I Will Teach You To Be Rich.
‘That’s a funny book title,’ I thought.
In early 2019 I started to make more money than I knew what to do with. Some months I was profiting an excess of $3,000, which might as well have been a billion dollars in my eyes.
I knew I needed to invest, and I knew that I needed to invest ASAP since the younger you do it, the more your money will grow.
So I picked up a copy of I Will Teach You To Be Rich by Ramit Sethi and tried to solve my problem.
It actually solved all my problems and more. Since reading that book, I’ve invested $25,000 — which has grown by some $2,000 due to investment gains.
I know it’s not a ridiculously large amount, but I’m sure a lot of young people would love to invest five, ten, or twenty thousand dollars before they turn thirty.
I want to show you how I accomplished that.
I Created An Online Business
Since 2015, I’ve been obsessed with making money online. When I couldn’t land a job despite going on 30 job interviews, I went on Craigslist and looked for freelance writing gigs. Luckily I won a job writing an ebook for a client. She wanted 5,000 words for $100.
I happily accepted the offer and two days later, I made my first $100 on the internet. It fascinated me, and I stuck with it for a few years afterwards.
I loved writing so much that I began blogging on an up-and-coming website. After a few months, I remarkably had a thousand followers on both my personal profile and a publication I’d started. I even had writers I didn’t know asking to contribute to my publication!
Over time, I started getting a lot of questions about said platform and how to grow a following there, and I felt like, after publishing a hundred or so articles, that I had some worthwhile insights to share.
So I created an online course about that platform and how to grow there. Luckily on my first webinar, I had 10 people sign up for the course. I remember coming downstairs and telling my Dad I just made $1,500. The look on his face was one of surprise and pride. I’ll never forget it.
That single online course has gone on to make me $200,000. It has been such a blessing.
I’ve written about how most finance advice seems to leave out that you need to make a ton of money to really become financially independent.
Well, this online course has been my money tree, and I firmly suspect anyone who can grow a following online — be it on LinkedIn, Youtube, Medium, a WordPress blog, or anywhere else — can sprout their own.
I Opened A Roth IRA At Vanguard
In I Will Teach You To Be Rich, Ramit Sethi lists off a bevy of online banking options to start your own Roth IRA. Since I am not an employee of any business, I don’t have a 401K and employer contribution matching. I learned later that you could open a Solo 401K, but compared to a Roth IRA it doesn’t really have the upper hand. Both types of accounts are equal in my opinion, since they both have tax benefits.
The short story? It doesn’t matter that much whether you open a Roth IRA or a Solo 401K. Just pick one and get started investing.
Anyway, I settled on a Roth IRA from Vanguard as my best bet. Ramit gives you two options for picking funds/companies to invest in:
- If you want to have a “hands-off” investment strategy, it’s best to invest in an index fund — also known as a fund that just replicates the performance of the stock market.
- If you want to have a “hands-on” approach, then you need to do intense financial research on all the companies you want to invest in.
I chose the first approach. Vanguard has a Total Stock Market Index Fund, which is is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks.
Throwing money at this fund and this fund only over the last few years has resulted in my investments gaining about $2,000 in value.
Not bad for two years worth of investing. One quick note: I recently opened a Solo 401K as well, since you can only contribute about $6,000 per year to a Roth IRA.
I Invested In The Philippines Stock Market
I have less than 10% of my portfolio in the Philippines Stock Market, but so far I’ve seen some ridiculous gains. After just two months of investing here, I’ve seen a 20% jump in my portfolio value. This doesn’t mean much since stock markets rise and fall, but I’m quite pleased with the performance.
Common investing advice says to disperse your portfolio across markets around the world.
Soon I hope to invest in the European stock market, too.
Investing in “Developing” countries can be a bit risky, but since I know a good bit about the Philippines and the best companies here, I feel I can take a few risks with a small portion of my portfolio and look at it as play money or something.
Best case scenario is I make some money. Worst case is I lose a little bit. Either way, it’s not going to make or break my long-term investing goals.
Tax Returns Have Resulted In Tens Of Thousands Of Dollars For Me, Too
Since I’m self-employed, I have to save about 25% of my earnings every year for taxes. I automatically route tax money between accounts so I never see that 25% reserved for the government. I am strict on that rule.
The good news is, when tax season rolls around, the amount I owe the government is hardly ever what I’ve actually saved. That’s because I have business deductions and my tax man makes sure to take advantage of all the fine print in tax law to keep the amount I owe reasonable.
In February of the last 4 years, I’ve always had some sort of bonus waiting for me. Last year I had about $10,000 laying in my account I thought I’d owe the government, but didn’t actually.
This has helped me significantly in investing, since it’s literally just a lump sum that seems to appear out of nowhere. If you want to go the route that I’ve taken, always take 25% out of whatever you make each month and set it aside. Don’t deduct business expense or anything. With enough luck, after you deduct business expenses and get your tax man to do their magic work, you’ll have a lump sum just waiting to be invested.
Most of how I invested $25,000 the last few years has to do with being able to make a lot of money with my online course, I’ll fully admit that. If I were you, I’d just focus on sprouting your money tree first. Then you can get into all the investment options I’ve just highlighted if you so desire.