I was asked “how do I become a millionaire in one year”? Here is my response.

In this blog I will list some of my top Quora answers for the last few days, which focused on many interesting subjects.

In the answers shared today I focused on:

1. How can somebody become a millionaire in just one year. Is it possible, or just unrealistic? What options exist for those that are more patient?
2. How has Covid affected the real estate market globally? Has it only affected some markets or everything? What trends could we see in the future?
3. Why do people retire too early or is “too early” the wrong way to look at it? Are the reasons for retiring early always the same, or can they vary dramatically between people?
4. Which investments will be riskiest during 2021? Has this really changed compared to previous years now interest and bond rates are lower?

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me or use the WhatsApp function below.

How do I become a millionaire in one year?

Source: Quora

This might not be the answer you want to hear, but it is very unlikely you will become a millionaire in one year unless:

• You have already inherited a lot of money or have a decent amount of money. As an example, if you have inherited $900,000, you only need markets to go up by 11% to reach the $1m threshold.
• Get lucky. An example would be winning the lottery, but relying on luck doesn’t make sense.
• Marry into wealth, which is connected to luck, but that isn’t a good idea for most people, if feelings aren’t also involved.
• Have a company which has been going for a while and suddenly it starts doing very well. That isn’t luck per see. It is more a case of somebody becoming successful due to previously putting in the building blocks

There are very few cases of somebody quitting their job, starting a business, and becoming a millionaire in the first year.

It can happen in very extreme cases, such as if somebody catches a trend early enough, and there is a big need.

This year has been an extreme year, so I imagine there has been more businesses going under, and more new players making it big than ever before.

What is better is to focus on:

• Becoming a millionaire over 10, 15 or 20 years
• Giving value to others and thinking how to monetize that value as opposed to doing it for free
• Invest your money and don’t save it. Invest in yourself and financial assets.
• Focus on your strengths and not weaknesses
• Focus on only the things you can control and not anything else. So many people worry about the economy, the markets and many other things. There will never be a perfect time to do anything, and there are so many unknown variables (unknown unknowns and known unknowns) that fortune often favours the brave and persistent.
• Don’t just be obsessed by whatever is normal. Some of the biggest increases in wealth come from people breaking industry norms and getting on trends early. Working remotely used to be dismissed – “business is best done face-to-face”, and people said that Starbucks would never catch on in places like France – “the French will never accept drinking coffee from a bucket”.
• Hard work but also smart, because time is a finite resource. More on that later.
• Spend less time with toxic people. We often become who we associate with.
• Read as much as possible and focus on implementing those ideas. Ideas only are pointless without implementation.
• Start investing early in the stock markets. Getting wealthy investing $500 a month for 40 years is much easier than $5,000 over 5 years.
• Leverage other people, time and technology where possible. This is linked to working smart. Starting the investment process sooner doesn’t cost us anytime time than later, but it makes a huge difference. Likewise, we all have 24 hours in a day, and most people have 12–20 waking hours. If we leverage other people’s time, and use technology, we can gain more traction by indirectly “buying hours”.

As a final one, don’t care about what other people think, unless there is a rational reason to do so.

Many people are dragged down by the expectations of others, alongside the fact that those people might intentionally try to pull them down.

What do you predict the safest investment sectors will be in 2021?

Source: Quora

I don’t think most of the fundamentals have changed. A few things might have changed.

So what hasn’t changed?

Investing in the stock markets, if you invest in the whole market through ETFs or indexes as opposed to individual stocks, is perfectly safe long-term.

Stocks beat bonds long-term and that has changed for over 200 years.

Yet bonds tend to rise when stocks fall, and in the first third of this year, bond funds easily beat stocks.

People go towards short-term bonds when there is a stock market crash.

Yet volatility isn’t risk, unlike what some people would assume. If somebody, therefore, only wants to invest for 1 year (never recommended), then the stock market isn’t a good idea.

In comparison, long-term investors who have a sensible portfolio are rewarded.

What has changed?

These things have changed:

1. Certainly types of property, like commercial property, have become riskier. People can now work remotely. Even once the virus and pandemic has ended, which might come sooner than expected now, many people will work from home at least part of the week. That means firms don’t need all that office space. Therefore, commercial property in the centre of London, NYC or Hong Kong might no longer be seen as a very safe investment. In reality, property has always had more risks than people assume. The property company Frank Knight did some projections in April which suggested that Central London would suffer the most. Projections are always hard to make, and big cities might come back, but there are now heightened risk.

