The Three Speeds To Building Wealth: How Fast Will You Go?

Building wealth has become easier over time. There is so much information in the world that you have to be active to try and avoid it. We can start to invest or start a business just by clicking a button!

There are so many apps out there that will support this.

Previous generations would have a lot more barriers to go through to achieve this! Calling a stock broker to buy stocks. Having a physical premise to start a business. Most of these are now removed.

The slow way to building wealth

This approach to wealth is one that is the lower risk option and allows to live a well-rounded life. Don’t mistake the word slow for boring. It’s far from it.

It just means that you are reasonably happy in your life and work with no real rush to retire from the 9 to 5.

This approach requires you investing at least 10% of your income over longer period. Something around the 25 to 30 year mark should do it.

Towards your later years after the kids leave the home (assuming you have children) than you should be aiming to invest at least 20% of your income.

But the more you invest the younger you are, the better the outcome. By a lot!

If you are reading this and have just finished high school, University or are under 30 you are about to go through a period where your income increases significantly.

Here’s the secret. When your income increases increase how much you save/invest. Don’t do what 98% of other people do and increase your lifestyle.

Obviously, you will need to increase your lifestyle expenses if you are going from a share house to your own rental. Just keep your house and car modest. More on this later.

It is also a good idea to look at getting a higher paying job for the time you work. Some jobs require you to work 50 hours per week for $60,000 per year.

Others require 50 hours per week for $100,00 per year. Provided the higher paying job is something that you still enjoy, this will make a massive difference to your net worth.

Let’s explore a case study. Image you’re in your 20’s and during those years you have an average annual income of $30,000 per year.

Each decade your average income will increase by $10,000. You invest 10% of your income up to your 50s where you bump it up to 20%.

We will also assume that you are getting an average annual return of 10% per year. Sounds like a lot but there are plenty of funds and assets producing this result.


Age Income Invested p/f Starting Balance End Balance
20s $30,000 $115 $0 $47,600
30s $40,000 $154 $47,600 $187,200
40s $50,000 $192 $187,200 $565,000
50s $60,000 $461 $565,000 $1,656,500



This also highlights the most powerful law of investing. Compound interest. Looking at the table above we can see that you start your 50s with a balance of $565,000.

During this 10 year period you invest $120,000 of your income. That means that your investment return for that 10 years was a total of $970,000! Earning interest on interest is the sweetest deal!

And this is just looking at your investments. It doesn’t take into account the home that you live in. It’s common to have a 4 bedroom house with a reasonable size yard whilst you are raising a family.

But at you get older, all that space can become unnecessary or too much to clean and maintain.

Some people opt to downsize to a smaller place and unlock capital in their home.  Let’s say that you own a 4 bedroom home outright and it’s worth $1,000,000.

You could look to downsize to a two-bedroom place for $750,000. Adding an additional $250,000 to the investment account.


The medium approach to building wealth

This is similar to the slow approach but with one twist. You need to increase the number of income streams that you have. Additional streams of income may include, having a side hustle.

A business that operates on the side of your full-time job, It may be something like blogging or running an ecommerce site that generates an extra $10,000 per year. Another popular choice is consulting.

If your company allows it you can charge people to access you expertise via a consulting role or speaking engagement. Running online courses can also be a great source of revenue.

If entrepreneurship isn’t for you, accessing equity in your home to purchase assets is a faster way to build wealth. If your home Is worth $750,000 and you owe $500,000, then you have equity of $250,000.

You can use this for a deposit on an investment property or to buy a portfolio of shares. There are a number of equity loans on the market, But if you can invest in a stock portfolio that produces a return of 8% per year and loan interest rate costs you 5%, then you have money from nothing.

Let’s use the same example as the slow approach. But this time we are actively increasing our income. It will go up by an average of $15,000 per 10 year period. Whether the income is from getting a promotion or raise at work, adding additional revenue streams or a bit of both this is the focus of the medium approach.

The difference is that we invest ALL the additional income that we make. Most people when they get a raise or make more money will generally increase their lifestyle and if there’s anything left, increase their investments.

So, we will see the initial amount of 10% invested based on the income from table. Plus, all the additional income earned compared to table 1.

For example, in table one in our 20s we earned an average of $30,000 per year. This time we are earning and average of $45,000 per year. We still invest the initial $3,000 (10%) per year as well as the additional $15,000 we are generating.

Check the results below.


Age Income Invested p/f Invest Additional Income p/f Total Invested Income p/f Starting Balance End Balance
20s $45,000 $115 $577 $692 $0 $286,700
30s $60,000 $154 $769 $731 $286,700 $1,046,500
40s $75,000 $192 $961 $1,153 $1,046,500 $3,192,000
50s $90,000 $461 $1,154 $1,615 $3,192,000 $8.900,000


I know that this table is very idealistic. It will never flow in a perfect sequence like this. And you’re probably thinking about all the disruptions along the way. The impact when the economy goes bad. Having children. Paying for parents aged care etc.  

I get all that and they are very valid points. But this table aims to highlight the point that for a medium wealth builder, you need to increase your income and invest it.

This doesn’t have to go on for ever. Once you hit the $1m bank account you may decide to tick off more bucket list items rather than investing that much cash.



The Fast approach to building wealth

This approach will still take you some 7-10 years to achieve. This is the higher risk higher reward option. It requires you putting all your eggs in the one basket and watching that basket very closely!

And by eggs I mean, time, energy, money and resources. Pretty much everything you have! It’s how most of the people you see get listed on the Forbes or BRW Rich Lists.

I’m talking about going all in on business or property.


When I talk about business I’m talking about something that can run without you using your hands. Or to be more blunt, it operates without you being there everyday.

A coffees shop owner who is making coffee 10 hours a day 7 days per week pretty much has a job. When they retire and look to sell their business they wont attract maximum value. T

hat’s because the buyer will either have to work 70 hours per week in the business or employ staff to cover this work. Effectively reducing the profit.

I’m talking about something that can still run when you decide to take off for 3 months of the year. Or something that you don’t need to be involved with on a day to day basis.

Rather than make coffee for the week, pay someone $1,000 to do this why you go out and land a $5,000 corporate catering gig!

Whatever business you are in, you eventually want it to be able to run without you. That doesn’t mean that it will. It just means that it needs to if required.

If this is your calling, then you find the bonus 8 Steps to Business Success section at the end very useful.


Property is a great asset as it allows you to seriously leverage you position. In this instance I’m talking about property developments. But not going big straight up.

Start with flipping houses where an investment in the aesthetics can give you a 5x return on your money. You’d be surprised out how much value a new kitchen, bathroom, carpet, driveway and a tin of paint can provide!

When you get comfortable with the flip you could look at adding a granny flat to a property or sub diving land and building an additional home. All this leads up to the bigger project of developing apartments or unit blocks.

The reason why I started with emphasising the different approaches is so you can choose the one that you want. If you have absolute clarity from the outset of what you want to achieve, it becomes so much easier putting together a plan and executing on it.

Of course, you can change it up at any time but make sure you are clear about your direction!


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