Three Ways to Become a Millionaire

This article explores the concept of being a millionaire, arguing it’s not just about having a million in the bank. It presents a strategic path to wealth that prioritizes income and assets over liquid cash, based on the author’s personal journey to financial independence.

Key Definitions of a Millionaire

The author identifies three distinct types of millionaires:

• Liquid Millionaire: An individual with at least 1 million PLN in liquid assets like cash, deposits, or bonds. This provides immediate access to funds but may offer lower returns.
• Asset Millionaire: A person whose net worth (assets minus liabilities) exceeds 1 million PLN. Assets include real estate, stocks, art, and business shares. This allows for diversification and potential for higher growth, though the wealth is less accessible.
• Cashflow Millionaire: Someone whose passive monthly income is equivalent to the interest earned from a 1 million PLN investment. For example, if a 1M PLN deposit yields 4,050 PLN/month after tax, anyone earning that amount passively is considered a Cashflow Millionaire.

The Recommended Path to Wealth

Instead of aiming directly for liquid wealth, which can be daunting, the author suggests a three-step progression:

1. Become a Cashflow Millionaire: First, focus on building multiple passive or semi-passive income streams to generate consistent cash flow.
2. Become an Asset Millionaire: Reinvest the profits and savings into acquiring assets like real estate and stocks to build a net worth that grows over time.
3. Become a Liquid Millionaire: This is the final, and potentially optional, stage. The accumulated assets and cash flow might be sufficient, making a large cash reserve unnecessary.

Conclusions and Personal Takeaway

The author shares his own 14-year journey following this path, which involved intense work, a high savings rate, and significant personal sacrifices. He has now reached a state of “Barista FIRE” (Financial Independence, Retire Early), where he has enough assets and income to quit full-time corporate work and prioritize time and freedom over accumulating more wealth. He argues that the ultimate goal isn’t just money but the independence it provides. The key is to decide whether to make sacrifices in your youth for freedom later or to postpone the hard work.

Mentoring question

The author describes sacrificing his ‘present self’ for his ‘future self’ to build wealth. How do you currently balance enjoying your life now with planning and saving for your long-term financial independence?

Source: https://52notatki.substack.com/p/trzy-sposoby-na-bycie-milionerem