The Wealthy Formula that I use to Build Wealth

I wasn’t born with a silver spoon. In fact, due to a lot of circumstance I stopped taking pocket money from my parents since 16 years old. I went to a local university and came out of university with a degree and only $6,000 and having to repay $16,000 in student loans that my parents helped me paid off.

For the past 10 years, I worked as an engineer, not drawing more than $5,000 in monthly salary at any point in my career.

In 5 years time, I believe I can reach Financial Independence, where I can afford to take the foot off the pedal and choose how I want to live the second part of my life. Conservatively, I believe I am very near it.

Many have asked how did I build my wealth to enable me to be close to it. I believe many people can do it as well.

I distilled what I did in this post here. In this article you will gain:

  1. The three fundamentally sound things that lay my wealth building foundation
  2. Comparison of someone who do more versus someone who did less of these things
  3. What are the 2 most important factors to build wealth and they just happen to be within your control
  4. The alternative to build wealth if you are not investment savvy
  5. The difference in not saving now but saving later and end up doing just as well
  6. Will you still have enough to spend?

No luck just Smart Actions

Many in this world have come before us that to be wealthy it is not hard.

The way to build wealth is ridiculously simple.

It is not about luck. It is rather scientific.

And because it is scientific, it means being wealthy is within your reach.

When I heard Todd Tressidder explained it , I just thought it represent what we tried so hard to find so well.

The crazy simple formula to be wealthy

Building sustainable wealth for the average folk involves doing three things well:

  1. Spend Less
  2. Earn More
  3. Build Wealth Wisely

That’s it. I just provided the holy grail. Couldn’t get more simple than that.

1. Spend Less

We all started with roughly almost the average amount of privileges. We went through roughly the same education system, and judging by the trend, a large proportion of the people work towards a minimum degree in university.

What usually differentiates people are their spending patterns.

The wise ones

  • Spend within their means. If they earn $2,500, they won’t spend $3,500
  • What they spend on reflects their values. You will not see them buy the best blenders, television and go for big holidays if their highest value are their kids. You are likely to see them working within what they can spend on and devoting an above average amount compared to other parents on their children
  • Are conscious about spending and have a systematic spending plan. Some use budgeting to be in control where they funnel their income and seldom encounter an emergency spending that catches them off guard
  • Sell old stuff before buying new. There is a conscious effort to “liquidate” whatever they can, think thoroughly before buying something and ensuring they get a good value for their purchases (value is not cheap, its quality at an acceptable price)
  • Will not borrow to pay for things that do not build wealth. Using credit cards or loans to boost spending will mean not knowing what  you need to cut in the future to fund purchases that don’t add value

How much does your spending affects the wealth you build over time? Lets go through this example.

Here we have a typical 25 year old Kyith.


  1. Starts off at age 25 years old
  2. Have 30 years to build his wealth. That will take him to 55 years old. (Typically you have 10 more years to build more wealth but lets stick to this parameter for now!)
  3. He starts off with a gross monthly salary of $2,500 per month and earns 2 months of bonus. This comes up to $35,000
  4. Out of this $35,000, he is not able to spend the full amount, as there is a 20% forced government savings that is put away into a government account (In Singapore, this will be the CPF, in USA the 401k, in Europe or Australia your private or public pension system.)
  5. Thus his disposable income is $28,000 per year.

To make this more fun and interactive, I have provided a Google Spreadsheet Wealthy Calculator that you can make a copy and find out how wealthy you can be. Do look at how you can make use of it, and go along with this wealthy formula here.

In the figure below, I have key in our example Kyith into the Wealthy Calculator (and we will keep referring back to this example today)


Assuming Kyith is young, and did not set aside any cash for investments and he spends a lot such that Kyith can only put 10% of his initial disposable income ($2,800 annually for 30 years) to building his wealth.

For the next 30 years, he does not increase this $2,800 annual wealth funding amount with his pay increment.

His wealth grows at 0% per year.

