<Strategies for Investing in Your 20s to Achieve Wealth by 30>

There's a clear explanation for why the wealthy continue to accumulate wealth.

To those who possess much, more will be given. To those who have little, even less will be taken.

This concept is known as the Matthew Principle, a term originating from economics and taken from biblical scripture. It is often paraphrased as “the rich get richer while the poor get poorer.”

Excellence tends to build upon itself. Athletes become increasingly adept, millionaires evolve into billionaires, and top musicians continue to produce outstanding work.

Conversely, the same principle applies to failure. The more we neglect our responsibilities, the worse our performance becomes over time. Thus, starting early allows for greater opportunities to cultivate your skills and capabilities, making your 20s the prime time for investment.

You reap what you sow, as another biblical saying goes. If you plant poor seeds today, your future harvest will likely be disappointing. To avoid that fate, here’s what you should consider.

Embrace Risks and Invest as Much as Possible

Now is the time to take significant financial risks.

Focus on the potential gains from your investments rather than the losses. The stock market isn’t a gamble if you conduct thorough research. Begin by investing in companies you believe in and utilize resources like Morningstar or CNBC for information.

Consider investing in stocks, exchange-traded funds, and cryptocurrency.

Purchase and hold onto these investments. Avoid selling when prices dip, as your initial research should give you confidence in their long-term potential.

Here’s What $1000 Could Have Earned You in 2020:

ARK Innovation ETF [Tesla, Roku, Spotify, Zillow]: $1520 (152% Growth)
Bitcoin: $3000 (300% Growth)
Tesla: $7430 (731% Growth)

At this stage of your life, you're aware of which companies are innovative and on the rise. For instance, I chose to invest in Tesla back in 2020, believing in Elon Musk’s vision. To me, not investing in him felt like betting against him.

Invest as much as you can—much more than the standard 10% advice—in companies you trust and engage with daily.

Live Beneath Your Means

Whenever I spend $15 on a meal, I imagine I’ve actually spent $100.

Once you master investing, you can potentially double or even triple your money. It's a remarkable ability.

This is why it's essential to save whenever possible. Opt for cooking at home over dining out, and meticulously review your bank statements to eliminate unnecessary expenses.

Remember, living frugally in your 20s is perfectly acceptable. No one will judge you for it. However, things will be different when you reach your 30s.

Surround Yourself with Like-Minded Investors

Your 20s are a great time to distance yourself from negative influences.

A toxic friend in college might lead to embarrassing situations, but a toxic adult friend can have long-lasting, detrimental effects on your life.

Such friends may encourage you to overspend or convince you that your 20s are for reckless living, with plans to fix it later. This attitude is self-serving and misguided.

Choose your companions carefully, as the company you keep can significantly influence your trajectory. Surround yourself with individuals who inspire and motivate you.

Save with the Intent to Invest, Not Just to Save

Smart investments safeguard your purchasing power, which refers to how much goods and services your money can buy.

Purchasing power isn’t solely linked to cash. Assets like gold and Bitcoin are increasing in value due to the U.S. printing more money while producing fewer goods, leading to inflation.

Currently, the interest rates on savings accounts are not keeping pace with inflation. Banks no longer effectively protect our purchasing power.

This is why Elon Musk recently allocated a large portion of Tesla’s funds into Bitcoin—he aims to preserve his company’s purchasing power.

Would you bet against Elon Musk? I wouldn’t, which is why I invest in Bitcoin and similar currencies.

Create Multiple Income Streams (Establish Leverage)

“A salary is just the drug they give you when they want you to give up on your dreams.” — Kevin O’Leary

Avoid becoming dependent on a single income source. Not only does this limit your wealth-building opportunities, but it also restricts your leverage.

If you dislike your job or boss, you may feel compelled to remain due to a lack of alternatives. Don’t allow yourself to become trapped.

Some straightforward ways to generate additional income include investing in stocks, exploring side hustles like freelance writing, or developing a product.

Open a Roth IRA for Future Wealth

Warren Buffet exemplifies long-term investment strategies, amassing significant wealth over time.

Buffett’s net worth stands at approximately $86 billion, with the majority of it (99.7%) accumulated after turning 52.

A Roth IRA operates similarly.

If you maximize your annual contributions of $6,000 to this tax-advantaged retirement account, you could become a millionaire by age 55, assuming no major global upheavals during that time.

While $6,000 annually may seem steep, using a dollar-cost averaging strategy makes it psychologically easier to manage.

Reevaluate the Necessity of College

If I had children today, I wouldn’t envision them attending college without a compelling reason. They could travel, enroll in coding or UX boot camps, or pursue vocational training.

I would advise against college unless it’s a clear passion for them. Even then, I’d urge them to be certain.

College often burdens students with debt, provides many with degrees of limited value, and promotes a singular ideological perspective. A significant majority of college professors lean toward leftist ideologies, potentially restricting diverse viewpoints.

I want my children to understand multiple perspectives and not waste four years in an environment that limits their thinking.

If you're currently in college or considering it, take the time to reflect on your decision. Don’t let past investments dictate your future.

Discern Between Good and Bad Debt

Philosophers assert that the world consists of tools and objects; economists refer to them as assets and liabilities.

Look around your space. What qualifies as an asset? Is your television an asset or a liability? What about your treasured books? Which items enhance your life, and which detract from it?

Spending money on a liability means that dollar is gone forever. Conversely, spending on an asset means that asset now works for you, generating income.

It’s acceptable to incur losses while acquiring assets—this is considered good debt.

Bad debt involves expenditures on liabilities, such as using credit cards to purchase the latest phone or overspending on luxury items.

If you can differentiate between assets and liabilities, nothing will prevent you from achieving financial success by your 30s.

Final Thoughts

Gary Vaynerchuk once remarked that your 20s are the time to act decisively.

Now is the moment to focus on building the foundations of your future. You will look back on this decade either as a period of significant growth or as a time wasted.

Keep in mind that the world is more forgiving when you’re younger. As long as you’re making an effort, many people will support you because they value your commitment, regardless of your inexperience.

Make wise choices now, and you’ll be grateful later.

Consider checking out my new book “Mind and Muscle” linked here.