I'm 30 and working in tech and aggressively investing — how can I grow my wealth to $20 million?

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24/7 Wall St. Key Points:

• If you crossed the first threshold of accumulating a lot of wealth at a relatively young age,  you must begin thinking about preserving capital if you want to retire early.
• Swinging for the fences risks running afoul of Warren Buffett’s first rule of investing: don’t lose money.
• A better option is to shoot for hitting singles and doubles by buying an index fund.
• Also: Take this quiz to see if you’re on track to retire (Sponsored)

One of the problems with the stock market is too many people look at it more like gambling. Instead of viewing stocks as ownership in a business, they think it is like going to a casino. They put their money down on red or black and hope they can become millionaires if the roulette wheel ball lands right.

Admittedly, most investors won’t ever own enough stock in a company to have a large say in what a company does. However, you should still take your ownership position seriously and only buy stocks of companies you believe will grow over time. Have a long-term mindset and avoid the temptation to think only of the current or next quarter, or even the next year. Only buy those companies you plan on holding onto for at least three to five years, and preferably for a decade or more.

The situation

This was brought to mind by a Redditor’s post on the r/fatFIRE subreddit looking for investment advice to 10X his money. He hit a golden lottery of being an early employee in a tech company that went public and he was due to receive a payout of several million dollars. 

Although he thought stocks were expensive, he wanted to buy some tech stocks and options, maybe some Bitcoin (CRYPTO:BTC) or Ethereum (CRYPTO:ETH), while also dabbling in real estate. His goal was taking his windfall and multiplying it into $20 million.

While he didn’t say what kind of time frame he was looking at, as he was 30 years old and and looking to retire early with at least a comfortable, upper-middle class lifestyle, one could assume his timetable was within the next 10 years or so.

What he wanted to know was what was a good way to diversify. As he was young, he figured he could be aggressive with his investments.

Playing in a different league

Now I’m not a financial advisor, so these are only my opinions, but the way I see the problem, the Redditor was essentially looking to gamble his money by taking a few big swings to hit some home runs. Instead of seeking out more accessible singles and doubles, and building his wealth over time, he really wanted a one-and-done solution.

It’s the wrong way to go about it. Home run hitters in baseball also strikeout far more often than they connect, while utility players tend to have better on-base percentages and score more runs for their team, if in less dramatic fashion.

At 30 years old, the Redditor has already achieved a significant goal. What he should do instead of swinging for the fences, is remember Warren Buffett’s top rule for investing: “Don’t lose money.” His second rule is just as important and says “don’t forget the first rule.”

Even though he is young and could make up losses over time, there is the opportunity cost of having to make up whatever money he lost. Instead of padding his lead, he would be striving to just get back to break even.

Key takeaways

Rather than bet on individual stocks or cryptocurrency, the better choice would be to buy an index fund like Vanguard S&P 500 ETF Trust (NYSEARCA:VOO) that could earn you the market’s average return of around 10% annually. That would basically double your money every seven years while giving you instant diversification across industries and geographies.

Slow and steady wins the race, just like the singles and doubles hitters do more to help their teams win world championships. A financial planner can map out a strategy based on your unique situation. Speaking with one is one of the best first steps a person can take.

The goal is to preserve capital, particularly if you are looking to retire early. You’re not on the same investment track as the average 30-year old, but are more akin to someone who is 50 or older and sees retirement on the horizon.

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