In the Wealthy Calculator, we key in

  • 10% for the 1st year wealth funding percentage
  • 0% for Increment wealth funding as a percentage of main salary growth rate
  • 0% for Wealth CAGR (stands for compounded average growth rate)


Taking a look at the Wealth Summary, Kyith build up $84,000 in wealth over 30 years.

Can Kyith do better?

Now what if instead of spending so much, Kyith decides to spend less, be more frugal.

Due to spending less, Kyith would then be able to possibly put 50% of his initial disposable income ($14,000 per year for each of 30 years) to building wealth.

We keyed in the following into the Wealthy Calculator:

  • 50% for the 1st year wealth funding percentage
  • 0% for Increment wealth funding as a percentage of main salary growth rate
  • 0% for Wealth CAGR (stands for compounded average growth rate)


Notice that Kyith did not

  • increase the amount he puts from his pay increments in the next 30 years to building wealth but only a fixed 50% or $14,000 into building wealth
  • did not put his wealth into assets such as stocks, bonds, property or business that earns a higher rate of return

By increasing his funding rate to building wealth from 10% to 50%, Kyith built up $420,000 in 30 years compare to $84,000 previously.

You may have this question in your head: Even if Kyith is frugal from the start, wouldn’t his future spending increase? How would he be able to maintain that?

When Kyith increase the amount he put away to building wealth from 10% to 50%, he is left with 50% to spend in the year, in this case he would only have $14,000 a year to spend on in his first year, which works out to $1166 per month.

However, remember that we are using a conservative 3% salary increment and that, since Kyith has already allocated a high initial amount to wealth building, his 3% increment can all go to future spending needs.

If we observe the column Leftover for Spending Allocation in the Wealthy Calculator, it shows  a gradual rise in the amount Kyith would be able to spend upon

  • Age 25: $14,000/yr or $1,166/mth
  • Age 40: $29,623/yr or $2,468/mth
  • Age 50: $44,625/yr or $3,718 /mth


So you see, Kyith standard of living can go up as he earns more, as he doesn’t allocate any more from his increment to wealth building and all of the money can go to providing for family building if he wants to.

At this point, the lessons learnt here is that, you have a choice in optimizing how much you spend, so that you can put away MORE into building wealth.

Spending less matters. The less you spend the more you can channel to build wealth, even when you build wealth with low return assets such as cash.

2. Earn More

Optimizing your spending is important, but doing that is working within the constraint of your existing employment situation. It is akin to working based on the size of the existing box.

Why not increase the size of that box?

The internet have made knowledge readily available, and have increase the different ways we can build knowledge and enhance our existing skillset, not to mention learn new skills.

It has also liquidfy the available opportunities that we can find to supplement our income from our main job.

The wise ones

  • Make use of company education and training to enhance their core competency.  They also developed an interest in their work to develop a valuable skill set. This makes them employable and able to seek opportunities with higher remuneration
  • Does not burn bridges and network extensively
  • Change jobs when they have learn what they can, when they do not feel challenged or seek up greater challenges or when they are not adequately compensated
  • Work overtime to gain extra money (but this is probably at the expense of health)
  • Build hobbies and interest areas into a monetary income stream. When you are interested in certain areas, you might be able to build a following and be able to sell goods and services using your expertise to supplement your main job income. E.g. A bike enthusiast who gains contacts on cheaper or not available bike parts and able to bring them in to sell to other local enthusiast
  • For some people with unique competency, the internet has liquidfy the environment such that you can take up free lance jobs. This includes, designers, artists through ODESK, or you could have competent skills that can consult other contacts on the side
  • This may overlay previous, but a person can also start a side business with like minded folks or good friends to seed a business that may eventually provide a sizeable income stream

What are the effects to the wealth built up when we actively sought to earn more?

Let’s take a look at our Kyith example again. We start off with Kyith in the Spend Less section where he puts only 10% of his disposable income to building wealth.

The Wealthy Calculator looks like this.

The only difference here is that while Kyith puts 10% of his initial disposable income into wealth building, he also puts 50% of future disposable income increments (which works out to 1.5% per year) into wealth building to supplement the initial 1st year wealth funding of 10%.

