I was asked “how does someone working at McDonald’s become a multi-millionaire?”. Here is my response.

I often write answers on Quora, where I am the most viewed writer for investing, wealth and personal finance, with over 232.5 million views in the last few years.

On the answers below, taken from my online Quora answers, I focus on a range of topics including:

  • How does someone working at McDonald’s become a multi-millionaire? Is it even possible?
  • If everyone says you should invest in stocks, but you are nervous about the markets, should you invest? In the response below, I explain why people should be more worried about themselves than the markets.
  • Is the 4% rule of retirement actually based on any kind of logic?
  • How do rich people show off? Or is that a misconception? I compare my home country to other places I have lived in the world.

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (advice@adamfayed.com) or use the WhatsApp function below.

How does someone working at McDonald’s (in America) become a multi-millionaire?

There are only two or three routes. Firstly, work in a job, and leverage time.

These two people became millionaires by doing that:

Here is their pictures.

All they did was buy stocks and other assets at a young age and hold them “forever”.

Boring? Yes. Occasionally nerve-wracking when markets fall? Yes.

But it is sure effective to just stay invested for half a century or more!

I have personally met people who have similar stories, and seen the statistics on this.

Even though they don’t work at McDonalds the salary levels were comparable.

What is easier is for people to re-train and/or work their way up the corporate ladder, and still follow the example of the two people above.

Many mid-level managers and executives in the hospitality sector started at the very bottom.

Or they started at the bottom, retrained, and went into another industry.

Beyond that I would

  1. Take advantage of any luck afforded to you. Let’s say you can only afford to invest $50 or $100 a month but suddenly you get an unexpected $50,000 or $100,000 from inheritance. All of a sudden, you have a great chance, but many people blow it. Inheritances will get bigger in the next decade or two, and more people will receive them.
  2. Also look at leveraging the online world. Just because you live in location A, doesn’t mean you need to work in location B. I would focus on what you are good at, seen if you can leverage it online, and if needed play the long game. That might mean working full-time and doing something part-time in the evenings, before you build it up.
  3. Take calculated risks, try many things out, and learn from people who have changed their lives. It can take years to succeed, but most people give up too soon.
  4. Read as much as possible in your spare time. It will give you loads of ideas. Then execute as execution is the ultimate key.
  5. Look at your network. By network I don’t just mean people you are close to. I mean extended family, long-lost friends, former college or school mates. Who is doing well, despite being from a similar background to those in your network who are unemployed? Who could you reach out to for help? By help I don’t mean handouts, I mean tips, ways to collaborate etc. You would be surprised what can come from this. You might, as an example, know a business owner in your network who needs Spanish speakers, and you happen to speak Spanish. If you get your foot in the door, more doors could open. Up to 50% of job opportunities are filled by these informal ways.
  6. If some of these techniques work and you start to earn more, don’t just spend just as much as you are earning. Invest some of the surplus wisely. 
  7. Get a job you are good at, at any level. Get good at it over five or more years. Then consider if there are any nieces you can solve, or any problems the market is not solving well. Starting your own business is so much easier if you have experience in the area.

Over a long period of time, like a decade or more, those actions increase your chances a lot.

If you are persistent and don’t just give up if you fail for five years or more, you will already be ahead of 80% of people.

Everyone says I should invest in stocks, but I’m nervous about the markets. Should I be?

You should be more nervous that you are nervous!

People who are nervous going in, are more likely to get nervous as soon as there is a crash.

That explains results like this:

Look at last year’s results

  • Many stock markets increased by over 10% globally, with plenty doing over 15% from January 1 until December 31.
  • Yet 35% of people sold between February 2020 and May 2020 according to statistics released by some DIY brokerages. So, many people sold low.
  • I have no doubt that even more people didn’t sell but refused to add extra money
  • Only a minority kept calm and added more during the worst of the crisis

The same results can be seen every time there is a crash, or even some kind of uncertain event such as elections, virus’ and government shutdowns.

To be a successful investor people need

  • Knowledge and emotional control, not just one of the two, and then they can invest by themselves.
  • Neither or those, or only one of those at best, but then they should use an advisor who can moderate those impulses

In either case, the ability to take calculated risks is key. Keeping money in the bank is a guaranteed loss to inflation.

That 2%-3% loss will compound over the years and decades.

As a final point, if you are a beginner who isn’t knowledgeable about the markets, you shouldn’t be investing mostly in individual stocks.

