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How to Get Rich with A Normal Job

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9 minutes

There are a plethora of ways on how you can get rich and if you’ve been reading or researching on the internet, you may have learned that the best and fastest way to wealth is by starting and business a business. However, not everyone is cut out to become an entrepreneur or a business owner. So, how can a person get rich by simply working a normal job?

This is the question that this article aims to tackle. You see whether you’re building wealth as an entrepreneur or as an employee, both take time, consistency, and hard work. The difference is that you’re more likely to become rich faster as an entrepreneur because of the available leverage once your business gets traction.

But then, of course, getting rich with a normal job, isn’t impossible but it helps if you start your journey while you’re young, creative, and have a good work ethic.

I’ve always an entrepreneur at heart and I always encourage people to follow their passions. But, for some people that might not be an option and the best way to build wealth is with a normal job.

It’s going to be a long journey ahead, but hey, everyone gets old, and you’re no exception, so might as well prepare for it.

During the active working years of our lives, we have to actively work to make a living. In other words, when you’re at work, you earn money. At old age, you may not be as healthy, and agile as you are now, which means that you may not feel like you still want to exert the same amount of energy and creativity at a job as you are doing right now. And whether we like it or not, that time will come when we’re no longer able to physically deal with the hustle and bustle or a regular 9-5 to make a living.

employee (hands working on laptop)

In that case, you must have built the necessary wealth that will prevent you from actively working in order to earn a living.

This only means that when you’re already rich, your money works for you. $1,000,000.00, invested at 4% annual rate of return earns you $40,000.00 a year. Of course, the amount of annual income is relative as it depends on your lifestyle but in reality, a rich person is someone who need not work for money to earn a living, so really, you don’t need a million dollars to retire.

Getting rich with a normal job is quite simple, all you have to do is keep a portion of your income, and invest it for the long term. Well, that’s not quite exciting, I hear you mumbles but this is how most people built their wealth slow.

It’s slow but is a sure-fire way wealth as a 9-5 employee.

1. Invest in Stocks and Bonds

If you’ve ever read the book, Automatic Millionaire by David Bach, it proposes saving 10% of one’s income for the long term. He proposes that by saving at least 10% of one’s income per month, you can become financially independent by the time you retire. You may think to yourself how is it possible for a regular person with a normal job to save consistently? It’s about having a long-term financial plan, living below your means, and forgetting about the amount that you’re saving.

No, don’t check it, don’t peak, don’t even think about glancing at it. Consider it as a self-taxation.

In most countries, you get taxed when you earn, you get taxed when you spend, and you get taxed on you’re money’s growth.

Most people complain about paying taxes but that’s just how it works, that’s your contribution to the community, well hopefully you live in a country where you actually see people’s taxes being distributed back into the community.

stock market investing

As an individual, however, you can build wealth by taxing yourself. Taxes get collected automatically by bi-weekly or monthly deductions from your paycheck, you can use this exact concept to get rich over time, without necessarily building a business.

So tax yourself, and no, don’t just put that money into a savings account, invest it!

Most people, I found have between moderate to balance investor profile. If you fall under this category, you can expect to have an average annual return of between 4 – 5% on your long-term investment. The keyword here is “long-term”.

Decide on the amount or percentage of taxes that you’re going to impose on your income, and invest that long-term into tax-deferred or tax-sheltered investments such as 401k or ROTH-IRA (TFSA/RRSP in Canada). If you’re reading this from outside North America, I’m pretty sure your country must have a similar program to encourage its residents to invest for their future.

If you’re working with a fiduciary advisor, he or she can help you pick a portfolio that matches your risk profile.

As financial advisors, we are fiduciarily obligated to start off an investment client with a risk profile and match his or her portfolio with his or her risk tolerance.

This wealth-building strategy is perfect for people who are just starting out in their careers, so preferably, you’re in your twenties when starting in this wealth accumulation journey. As I mentioned, this is a slow way to get rich, but hey, most people don’t get rich despite working 40+ years in their career, so if you’re planning to get rich with a normal job, and you don’t mind working long years for someone else, this is a great strategy to build your future.

2. Invest in Rental Real Estate

Most people are afraid of investing in real estate because they don’t want to be landlords and deal with the management of tenants, but there is a way of investing in rental real estate without becoming a landlord.

If you don’t mind partaking with a portion of your monthly rent, you can always hire a property management company to deal with the headache. In this case, you’re not really after the property’s monthly cash flow, well only buy properties with positive cash flow in the first place, that’s the number one rule of investing in real estate.

investor shaking hands with tenants

As opposed to what you’ve learned from real estate investing roadshows, the monthly cash flow in rental real estate isn’t that great. You’ll only be making between $100 to $300 on monthly cash flow per unit but you’re not trying to replace your income here with one rental property, the idea is to grow a real estate portfolio while you’re working a regular job.

