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If you are like many people, you may have asked yourself at some point in life, “Will I be rich one day?” No one knows for sure what the future holds, but there are a few things you can do to increase your chances of becoming a millionaire.

One of the best ways to amass wealth is to invest in assets that will appreciate over time. But while that sounds good, finding a starting point can be challenging for some. For example, you can start your own business or work hard to climb the corporate ladder, but which is the better option? And you’ll want to invest the money you earn. But where?

Whatever you do, it’s smart to remember that it’s okay to take risks and make mistakes; learning from your experiences is a critical component of success. Above all, remember that wealth accumulation is a marathon, not a sprint. It takes patience, commitment, and perseverance to achieve financial security.

What Is a Sign of Wealth?

Often, specific aspects of one’s physical appearance such as luxury cars and designer clothes are taken as a sign of being rich or wealthy. Unfortunately, these signs aren’t always reliable. For example, some people may live in an extravagant home, giving off the appearance of wealth, but it may simply mean that they can access money — perhaps through credit, savings, or even family.

Real signs of wealth are often more attitudinal, and many can be cultivated through patience and practice. Here are a few people who were early millionaires due, in large part, to their drive and focus.

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Examples of Millionaires Under 30

With the advent of the tech industry, smart investments, business ventures, or inheritances — i.e., the great wealth transfer — millionaires under 30 are becoming increasingly common. Here are three examples of millionaires who earned their fortunes before turning 30.

Mark Zuckerberg: Zuckerberg created Facebook at age 19 while attending Harvard University. The idea was to match photos with the names of other students. And in just a few short years, Zuckerberg became a self-made millionaire at age 22.

Sergey Brin: Brin is a Russian American computer scientist who, at the age of 25, co-founded Google, Inc., and became a millionaire. Google is one of the world’s most valuable companies, and today, Brin’s net worth is estimated to be upwards of $120 billion.

Alexandr Wang: Wang founded Scale AI in 2016 as a way to analyze data far faster than any human could. Today, Scale AI’s technology has been used by the U.S. Airforce and U.S. Army, as well as 300+ companies. Today, Wang’s net worth is estimated to be over $2 billion, and at age 27, he’s among the youngest self-made billionaires.

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9 Signs of Wealth to Look Out For

In the U.S. 1% of earners take home nearly 30% of the country’s income, so it’s essential to know what signs to look for when trying to identify if someone is wealthy. While there’s no one-size-fits-all definition of wealth, some cues can give you a good idea of whether you or someone you know is doing well financially. (And a net worth calculator can help you tally up your own assets.)

Here are six signs of wealth to look out for that indicate you’re on track to becoming wealthy:

1. You’re an Overachiever

It’s hard to be modest when you’re an overachiever. You know you’re good at your work and are not afraid to let everyone know. Overachievers work hard and try harder. While this may make some people uncomfortable, it comes naturally to you.

2. You Started Making Money At a Young Age

It is not uncommon to see young adults with successful careers in today’s society. While some people played with toys as a child, others learned how to make money. For example, it could mean that you had a paper route or a babysitting business.

Making money at a young age, or any age for that matter, is not always easy. But an early start in earning, tracking your money, and investing can put you on an accelerated schedule when it comes to building your wealth and becoming a millionaire.

3. You Take Action

There will be times when things happen that are out of your control. You may feel stuck and as if you have no way to change your circumstances. However, these are the times when you must take action to create the life you want to live. For example, it might mean organizing your finances to get what you want. And, sometimes you’ll have to take some risks and go for it. It can be scary, but it’s worth it to achieve your goals.

When faced with a difficult situation, it’s essential to remember that you always have a choice. You can choose to give up, or you can choose to fight for what you want. Only by taking action can you make progress and take a step towards achieving financial wellness. So don’t be afraid to step up and take on whatever life throws your way — you can do it!

4. You Are Outspoken

In a society where people get judged by how much money they have, it is no surprise that many go out of their way to keep up appearances. And while some may try to blend in with the wealthy crowd, a wealthy person will often stand out with his unique style or outgoing sense of humor. Wealthy people tend to feel less inhibited and are more likely to speak their minds. They may also be less concerned with the rules and more likely to take risks.

