don’t jump the gun just yet and believe that this is a get-rich-quick scheme. You can’t just start a business and expect things to run smoothly while watching the profits roll in. There’s a few things you need first:

  • A really good idea
  • A strong business plan
  • A profitable market
  • Money to invest in the business

When starting a business, you can sell products, services, or consultation services, and you can work in a physical location or have a business based online. If you really want to cash in, the secret lies in launching a successful startup and selling your business.

Become an Expert

Image via Flickr by Pete Prodoehl

If you’re really set on your goal of a million dollars, you can quickly claim this by becoming an expert in your field of interest. Invest in your education, take advantage of opportunities, and learn as much as you can.

Once you become an expert, you can charge for consultation services, sell books, give speeches, sell advertising slots on your website, and hold leadership positions. As you do this, you’ll see your income rise.

Before you’re ready to jump into your studies, let’s explore a few tips that can help you earn via this method:

  1. People have to like you. Make sure you practice your public speaking skills.
  2. To make any money, you must have something important to say. If you’re consulting, writing books, or hosting seminars, your success depends on the amount of people who are willing to listen. Again, you’ll only make money advertising on your website if you have people coming to the site interested in your content.
  3. You better make sure you are an expert. A degree doesn’t necessarily make you an expert. Do research and get involved in your field.

If you’re motivated and willing to put in the time, a million dollars isn’t an unrealistic goal. So stop letting people tell you that you’ll never make it! These few suggestions can help make you a millionaire.

Who Wants to Talk Stocks?

Stocks, and the stock market in general are not a normal part of the content here.  That’s almost entirely because I don’t have a lot of money invested in the stock market, and, as a result, I don’t do a whole lot of trading of stocks.  But, I do have a few accounts here and there, and I’ve managed to do semi-well with my investments over the long term.

But, I’ll leave it up to you.

The things you won’t get from any articles I write about stocks or the stock market:

  • Well analysed stock picks: Yeah, that’s just not going to happen.  At least not yet.  I don’t know enough about analyzing a stock in the way that a professional would.  If you want professional picks, try the Wall Street Stock Forecaster.
  • A well-rounded, balanced look at all of the stocks: Some of them, I just bought because I like the company.  More savvy investors will likely scoff at that, and maybe call me names.
  • No guarantees:  I can’t even guarantee that I’ll make any money on any of the stocks that I talk about, so I certainly am not going to guarantee you that the stock is any good.

What you will get from my stock/stock market articles:

  • Stock picks: Yep.  They might not be very well analysed, balanced, or even guaranteed to be any good, but that shouldn’t stop us from being able to discuss them.
  • Insight into my thought process when buying each of them: The what, why, etc of each of my stock picks.
  • Peace of mind: You’ll most likely have found someone who is a worse investor than you are.

So, what do you say?  Should we discuss my stock portfolio?  Leave a comment below and let me know!

Lending Club Return Update 2Q13

Lending Club is a peer-to-peer lending service.  People (like you and me) sign up for their site, and list a loan to be funded by investors (like you and me).  I like to think of it as replacing the bank in a loan with me.  (Except I’m not “too big to fail”.)  Of course, with that comes the same risks that the bank assumes when it issues a loan.  There’s a risk of late payments, missed payments, and default and it’s associated collection activities.  Luckily, Lending Club and Prosper (another p2p lending site) take care of most of the paperwork for the lenders (and borrowers).  This post is the second quarter update on my Lending Club account, and the return I’m getting on my money.

If you’d like to catch up a little, here’s links to the last few quarterly updates. (1Q13, 4Q12, 3Q12)

Beating Broke Lending Club Update

First Lending Club Default

I’ve been mentioning in the last several updates how lucky I’ve been that I haven’t had a loan go into default yet.  Well, that streak ended recently.  I knew it was only a matter of time before one of the notes defaulted, and one has.  Luckily, the loan that defaulted was a small one, and my portfolio has grown enough that the value of the default didn’t really affect the account too much.  The value of the defaulted loan is about 1% of my Lending Club portfolio.

There’s also a loan that is in the 31-120 days late category, that has the possibility of going to default, but at this point, the borrower is making attempts to pay the loan.  The reason it’s still in the late category at all is because the most recent payment was only a partial payment.  This loan is a larger loan than the defaulted one, so I may have to consider taking the loss on it and selling it at a discount to get it off my books.

Diligent Reinvestment

One of the things that I like most about Lending Club, and p2p lending as a whole, is that you get a relatively high churn on your money.  It’s not a buy-and-hold scenario, per se.  Yes, you invest in a note with the expectation of holding that note until it is fully paid off, but, as the payments come in monthly, that money is available for reinvestment.  In my 1Q13 update, I mentioned that I’d been a bit lazy in my reinvestment of those funds.  I was slightly better with that in the second quarter, and was able to keep most of the money pretty actively invested.

Passive Income from Lending Club

Many people (myself included) call p2p investing a form of passive income.  While not strictly meeting the criteria in that it does still require some activity on the investors part, it’s pretty close.  Maybe we need to start defining passive income in terms of it’s passivity?  Something like levels.  Each level is achieved by it’s decile of passivity.  For instance, I think p2p investing could be somewhere around 90-95% passive.  That would make it a Level 9 Passive Income source.  With about 15 minutes of work a month, I’ve earned almost $60 in interest payments as of the end of June of 2013.  Last year, with the same amount of work, I earned $75.37 in interest payments.  If I had significantly more money, that amount would be larger, but I think that the time spent each month to earn it would be a bit larger as well.  Still, a pretty close to passive means of making some money.

Lending Club Return Update

We’ve talked about most of the rest of the account, but the title did say that it was a return update, right?  Yes.  In my 1Q13 update, I mentioned that the rate of return then was being shown as 14.63%.  As of 8/3/13, it’s being displayed as 14.08%.  The combination of the defaulted loan, and the payoff of a couple of higher interest paying notes is bringing the rate down.  I’ve been happy with the return I’ve been getting, but I truly think that a more reasonable expectation of return is somewhere in the 10-13% range.  I’ll take the 14%+ returns I’ve been getting though.

Click here to learn more about how I select my Lending Club investments.

Overall, I’ve been really happy with my results at Lending Club.  And, with the p2p lending industry as a whole issuing over 200 Million in loans in July, it would appear that there are plenty of other happy users too.

Have you gotten your feet wet in p2p lending?  Why or why not?