In the Wealthy Calculator, we key in:

  • 10% for the 1st year wealth funding percentage
  • 50% for Increment wealth funding as a percentage of main salary growth rate
  • 0% for Wealth CAGR (stands for compounded average growth rate)

The Increment Wealth Funding % is computed for you. How is the 1.5% derived? Since the annual growth rate of the main salary is 3%, 50% of 3% is 1.5%.

The original wealth built if Kyith doesn’t put more of his increment to wealth building is $84,000.

By putting 50% of his subsequent 30 years increment into wealth building, at 0% CAGR, he increased his wealth to $330,055. Certainly looks better when you spend less and puts more into wealth building.

What if, Kyith makes himself more competent and his salary can grow at a rather much more than the conservative estimate.

If we smoothed out Kyith’s various job hopping and promotions, we conservatively estimate Kyith’s gross income growth rate to increase from 3%/yr to 5%/yr.

In the Wealth Calculator, we key in:

  • Growth Rate @ Your Main Salary to be 5%/yr

Instead of a wealth of $330,055 built, increasing the salary earned would increase the wealth built to $594,143 or 80% more.

It goes to show that earnings more is a very important key component to building wealth, but you need spending less to clap as well.

In the the table below, we can see how salary growth eventually results in more wealth being built.

Each salary growth of 2.5%/yr gets added on to next year, which is added on to the next year so essentially your contribution of wealth funding grows

  • Year 1: 2.5%
  • Year 2: 5.0%
  • Year 3: 7.5%

Wealth Funding as a % of Annual Total grew from a modest 10% of combined income to 40%.


Side Jobs / Hustling

For some of us that starts off, we realize that we have more free time then we initially realized. We can of course put the freedom in the mind to creating side businesses such as a content advertisement blog, drop ship business, or developing a business plan for a software as a service with some friends.

You could of continue your part time job at university by picking up 2 students and teaching them tuition for $400 per month each.

You could ask for more responsibility if you are paid more for overtime (which may also mean a bigger chance of greater salary increment or promotion)

This enterprising use of your mind and time, will enable you to supplement your Main Salary with Side Jobs, Temp or Overtime work.

Lets go back to Kyith who is putting 10% of his initial disposable income and 50% of subsequent increments into wealth building, where his salary also grew by 3% per year. The wealth built up was $330,055.

Kyith has grown more enterprising, paying more attention to his interest area and was able to create an additional stream from monetizing it.

This may be challenging to model because this stream might only be temporary and may not be long lasting but lets give it a try.

We keyed in the following into the Side Jobs/ Overtime / Temp Work section of the Wealthy Calculator:

  • Monthly Component of $200 for what the side job brings in
  • Additional Component of $0
  • The side job grows at 1%/yr
  • This side job is taxable (in reality it may not be!)

The result at the end of 30 years is rather insignificant, $338,480 versus $330,055 had he not taken it up.

Having this additional stream might harm Kyith’s time devoted to his main job. This may be a problem if his main job is more productive.

On the other hand, if Kyith develops his side job well, it might develop to something more than $200 per month.

The growth rate might change a lot.

For a person earnings low at the start, you can see he will have more  flexibility with greater spending allocation.

The lesson learn here is

Earning more matters. It increases the amount and flexibility you can devote to wealth building and spending.

3. Build Wealth Wisely

If you spend less and earn more, you will have more money to fund your wealth building.

Up till now, we are merely discussing about saving, that is, putting the money to building wealth in low risk basic savings. Savings are low risk and the returns will correspond to the low risk, which tends to be lower.

If you want to build up a sum of wealth, of around $500,000, with savings in deposits earning less than 1%, it will take you nearly 73 years to get to that sum, unless you severely earn more and spend less, and have a really high excess amount to channel to wealth building.

With higher return financial instruments, you will be able to reach your goal of $500,000 at a much faster pace, cutting time by years.

This will enable him to build wealth so that he can adequately meet his retirement spending needs, be financially secure, financially independent.