5. You Possess a Sense of Urgency

When it comes to the wealthy, there are a few telltale signs that set them apart. One of these is their sense of urgency — they don’t like wasting time and are always moving forward. This urgency allows them to set financial goals, achieve them, and maintain their wealth. It’s also one of the reasons why they may seem constantly stressed out — they’re always trying to do more.

6. You’re Focused More on Saving Than Earning

It doesn’t matter if you earn $50,000 or $250,000 a year. Unless you consistently spend less than you make, you’ll never get ahead financially. People who focus on their budget and saving their disposable income understand how to live within their means and focus on what’s most important: saving money for the future.

7. You Know the Difference Between Needs and Wants

In our materialistic society, getting caught up in the “must-have” mentality is easy. Advertisements are everywhere, and social media posts tell us we need the next latest and greatest products. It can be challenging to discern between the things we need and want.

A sign of a wealthy person is their ability to distinguish between the two. They know which items are essential for their well-being and those which would be nice to have. Advertising or peer pressure doesn’t work on rich people, and their possessions don’t rule them.

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Spiritual Signs You Will Be Rich

Are there spiritual signs that you can be a wealthy person? Some people believe steadfastly in spiritual and other signs of wealth and luck. Here are a couple of examples:

Gravitating to the Lucky Number, 8

In Chinese culture, the number 8 is considered a lucky number. Individuals who gravitate toward this number may believe it will bring them good fortune. Some people might even go as far as to change their phone number or social media handle to include the digit 8.

A Psychic Confirms Wealth is Coming

Some people consult psychics to get guidance on anything from love to health and even money. While many psychics will say they can tune into your energy and give you specific information about your future, and many people believe their predictions, you may be better off putting the money you’d pay the psychic into savings.

Pros and Cons of Having Signs of Wealth

There are very few times when it can be helpful to show off your wealth to others. Indeed, showing off can make others feel intimidated. Additionally, it can attract unwanted attention from criminals or others who want to take what you have. And having too many signs of wealth can make you a target for scams or other fraudulent schemes.

The Takeaway

If you identify with any of these habits you’re likely well on your way to building a significant amount of wealth. However, it is essential to remember that wealth accumulation is not a one-time event; it’s a way of life. It’s something you’ll need to make a habit of, if you want to succeed. For many people who work hard, stay focused, and are disciplined, it is possible.

And as you’re building your wealth, tracking your income and expenses is one of the primary ways to manage your money. SoFi’s money tracker app can help you keep track of your funds so you can make the best spending decisions and start building your very own fortune today.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

At what point is someone considered wealthy?

There is no magic dollar amount that indicates someone is wealthy and one person’s definition may not be the same as another’s. But in 2022, the top 1% of earners took home an average of $785,968, according to the Economic Policy Institute. Of course the amount you earn is only part of the wealth story. How much of your income (or inherited wealth) you retain is affected by your spending habits.

What are invisible signs of wealth?

People who are stealthily wealthy still might have a “tell” that gives them away. Use of private banking or wealth management services would be one example. Another might be not working but being able to maintain an expensive hobby such as riding horses or boating. Buying bespoke products, whether tailor-made clothing or custom-designed furniture, is another subtle giveaway.

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What Is the Payback Period?

The payback period is the amount of time it will take to recoup the initial cost of an investment, or to reach its break-even point. Considering the ups and down of various market factors — e.g. the crypto winter or the impact of higher-than-usual interest rates — being able to gauge the payback period is one of the most important calculations for investors when planning investments and returns.

The payback period can help investors decide between different investments that may have a lot of similarities, as they’ll often want to choose the one that will pay back in the shortest amount of time. The longer money remains locked up in an investment without earning a return, the more time an investor must wait until they can access that cash again, and the more risk there is of losing the initial investment capital.

How to Calculate the Payback Period

The payback period is calculated by dividing the cost of the investment by the annual cash flow until the cumulative cash flow is positive, which is the payback year. Payback period is generally expressed in years.

Prior to calculating the payback period of a particular investment, one might consider what their maximum payback period would be to move forward with the investment. This will help give them some parameters to work with when making investment decisions. If the calculated payback period is less than the desired period, this may be a safer investment.

There are two easy basis payback period formulas:

Payback Period Formula (Averaging Method)

Payback Period = Initial Investment / Yearly Cash Flow

Using the averaging method, the initial amount of the investment is divided by annualized cash flows an investment is projected to generate. This works well if cash flows are predictable or expected to be consistent over time, but otherwise this method may not be very accurate.

