Most millionaires happen to be business owners.
John begins his career as an employee who also runs a small side business as a hobby. Over a period of less than two decades (16 years), his hobby side business is worth more than one million GBP.
It turns out that the business that John is running has higher success rate than any other businesses. In fact, people rarely lose money in it over the long term, typically 5 to 10 years and beyond.
It does not consume too much of John’s time and energy. It is almost a pleasure to run it. It does not even require large start-up capital: only GBP 7000 maximum per year. This means that the business that John runs is highly accessible and affordable to anyone of us.
That profitable business is called stock investment.
$600 per Month over 16 Years Can Turn into Miracle
What John had achieved is incredible. Investing $7000 per year is equivalent to around $600 per month.
Investing $600 per month consistently over 16 years to generate a net worth of more than one million. That is slightly more than 20 % return per annum. To keep thing in perspective, the total out-of-pocket capital amounts to a total of $115200.
If you start investing at 30 and achieve the same result as John investing $600 per month, you could be a millionaire by 46. If you repeat this process for another 16 years, you could be a multi-millionaire.
How to Make a Million Slowly
John follows certain criteria before making any investments.
- Low PE, High Yield: He prefers single digit PE companies that pay generous dividends
- Undiscovered, Unloved, Undervalued: These are the magical words that describe the type of companies that attract John’s attention
- The Beauty of Small: John invests in small companies which have higher growth potential than larger more established companies
- Reinvestment of dividends: He leverages on the compounding machine that does all the hard work for him
- Friendly and frugal management: He likes to attend AGM to get the feel of CEOs whether they are honest and reliable with significant stakes in the companies
There is nothing extraordinary in the criteria list. That is exactly what make it so extraordinary. It means that you don’t need to be able to understand quantum physics in order to make a million.
John is a typical value investor who beliefs that value will prevail eventually.
You can read more about John’s investment principles from his book How to Make a Million – Slowly: My Guiding Principles from a Lifetime of Successful Investing (Financial Times) where he details all the investments he made including the many successes and especially the failures that he encountered during the process. He will show you how to make a million slowly.
Note: The book does not seem to be popular among the readers. This could mean good news and opportunities for those who actually read it.
Final Thought
If you dream of becoming a millionaire by starting a profitable business, stock investment is probably one of the safest and best options. You could run a one-man investment firm where you are the fund manager allocating your own money (no borrowing is necessary) to where it is the most productive to maximising its returns. $600 per month is a good starting point.
In a way, it is an advantage to not have a large capital to start because you could go places where most big investors can’t. That means more opportunities. The cost of failure is also lower.
However, it takes time to see results. But who will complain being a millionaire running a small part-time side business that cost so little?
Most millionaires are business owners. Do you want to own one too?