How $5/Day Millionaires Actually Make Money

Dividends Forever
4 min readApr 14, 2022

“Make coffee at home, invest the money you saved in a low-cost index fund, and retire a multimillionaire.” This is some of the most common financial advice in America. There are numerous books, YouTube channels, and podcasts dedicated to the topic of saving $5 per day and harnessing the power of compound interest.

There’s nothing wrong with this advice. If you invest $152 each month (essentially $5 per day) at a 10% annual rate of return, you will compound your savings to $1,080,538.86 over the next 43 years.

It’s a simple strategy and one that 99.99% of people can follow.

Start saving $5 per day at 25, you have a million-dollar portfolio at 68.

That’s great!

I have nothing against this advice and think it’s a good way to get regular people to understand the power of saving and investing. In fact, The Automatic Millionaire was one of the very first personal finance books I ever read. It’s a title that’s well worth a library borrow if you’re completely new to wealth-building and compound interest.

However, this type of indexing plan does have limitations.

And in today’s article, I want to discuss the differences between what $5/day millionaires preach versus what $5/day millionaires do.

Long-Term Compounders And Goldbugs Share This Trait

There are thousands of books and websites with authors claiming to have been in horrible debt before discovering the power of setting aside tiny sums of money each day. They stopped buying Starbucks and — PRESTO!!! — all their money problems vanished.

This is a nice story, but mathematically unlikely.

Investing $5, or even $10, per day is an ultra-conservative strategy that takes years before there’s any noticeable pay-off.

A guru who only used this technique would have to be in their 60’s to speak credibly on how they amassed millions by forgoing Starbucks or eating at home. Most of the $5/day advocates are nowhere near this age. The majority are in their 30’s or younger.

In reality, $5/day millionaires make their money the same way goldbugs do, by building a business around one…

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