Automatic Wealth for Grads

by Michael Masterson

You've just graduated college and you'd like to be wealthy someday. Of course, you would. Problem is, you have no clue how to make it happen. First, you're broke and drowning in student loans. Second, no matter what the "experts" might say, it feels like there are tons of fellow grads fighting over a handful of jobs. Third, though you don't mind hard work, you don't want wealth to come at the expense of a social life, a family, and the chance to do some good in the world. Should you give up the dream and content yourself with an average life?

Not only is it completely possible to become a multimillionaire before you retire, but also you will never again have the advantage you have now: youth.

Most young people simply have no concept of how simple it is to build wealth. I didn't say easy, because hard work and self-discipline are required, but simple. Any reasonably intelligent person with a fairly ordinary career trajectory can do it. But now is the time to get started. With every year that passes, your window of opportunity closes a little more. Sounds good, right? Read on:

  • Understand the astonishing power of compound interest. If you take a penny and double it every day for a month, how much would you end up with? A hundred dollars? A thousand dollars? How about a million dollars? Not even close. Starting with a single penny, if you double it every day for 31 days, you end up with $21,474,836.48. That's compound interest. That's how you get rich. And that's why, when it comes to wealth building, your age gives you a major advantage.

  • Starting with your first job out of college, invest 15 percent off the top. By the time you retire, you'll be a multimillionaire. Yes, you've heard the "pay yourself first" principle before. But you probably don't realize just how wealthy it can make you. Let's say you start making an average income (which according to the National Association of Colleges and Employers is $30,337 a year). Assuming that you are good at your job and get consistent annual raises of 4 percent, you'd be making $43,170 a year 10 years from now, and $140,046 in 40 years. Not only will you be making more money, but also you will be able to save more money. If you consistently (and that means every year) deposit 15 percent of your income into investments, compound interest will begin to accumulate like you wouldn't believe. Assuming a return of 10 percent a year, you'd be worth about $5.5 million when you are ready to retire.

Pay out your money in the following order:

  1. First, pay the government because they can get very nasty if you don't.

  2. Second, pay yourself. Put the aforementioned 15 percent of your income in some sort of investment.

  3. Third, pay the interest on your debts, such as credit cards, student loans, car, etc. Keeping that debt low is critical.

  4. Fourth, pay for non-critical parts of your life. Those would include entertainment, travel, and toys.

Of course, all of this advice hinges on your finding a decent-paying first job. Here are a few tips on landing one:

  • Forget the standard resume-cover letter program. Instead, write a direct marketing letter that lets your prospective employer know you understand what his problems are and that you have the solution to them.

  • Call the office of your prospective future boss and ask for a short, non-threatening informational interview. This is a great way to get in that locked door and find out a lot of personal and professional information about your target prospect. You may even end up with the job before you leave the office.

  • Remember that the hiring interview is a sales call. Let the customer talk as much as he wants. Listen. Nod your head. Smile and agree. When he asks you a question, give him the answer that he wants to hear. If you've been listening closely, you will know what that is.

  • If you feel you might not get the job you are seeking, suggest that you can do a project for the company on a freelance basis. Perhaps even for free. It works in selling vacuum cleaners. It should work when you're selling yourself.

Don't succumb to the temptation to pay for prestige. A big part of being able to save the requisite 15 percent involves not blowing your paycheck on expensive cars, high-dollar meals, and trendy couture. But that needn't mean depriving yourself.

Beautiful, comfortable clothes are not cheap, but they don't have to cost a fortune. You can buy a great pair of slacks for $150 or you can spend 10 times that amount. The difference will be the label on the waistband. The point is this: The best material things in life are affordable. They are not cheap (quality never is), but if you buy them selectively and use them with care, you can enjoy a life as materially rich as Bill Gates on an income that wouldn't get him through lunch.

Right now, you may think becoming a millionaire is not a laudable goal. You might say money doesn't matter. Well, it may not matter now, but it certainly will when your kids are applying to colleges or when you're approaching retirement. Financial independence frees you to live a rich, fulfilling, authentic life. And that's the true definition of wealth.

Michael Masterson has been making money for himself and others for almost four decades. At one time or another, he's owned and run companies that were public/private, onshore/overseas, local/international, service-product-oriented, retail/wholesale/direct mail, and even profit/not-for-profit. Masterson is the author of Automatic Wealth: The Six Steps to Financial Independence, Power and Persuasion: How to Command Success in Business and Your Personal Life, and Confessions of a Self-Made Millionaire. Available at bookstores nationwide, major online booksellers, or direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797 or visit

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