There are a few ways to build wealth to generate higher returns. Which way you choose depends on:

  1. Risk appetite. How much short term losses can a person take that prevents him to sleep at night?
  2. Acquiring and maintaining a skill to wisely build wealth through that method. This can come from your job, going for courses or scouring the internet for different wealth building methods. E.g. learning the in and outs of purchasing a property and renting it out, understanding the returns, pitfalls, and effort require to be profitable for 30 years
  3. Active or Passive. How much time do you want to spend on building wealth? Do you want to spend more time with family? Different ways of building wealth comes with different time needed to become competent and also  different levels of recurring managing wealth time. (Read building wealth is not as passive as you think)
  4. Your Skill & Competency. Whether you have the ability to confidently build up your wealth consistently over time using your wealth building methods. Some people judge their results on a short 5 year basis as having the edge when they could just be lucky and not competence.

The methods available to build wealth are illustrated below. This is how I would look at this wealth building methods. Each wealth building methods have different

  • start-up costs
  • competency required to kick start
  • maintenance or recurring work required to be build wealth effectively and successfully

These will eventually be your Wealth Machine(s). Think of your wealth machines as particular form of wealth building method based on certain financial instruments to generate a rate of return effectively. The rate of return can range from low to very high.

If you keep what your Wealth Machines generates, be it interest income, business income, dividend income, realized capital gains, by plowing them back into your Wealth Fund, you can put them back into your Wealth Machine, your wealth will grow at a greater compounded rate of return (CAGR).

I explain more on why you need to look at this important layer in your wealth building, by thinking in terms of funneling your money to a Wealth Fund and having Wealth Machines in this comprehensive article. Do read it and come back to the examples here.

Lets go back to Kyith again, who is putting 10% of his initial disposable income and 50% of subsequent increments into wealth building, where his salary also grew by 3% per year. The wealth built up was $330,055.

Kyith decides to make an insurance savings endowment his Wealth Machine or wealth building method.(you can take a look at my compilation of some past insurance savings policies and their rate of return) He conservatively think he can make 3%/yr in compounded average growth compared to 0% previously.

We keyed in the following to the Wealthy Calculator:

  • Wealth CAGR of 3% instead of 0%

Instead of $330,055, Kyith would have built up $456,912 in wealth over 30 years. Its great to passively do this and earned $120,000 more.

Suppose Kyith, builds up his competency and changes his wealth building method to managing a passive stock and bond exchange traded fund investing (read here).

He knows that this form of Wealth Machine means his wealth would have increase volatility (sometimes positive sometimes negative, more ups and downs), but it takes him very little management yearly, and have the potential to earned a 6%/yr rate of return.  The potential of wealth build looks higher.

From the Wealth Summary below, by bumping up his Wealth CAGR from 3% to 6%, Kyith would potentially built up $662,121 instead of $456,912 over 30 years.

If Kyith determines that he has a higher competence in certain areas and takes an active approach to managing wealth, the potential to earn can be closer to 9%.  The potential of wealth build is also higher.

Building wealth by taking different approaches can give you higher growth, but the wealth builder have to take a prudent approach otherwise it will result in more detriment then good result.

What matters most when it comes to Wealth Building

The wealth formula looks simple enough. However, there are many variables that decide your success.

Which of these variables matters the most?

Which of these variables are within your control?

Some time ago, John Rekenthaler, head of Morningstar research wrote a piece called What matters the most.

It’s a good read. You may need to create an account to login.

John highlights a company that profiles an average aspiring retiree:

  • 42 years old  employee
  • Makes $40,000 annual
  • Salary grows 3% annually
  • No contribution to company investing account but will contribute 6% of income annually to the company account and the company will match it with 50% of the person’s contribution
  • The company investment is a passive portfolio with a 0.72% expense and looks to gain 7% per year before this cost
  • This person looks to retire at age 67 years old (25 years later)

What course of action will help this person the most to reach his/her goal?

