How to invest and become a millionaire? (Mid-30s)

I am in my mid 30s with comfortable level savings, steady outgoings, credit card debts are under control, matured career, afford to travel a couple times a year and not into any more gadgets or expensive gear. Some at 36 have kids and others are still single. But the common ground for both mid 30s is comfortable level of savings.

How do I invest for growth? Is it too late to take a little risk?If you are still not saving in your mid 30s then you are taking an enormous risk. This is not right and perhaps you should consider getting away from debts before its really too late. Or perhaps you may be investing on a business which could potentially grow. Regardless of the circumstances, to retire as a comfortable millionaire is not how you earn but how you save and invest.

This article is focus on the investment and not how to save. Thought I would warn before you read forward.

There are three key reasons why you have stumbled into this article today. First reason, you are clearly unhappy that your savings bank account is paying a very low interest. Second reason, you cannot understand how your friends and colleagues are boasting on how well they are doing in their investment and have no clue how to mimic them. Third reason, how much should I save and invest and what goals are reasonable for my current age.

To be totally honest being in your mid 30’s is probably the best time to plan for the future retirement. All the parties, travel plans, toys and gadget days are perhaps done and dusted. The greatest tool we have left is time. Between the age of 35 to 65 years you have 30 golden years to compound interest from start to a millionaire. The risk you take at this age is simply low and probably have sufficient funds and savings for a good portfolio. Finally the rate of success is probably highest too.

To begin our case study, we would like to assume you have at least USD20,000 in savings which you do not need for any near future requirement (i.e. Mortgage, school fees or a shopping spree). This is crucial because a long term commitment is required for compounding growth.

$20,000With a $20,000 starter savings, you would need three key conditions to retire as a millionaire in 30 years.

  1. Dividends reinvested for further growth
  2. Minimal 8% growth every year with reinvested dividends of 3%
  3. Annual annuities of $3,000.00 (yearly top up)

The greater the yearly growth the faster you would grow your retirement funds.

My Guidelines below guides on how to deploy a 100% equity portfolio to help gain the required yearly growth. If you have 30 hours spare time month to research and invest your hard earn money then you should strongly consider this guidelines shown below.

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Rule 1 of future millionaire retiree fight club

Firstly, it to identify good defensive shares with increasing dividends for  longevity and dividend reinvestment plans. This 30% plus the 15% cash will help to reduce the impact for any financial crash which may happen 2-4 times over the 30 years cycle. These are long sustainable type shares which is easily identifiable but difficult to decide when to buy.

Easily identifiable means they should be shares which you see on a daily basis. Tip#1 would be looking into the future and trying to identify companies which will still be standing tall when you retire or when your grandchildren starts going to university or work. (i.e. Disney, Starbucks, Microsoft, etc)

Tip #2 would be going on a weekend shopping with the family and bring a note and pen and try to identify all the companies of the groceries your family buys. I can guarantee you will find 8-10 common companies which you do not realized are own by the same companies. (Dieago, Unilever, P&G, Heinz, Pamolive/Colgate, Coke, Pepsi, etc).

Tip#3 These defensive dividend shares can be invested on a  regular basis. Make sure you get a free app on your phone with alerts which would track your favorite ones. Do not worry about drop of under 6%, this is mostly due to dividend pay out on a quarterly or yearly basis. If you witness a drop of 10% then is normally an attacked by a scandal or a non P&L related issue (i.e scandal, internet hacks, retirement of a CEO etc). Depending on your confidence in the future of the business you can decide to deploy more cash into share holdings.

There is one stock which I think is super defensive, slow steady growth, strong portfolio of brands BUT have not paid any dividends in the past 5 decades! It is Warren Buffets own Berkshire Hathaway stocks currently price at $177 per share. Google Berkshire Hathaway ownership and stakes in Apple, Heinz, P&G, Coke, Pepsi and the list goes on.

Another unorthodox shares which I would class as defensive with excellent dividends and future with ever changing technology is BMW. 5% dividends yearly with a long term brand and following from people of all ages. Drives German economy and pride. I am sure they will be leading the electric car brands once diesel and petrol days are over.

Rule 2 of future millionaire retiree fight club

Identify good growth shares to help boost the growth (DOH!). Many growth shares have poor dividends or no dividends at all. Please remember to always buy growth shares during a correction cycle, which means buy a big chuck when there is a temporary crisis which does not impact the business or cash flow.

Growth shares are fairly tricky. If all of us have a crystal ball then the stock market would be non existence. Between 2012-2017 the chances of identifying a growth stock was whole lot easier compared to 2002 to 2007. Data for analysis was easily available and well tracked for progress. Still it is not easy to identify the next big stock. A few things always goes through your mind. Has the growth boat left? I think its too expensive to buy now. Its already a bubble ready to pop!

Tip#1 Stick to your day trade. If you work for the oil and gas, gamer, logistics consultant, bio technologist, doctor, insurance advisor; look into your fields and study the strength and weakness of your field and try to pick out the cream of the crop stock. This way it will give you more superior confidence since you potentially have better information than the analyst on the world wide web.

Tip#2 Never follow someone else’s recommendation. Warren Buffett once said, if the door bell boy at the hotel starts dishing out stock tips its time to leave the stock market.

Tip#3 never be afraid to look into emerging markets. Emerging market poised more risk than the FTSE, EU, NASDAQ. If you are genuinely looking for growth perhaps study and research into China, India, Latin America, South Africa.

Tip#4 Never store all your eggs into one basket. Never just focus on Technology stocks as it is the trend. Never just buy bio stocks or Oil and Gas stocks. Diversfy Diversify Diversify.

As of writing this article, the current common big guns I favour are Amazon and Facebook. The simple reason is because of their incredible visionary CEO Jeff Bezos and Mark Zuc. There two are born with a vision, never afraid to fail, financially backup and no rivals close to second place. They are still young and not ready to retire until the change the world completely.

The hidden gems i am investing on are Tritax Big Box REIT and AMD. Tritax are based in the UK and are expanding with online shopping. High streets are no longer the future. As high street shops diminishes, storage areas for online shopping giants will be emerging replacing empty farmlands in the UK with logistics trucks covering the land. AMD is the rival to Nvidia will be standing tall for the E-Sports growth in the future and will not be stopping until the industry stops.

Rule 3 of future millionaire retiree fight club

Risky shares of 15% is not lot but good enough to create room for exponential growth. If carefully selected a risky shares could increase in twice or ten folds its value. There is also an equal of 15% cash warchest if needed to boost this to up to 30%. Then again, it all depends on the individual investor preference on deployment of the 15% cash holdings.

Unfortunately this post will not be advising or recommending risky shares. However i would still share tips on the cash.

Tip#1 Always have a minimal of 15% cash available when required. All shares investment contain a form of risk. If a share is purchased when the value is below its norm (discounted) then the risk is further reduced. To be able to capitalized on this opportunity then CASH is required!

Tip#2 Cash can be used as rainy day fund if needed rather than selling shares.

Tip#3 Save Save Save. To get involved in growth investment, always be prepared to save no matter how the market is doing!

Final Words

Honestly an 8% yearly growth with 3% increasing dividends is very difficult to sustain even for 10 years.

Always be prepared to save no matter what. Always spend less than you earn to enable a certain level of savings.

Investment is money working for money without any hard labour involve. Its like a second job without working. There are risk involves but it does not risk your day job.

Being in your mid 30s its no harm learning how to self-invest and study more about economic and industry which are not norm to your daily job.

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