Your chances of beating an S&P500 ETF as an amateur investor isn’t low over a year, or even five. Your chances over a career are close to zero.

That isn’t a negative though as nobody, yes 0% of people, has ever lost money by holding the S&P500 or MSCI World for a lifetime and reinvesting dividends.

Loads of people have lost money by panic selling in the middle though!

So, be afraid of your reactions to market instability and falls, not the falls themselves!

If you are mentally prepared to face numerous 20%, 30% or 50% falls, in the knowledge that markets will come back, then you will do fine.

How do rich people flaunt their wealth in your country?

I am from the UK, even though I have lived overseas for about a decade.

There is a big difference between:

  • The new rich and old rich
  • The merely high-income but low wealth, and those who are more focused on wealth

Many “old rich” people, or even those who have came from a comfortable middle-class background, have an inverse snobbery towards showing off.

Being relatively frugal is seen as good, as is being discreet about any luxuries bought.

There are some exceptions, such as housing, but that is still somewhat discreet, as people will only know if you invite them over, as opposed to driving in a sports car through the city centre!

In comparison, plenty of people who are new to money, like some sports stars, lottery winners and people who get good jobs in their 20s, are more likely to show off.

That could be on social media or in “real life”. For some it is sports cars. For others it is selfies on social media.

Of course, people who are paid to live luxurious lives, like some influencers, are most likely to show off on Instagram:

Of course, it also depends on people’s values as well. Some people don’t care about wealth.

They just want income and spend 100% of whatever comes in, no matter how much they make.

Others are more focused on the security wealth can bring, and know the future is uncertain.

I have found these patterns is true in most developed countries:

  • Many wealthier people are actually pretty frugal, even stingy in some cases, with the average wealthy person less likely to spend on luxury items than the average person.
  • Likewise, as societies keep wealthy for longer, being subtle gets more normal. Look at a country like Switzerland. Most of the people I know who live there say it is very subtle, yet it is one of the wealthiest countries in the world on a per capita basis, and has been like that for decades.
  • It does depend on people’s values though, and whether they are more focused on the security wealth brings, or just on income .

In comparison, many developing, mid-income and even some newly developed countries are quite different.

In many of these societies, it is more normal to show off. It often amazes Western expats who move to the Asia-Pacific region.

Some of them assume that “the West” is more materialistic than “the East”.

They come to Shanghai, Singapore or any number of other cities and are amazed that this is no longer true.

Here too though, we do see a difference between a place like Tokyo, which has been wealthy for a long time, and the newly wealthy cities.

Tokyo still has more millionaires in terms of wealth than any other city in the world, yet you wouldn’t believe it if you visited there.

The thing is though, people confuse wealth and income all the time.

I remember speaking to a South African guy who lived in Jakarta when I did, many years ago.

He commented that he was surprised about the fact that “I have seen more wealth people here than almost anywhere in the world, including Tokyo”.

He is assuming that somebody who “looks rich” is always wealthy.

The following content was put on adamfayed.com’s Quora Space

I’m 20 years old and I have 100 USD to invest every month. Where do I start?

With sums like 100 a month, I would consider a Robo advisor like Wealthfront.

Once your needs become more sophisticated, you can try human advisors or doing it yourself.

Also depends on your country of residence.

What is the logic behind the rule: for every $1,000 per month you want to have in income for retirement, you need to have $240,000 saved?

It is merely a rule of thumb. Academics have looked at various periods in the past.

They found that if you only spend 4% of whatever you have invested, you shouldn’t run out of money.

This is called the 4% rule of retirement. The creator of the 4% rule recently said it is an over-simplification of his original intent, and it is usually possible to take out at least 5%.

Nevertheless, the fact that the 4% rule of retirement does have a conservative bias is good in some ways.

If somebody would have retired one day before the 2000 stock market crash, and just eight years before 2008, they would now have slightly more money than on the day they retired.

That is despite three crashes in 2000, 2008 and 2020 and many mini ones.

This shows that the rule is robust – it has worked even during bad moments.

Retiring in early 2000 was much worse than in 1998, or 2010, yet the rule held up, assuming:

  • Somebody was diversified between US, international and a bond market ETF
  • Dividends were reinvested
  • There was no panic selling during the bad times
  • No more than 4% of the portfolio was withdraw annually, adjusted for inflation.

It is only based on data crunching though and taking into account the possibility that you retire at a bad time.

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 232.4 million answers views on Quora.com and a widely sold book on Amazon

Further Reading 

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