  1. Start early. Find a time machine to go back and start earlier
  2. Higher salary. Get a 25% raise to $50,000 a year
  3. Salary growth. Grow his or her salary at 4% instead of 3%
  4. Increase wealth funding rate. Instead of funding 6% of the annual income, choose to fund 8%
  5. Increase company match. The company willingly increase how much it matches the employee’s contribution rate
  6. Cheaper investment plan. Instead of 0.72% expense, switch to a plan similar but cost 0.22%
  7. Better return fund. Get a fund that yields 8% instead of 7%
  8. Retire later. Wait 2 more years to retire, instead of 67.

Among these actions, which are the actions that he or she have a direct control over?

  • 1 – Choosing when to start investing
  • 4 – Increase funding of wealth building
  • 8 – Retire later
  • Partially 7 – a Better return fund. A better way to look at it is taking a more active approach

They did a study to determine based on this person’s profile, which would help the person more. The result is below:

The great thing is that the top three are the things that are within the persons control. The surprising thing is that cost (cheaper plan) matters so little, which they attribute to the original plan is relatively not expensive in the first place.

In the following section, I will expand on the variables that makes the biggest impact to building wealth.

Start Funding your Wealth Building Early in Life

The amount of money you need to commit to wealth building, and the amount you build up varies by funding it early versus funding it late.

Consider the above 3 scenarios, the first one (Early) where the person funds wealth building with $6,000 of his take home income annually for 16 years from age 20 to 35 years old. the second one (Late) funds his wealth building with $9000 (more than mr Early) of his take home income annually from age 36 to 65 years old or 30 years and the last guy (Early and Continue) who did the same as the first guy (Early) only thing he continued to 65 years old or for 46 years. All of them build wealth at the SAME RATE OF RETURN.

The interesting thing is that Early build more wealth than Late but with LESS MONEY COMMITTED. You can liken this scenario to someone who committed to wealth building early for 16 years and then uses that $6000 for other part of his family’s expenses. Such flexibility!

The third guy (Early and Continue) did the best with the same amount of commitment as Late, and gotten at least $400k more wealth.

The 3 options here for you is that you can:

  1. Cut Spending, Earn More and put a high percentage of disposable income at the start to your Wealth Machine, then spend a higher percentage of subsequent income increments
  2. Cut Spending , Earn More and put a small percentage of disposable income at the start to your Wealth Machine, then ALSO put a higher percentage of subsequent income increments into your Wealth Machine
  3. Cut Spending, Earn More and put a high percentage of disposable income at the start AND a higher percentage of subsequent income increments into your Wealth Machine

The difficulty for most to do (1) is that cost of living might be high and large spending takes place at the start.  (2) will be more applicable for them. (1) Work well for singles.

It make sense to funnel more to build wealth and let compounding work its magic AS EARLY AS POSSIBLE.You need less of your take home income to reach the desired amount over time when you fund wealth building early than late

Fund MORE than normal into your Wealth Building (Note this for those that are less investment savvy)

You have many ways to fund your wealth building:

  • Choose to fund 10%, 20%, 50% or even 70% of your disposable income annually to wealth building
  • Choose to fund a higher initial disposable income (50-70%) and then less of your subsequent annual increment or a lower initial disposable income (5-15%) and then a large part of your subsequent annual increment

Or course if you fund more into wealth building you have less for your other life’s expenses.

What is the upside for us to be so drastic to fund 50-70% of our take home income to wealth building?

For one thing, we are all working towards our financial independence, that is when the wealth that we build up is able to afford our life more freedom to semi-retire, or take a more risky life endeavor.

What many do not know is that how fast you can reach financial independence depend greatly on the amount annually you use to fund your wealth building AND the rate of return of your Wealth Building Method.

If you fund little, you take a long time to reach that stage. If you fund a lot more, it becomes faster. If the rate of return per year of your wealth building method is small, it will take longer, if it is high, it is faster.

This can be illustrated in the chart above. This chart shows the number of years to reach financial independence versus the percentage of take home income a person or family channels to building wealth. The various different color lines show different rate of returns per year of the wealth building method chosen.