2. Cash. Cash has always had loads of risk like inflation and currency risks. Yet historically people could make inflation +2% in the bank, or at least beat inflation. Therefore, only people in developing countries with historical issues with inflation worried about those kinds of issues. 2008 changed all that. 2020 only made that problem worse. So now, rightly, even people who haven’t historically put their money to work have seen that cash has many indirect risks. There is a chance interest rates could become negative in more countries as well.

3. Bonds, short-term bonds, pay less than 1%, at least in terms of US Treasury Bonds. Bonds have always paid less than stock markets as mentioned, but this huge difference between what bonds used to pay and what they pay now, means more people will want to invest a higher percentage of their portfolios in the market. Others will look at mixed government and corporate bonds funds which have slightly more risk but can give the investor a 3%-5% return with minimal chances of facing big volatility. However, low-quality corporate bonds are riskier than ever, as more firms might default in the next few years.

4. Online firms have always been less riskier, whatever the public used to think, due to lower overheads. This has only become more apparent since the crisis. Moreover, firms which are global, are less risky than those focusing on just one market.

How is COVID-19 affecting the real estate market?

Source: Quora

It isn’t affecting it as much as expected. It depends on the type of property, location and many other things.

1. Location – expat-focused cities like Dubai have seen the biggest falls. Likewise, in places like Cambodia where condos are usually purchased by overseas buyers, those specific areas have seen massive falls. We have also seen prices increases in many smaller cities and towns, as an increased number of people work remotely.
2. Type of property – Commercial property has suffered much more than residential property as more people are working remotely and banks and other firms are downsizing office spaces. Yet, not all commercial is suffering. Roadside retail is doing well in some countries as more people use their cars to go to business meetings rather than use public transport which can be a heaven for Covid.

In general though, real estate has done much worse than the stock market and a bit worse than bonds in 2020.

Most REITS funds are down for the year, but sharply up on their price levels in February, March and April.

Many countries are seeing real estate fall, or just keep pace with inflation at best.

These things all come and go though, but I have noticed a trend. During the bull markets for property, most people “leverage up”.

In other words, get into more and more debt, because that does increase the long-term returns on real estate.

Then crashes, like in 2008, or losing jobs due to events like coronavirus, leads to people being more careful for a few years.

As most people buy real estate on debt, and it isn’t an asset which can be sold easily, this increases risks.

One of the benefits to REITS is that they are liquid so can be sold if somebody has an emergency.

I expect more people to become interested in REITS in the future for this reason.

I also think it will be interesting to see what happens once the various government schemes get taken away.

If the UK, German and other governments didn’t do schemes like Furlough, prices could have fallen very hard.

The real estate market is much more connected to the real economy compared to stocks, which are mainly owned by institutional investors and wealthier people.

Why do people retire too early when they should still be working?

Source: Quora

There are a combination of reasons. The main ones are:

1. People can afford not to work

For people in this category, they have made their money, and often didn’t like their jobs.

They, therefore, want to go into early retirement or at least semi-retirement. In addition to people who don’t need to work, this is especially interesting for people who feel they have missed out on things down the years.

For instance, those that haven’t seen enough of the world via travel, or spent enough time with friends and family.

The information below from Scotiabanks shows the average priorities for Canadians that retire early.

I am sure most nationalities have similar priorities in retirement:

Needless to say, a certain percentage of people retire early and love it, whilst others go back as they can’t occupy themselves.

People that plan an early retirement tend to succeed, as do people who stay active after retirement.

Retirement just means not working for money. It can mean volunteer work and many other things.

2. They have no alternative

A certain percentage of people can’t work. The main reasons for this is:

• Bad ill, which sometimes comes unexpectedly
• Their jobs or industries got automated or destroyed, and they can’t find another job, even with government retraining
• They want to work but lost their job 1–2 years away from retirement so just decided to retire early

I could add other bullet points here too. The point is, most people assume they have a job until retirement age.

It doesn’t always turn out to be like that. Most people, moreover, want a choice. They don’t want to feel like they “should” be working, and instead want to be able to only carry on if the enjoyment lasts – especially for people that are much older.

It is one thing hating a job as an 18-year-old, and another if you still hate your job after 30 years.

Further Reading

In the answer below I focused on

1. What are some of the biggest mistakes people make in investing? Are all of them obvious? 
2. Can a dentist become a millionaire? Moreover, does somebody’s occupation really stop them from reaching this milestone, or are other factors at play?
3. Argentina has announced a new wealth tax which will hit expats harder than people living locally. Does the new tax in Argentina send a warning to expats living globally?

To read more, click below.