Payback Formula (Subtraction Method)

Payback Period = the last year with negative cash flow + (Amount of cash flow at the end of that year / Cash flow during the year after that year)

Using the subtraction method, one starts by subtracting individual annual cash flows from the initial investment amount, and then does the division. This method works better if cash flows vary from year to year.

Other factors

Investors might also choose to add depreciation and taxes into the equation, to account for any lost value of an investment over time.

Benefits of Using the Payback Period

The payback period is simple to understand and calculate. It can provide individuals and companies with valuable insights into potential investments, and help them decide which option provides the best return on investment (ROI). It also helps with assessing the risk of different investments. Advantages include:

•  Easily understandable

•  Simple to calculate

•  Tool for risk assessment

•  Helps with comparing and choosing investment options

•  Provides insights for financial planning

•  Other calculations, such as net present value and internal rate of return, don’t

•  look at the amount of time it takes to recoup an investment

Downsides of Using the Payback Period

Although the payback period can be a useful calculation for individuals and companies considering and comparing investments, it has some downsides. The calculation only looks at the time period up until the initial investment will be recouped. It doesn’t consider the earnings the investment will bring in after that, which may either be higher or lower, and could determine whether it makes sense as a long-term investment.

If earnings will continue to increase, a longer payback period might be acceptable. If earnings might decrease after a certain number of years, the investment may not be a good idea even if it breaks even quickly. On the other hand, an investment with a short lifespan could need replacement shortly after its payback period, making it a potentially poor investment.

The payback period doesn’t take into consideration other ways an investment might bring value, such as partnerships or brand awareness. This can result in investors overlooking the long-term benefits of the investment since they’re too focused on short-term ROI.

The payback period equation also doesn’t take into account the effects an investment might have on the rest of the company’s operations. For instance, new equipment might require a significant amount of expensive power, or might not be able to run as often as it would need to in order to reach the payback goal.

Another limitation of the payback period is that it doesn’t take the time value of money (TVM) into account. The time value of money is the idea that cash will be worth more in the future than it is worth today, due to the amount of interest that it can generate. Not only does this apply to the initial capital put into an investment, but it’s also important because as an investment generates returns, that cash can then be reinvested into something else that earns interest or income. This is another reason that a shorter payback period makes for a more attractive investment.

When Would You Use The Payback Period?

The payback period can apply to personal investments such as solar panels or property maintenance, or investments in equipment or other assets that a company might consider acquiring. Often an investment that requires a large amount of capital upfront generates steady or increasing returns over time, although there is also some risk that the returns won’t turn out as hoped or predicted.

Calculating payback periods is especially important for startup companies with limited capital that want to be sure they can recoup their money without going out of business. Companies also use the payback period to select between different investment opportunities or to help them understand the risk-reward ratio of a given investment.

Knowing the payback period is helpful if there’s a risk of a project ending in the future. For example, if a company might lose a lease or a contract, the sooner they can recoup any investments they’re making into their business the less risk they have of losing that capital.

Any particular project or investment can have a short or long payback period. A short period means the investment breaks even or gets paid back in a relatively short amount of time by the cash flow generated by the investment, whereas a long period means the investment takes longer to recoup. How investors understand that period will depend on their time horizon.

The Takeaway

You can use the payback period in your own life when making large purchase decisions and consider their opportunity cost. Understanding the way that companies calculate their payback period is also helpful to determine their financial viability and whether it makes sense for you to invest in them as part of your portfolio.

Whether you’re new to investing or already have a portfolio started, there are many tools available to help you be successful. One great online investing tool is SoFi Invest® online brokerage platform. The investing platform lets you research and track your favorite stocks and ETFs. You can easily buy and sell with just a few clicks on your phone, and view your portfolio on one simple dashboard.

You can choose from either active or automated investing. With active investing, you can hand select each individual stock or ETF you wish to add to your portfolio. Using automated investing, you can choose from groups of pre-selected stocks. There are additional tools in the app to set personal financial goals and add all your banking and investment accounts so you can see all of your information in one place.

If you have any questions or need help getting started, SoFi has a team of professional financial advisors available to help you reach your personal financial goals.

You may also be interested in:

Rate of Return (RoR): Formula and Calculation Examples

NPV Formula: How to Calculate Net Present Value

Discounted Cash Flow (DCF) Explained

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