Observe that if the amount of take home income channel to wealth building is lower at 10%, the rate of return of your wealth building method determines greatly when you reach financial independence, in 84 years or 20 years.

However, if you channel 50% of your take home income to wealth building, whether the rate of return is 1% or 20%, it matters much less. You will reach your goal in either 9 years or 23 years. This means that even if your wealth building method yields 1% per year, you will reach financial independence at age 48 years old if you start working at 25 years old.

Here is another view where we show the above chart in numbers.

The numbers in the blue cells show the number of years to reach the desired financial independence amount (whether it is $100k, $500k or $1 mil).

It gives you extra motivation to earn more or spend less, because the more you earn and less you spend, you will be able to achieve a high savings rate, or wealth funding rate. When you move on from being a junior associate to manager, the earlier you are able to do that, you may be able to channel 70-80% of your disposable income. Even at a 1% wealth building rate of return per year, the number of years to reach financial independence is between 10 years or 6 years!

The best optimization is when you and your spouse are aligned and want to reach financial independence, where both of you can optimize your combined income to channel well to wealth building after optimizing expenses. Usually it is when you have combined income or a higher earning professional that 70-80% is possible.

For myself I am working with a 50% disposable income savings rate, which will take me 15 years or so to reach financial independence as a single.

Other than reaching your wealth goals earlier, there is one added benefit of funding more to wealth building, and that is reaching financial independence despite not being so sophisticated when it comes to wealth building.

Suppose you decide to channel $5,000 per year from your disposable income to wealth building, starting at the age of 25 years old.

You have 4 different option to increase the amount you channel to wealth building every year by 0%, 5% and 10%.

You also have 2 different wealth building rate of return, 3.5% per year (like bonds, insurance endowments) and 7.0% (like stocks).

How fast can you reach your goal for financial independence, in this case $500,000?

Observe that to reach $500,000, the number of years with no funding increases growing at 7% p.a is close to 5% annual increase growing at 3.5% p.a. This is the same for 5% annual increase growing at 7% p.a. and 10% annual increase growing at 3.5%.

If you make the decision to pay yourself first, fund more of work income to your wealth building, you do not need a higher return to achieve your goal for your wealth machine.

Since higher return usually comes with higher risk and volatility, this shows that by channeling more, you do not need to increase your risk level, especially if you traditionally have a low risk appetite. This decision is important AND within your control.

A good example here is that many people always gets sub-consciously influence by friends saying that their money should be pushed as hard as possible to get the most returns.

If you understand this concept, you will see that if you focus on your career or that, your career is much more lucrative than others, by sensibly increasing your funding to wealth building above the average, say 50-70% of your initial take home pay and 50% of your incremental pay, you do not need to push your money that hard if you understand how much you actually need to achieve financial independence. As you are funding more, you can put majority of your wealth assets in insurance endowments, bonds and 30% in a broad market stock exchange traded fund, compare to your friend who is funding less, who have to put 100% into a broad market stock exchange trade fund.

Your return might be on average 5% compare to your friend’s 7%, but as you are funding more, you end up at the same destination. A side note that is out of the context of discussion is that, because you put your wealth assets in lower volatile instruments, you get less of the extreme swing in the value of your wealth assets, there by less psychologically affected to do stupid things like sell low instead of buy low.

A tale of a hard-working Kyith

Having said all, lets look at what happens if Kyith decides to try his best and apply what he showed above:

  1. Spend less and strive to earn more. He will funnel 40% of his initial disposable income of  $3,000 with 2 month’s bonus to building wealth. Subsequently 30% of his annual increment of 3% will go to building wealth.
  2. Learn to build wealth wisely. He decides to quarterly invest in a passive portfolio of stock and bond exchange traded fund as his Wealth Machine, growing his wealth at 4%.
  3. Start early. He decides to start building out of university and will have 30 years till age 55 to build wealth.
  4. Contribute more

Kyith would have funded a total of $580,360 to building wealth and with his wealth building method the wealth would potentially increase to $1,011,109.

His monthly gross salary would have increased from $3000/mth to $7069/mth.