These properties get paid overtime and would increase in value on average.

And who’s paying your mortgage by the way? Yes, your tenants!

Your job as a long-term real estate investor is to accumulate as much real estate in your portfolio throughout your working career. This is no getting rich quickly and is a less complicated way of investing in real estate.

Stocks Vs. Real Estate

By this time, I can sense you’re rallying thoughts trying to figure out how you can make all these work with a regular 9-5 job.

On the first strategy of getting rich with a normal job, I proposed that you should save a percentage of your income and invest it in a combination of bonds and a stock portfolio.

If you’re a do-it-yourself investor, you can take a look at the S&P 500 index funds for your stock portfolio, and match it with a corresponding long-term bond index. In Canada, I use Questrade, and I’m invested in Vanguard S&P 500 Index ETF (VFV), mixed with Vanguard Candian Long-Term bond Index ETF (VLB).

Most people dread investing in stocks because of the asset’s fluctuating nature. Yes, the market goes up and down but the general trend is upwards. If you’re not a savvy investor, talk invest in indices instead of picking individual stocks, in other words, invest in funds, not stocks.

Stocks are shares in publicly traded corporations, and I always suggest that you mix them up with bonds.

Bonds are similar to a savings account, with a little bit better interest rates, they’re technically debts, they don’t go up and down as much as stocks do but their returns are dependent on interest rates.

You use bonds to hedge against your stock portfolios’ fluctuation to balance out the overall return of your investment.

Both paper asset and real estate investing can help you get rich with a normal job but both require some form of capital, so you must be willing to keep a portion of your income to build that capital.

With real estate, you can start with buying a home that you’re going to live in. If you can, buy a duplex, live on one unit, and rent out the other one. You’ll be living almost free while building equity at the same time. Now, multi-family properties don’t rise as much in value as single residential properties but it’s a good start if you value privacy.

Of course, you can always get a single-residential unit and house-hack your way to wealth where you rent out rooms instead of the entire property.

In the US, you can claim the mortgage payments on your primary residence against your taxable income, which makes this asset type such a great way of building long-term wealth.

In terms of stocks, you can also invest in dividend-paying companies like General Mills or Hershey’s and leverage the dividends to push your wealth upward. Of course, dividends aren’t guaranteed, and so are the rates of return on your investments. That’s why I always suggest that you invest in funds and indexes, instead of individual stocks because, the whole index has to fail for you to lose your investment.

stock monitoring - tablet

In the case of the S&P 500, for example, if one company has a bad year and drops more than 25% of its share value, the other 499 stocks will compensate.

In essence, you’re diversifying your risk across 500 companies instead of just investing in one or two. That’s how to get rich with a normal job!

Even so, nothing is guaranteed, not even our lives. Getting rich is a long-term mission, it won’t happen overnight but it can happen to you by systematically and consistently building your equity.

Most people will never get rich, especially with a normal job, but it’s worth trying. We are all programmed by society to spend what we make, and most of the time, most people tend to spend more than what they make.

Living paycheck to paycheck has become the norm, and I’ve seen families live on their bank’s overdraft protection to make ends meet until the next paycheck.

There is a saying that goes “it’s not what you make, it’s what you keep.” It means that if the person makes $30K per year and spends everything they earn at the end of each month, then they are not going to have anything saved up. If you start investing between 10% to 25% of your income, live frugally from what’s left after you take away your wealth accumulation taxes, you can become rich with a normal job.

Of course, it pays when you have a higher income but just start where you are.

Most people raise their browse when they see the 25% saving ratio but then not all people reading this are 20-25-year-olds. You may be 40 years old, which means that you have a shorter time horizon to get rich.

Building wealth is like building muscles. It takes time.

men holding money

Save more than you spend each month and invest what is leftover in a diversified portfolio of stocks, bonds, real estate investment trusts (REITs), or exchange-traded funds (ETFs).

Start out by saving $25 for every additional dollar that comes your way until you have reached the 25% savings ratio mentioned earlier. One example would be if you make an extra $1000 this year: save $250 for every $500 earned after taxes, etc. This will take some discipline on your part but nothing worth having ever came easy.

You don’t need to start investing 25% right away- it’s better to get into it with a small amount then gradually increase your saving ratio, and before you know it, what was impossible, is actually achievable.

If you’re looking to invest in real estate, you can open a short-term investment account and let your money grow in the next couple of years while you’re accumulating your downpayment. This can be a more conservative portfolio that doesn’t fluctuate as much, a conservative managed portfolio or bonds can be an option since you’re going to withdraw these funds when you’re ready to make your down payment.

If you’re investing in paper assets, build up to your desired saving ratio, invest in a mixture of stocks and bonds portfolio, automate your contribution, and forget the darn thing until you’ve built up wealth that need not work your day job to make a living.

This is how to get rich with a normal job.

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