What was a 40% contribution to wealth building out of disposable income slowly went down to 34%.

He will start off having $1680/mth to spend growing to $4338/mth to spend.

This estimation is carried out for one person. When the person gets married, further expenses can be optimize further and income will be likely supplemented if the spouse is also working.

Will $580,000 be enough for financial independence? How about $1 mil? To find out, take a look here where I showed the formula behind how much you need to achieve financial independence.

A high income earner who hopes to be Financially Independent by 40

So we hear stories, of people who was able to retire in their 30s and are so envious of their situation.

They must have rich parents or high income earner. How close to the truth is that?

Perhaps some have overestimate what is required to retire, but financially independent is a correct phrase for them. (Read here)

By that, it means that they have acquired wealth that sufficiently provides for their daily needs that they can take up choices in life that are otherwise not possible.

Some folks have worked hard in school, or managed to get into a profession with a high starting starting pay, would he or she be able to be financially independent at a young age?

The premise

In our simulation here, we have the following scenario

  1. Stay single and choose not to get a dwelling
  2. Assuming he is privileged to start off with a high salary relatively. He will funnel 80% of his initial disposable income of  $5,000 with 2 month’s bonus to building wealth.
  3. Subsequently 20% of his annual increment of 3% will go to building wealth.
  4. Learn to build wealth wisely. He decides to quarterly invest in an active portfolio of stock and bond exchange traded fund, growing his wealth at 6%.
  5. Start early. He decides to start building out of university and will have 15 years till age 40 to build wealth.

The Science behind being financially independent with $1 million by age 40 I9JCxG5

The Result

The Science behind being financially independent with $1 million by age 40 1RLxY68

At the end of 15 years, he would have accumulate a portfolio wealth of $1.1 mil. Note that an assumption here is that he would have to build wealth rather wisely.

He funded nearly $45,000 of his first year $56,000 salary. At the end of the 15 years, his wealth funding only increase by $5,000 more.

At this point, with a safe withdrawal rate of 3% per year, he would have generated $32,654 per annum in cash flow or $2,737 per month, which will be able to take care of the necessities in life.

3% looks conservative, but if you want the amount to conservatively last through a volatile stock market cycle, you would want a lower withdrawal rate.

Young enough to choose how life goes

What this means is that at 40, this guy is young enough to make a profession decision that will more likely satisfy him.

He could have choose to find love then.

He can choose to start a business with the knowledge he has accumulated up till then.

How can anyone live on $11,200 per year?

A common question readers will have is how can anyone survive on such a low amount per year?

This will work out to $933 per month in expenses.

How one decides to live is a matter of where their values and priorities lie.

Different people have different values and a person like that may be sacrificing much (you can’t earn back time), but that is his or her choice.

$933 is a sum that you can work with, you have to optimize your spending.

And at the end of the 15 years his allocation to spending actually increased to $34,000 per annum.


We start off with a conservative profile of an average university graduate starting salary with a conservative wage growth.

To be wealthy is simple. The reality is that you have to

  1. Stop giving yourself excuses, take action today and find ways to optimize your spending
  2. Never let go of improving yourself to stay employable, get promoted at work
  3. If you believe in financial freedom, pick up one of the wealth building methods to grow your wealth further
  4. Sacrifice things that hold low value to you to funnel more to build wealth
  5. If you are constraint to not able to fund with a high amount now, commit to use your increment to fund wealth building. I shown that it is a viable route.
  6. The less mistakes you make, the more wealthy you become

There are no lottery here. No gambling. Luck is but a small factor here.

80% of what is  suggested are within your control. It is whether you will do it.

Pick out one area that you need to improve and work on it. Share with me what are the potential problems building wealth this way.

Share this with your friends who you think will benefit from.

Start by using this Wealthy Calculator here (which we use above) to project how much of your income you would like to channel to building wealth today and the wealth build at the end of X years.

After learning the simple way to start building wealth, let me share with you how important it is to make a decision to build wealth >

Grow Wealthy, start Building Wealth, start with the Best Resources section.