By all accounts, Drew Lee isn’t a typical millennial in his age group. 

Whereas the typical individual below the age of 35 has a internet price of $76,000, Lee has a internet price almost seven instances that. In lower than 10 years, the 32-year-old Pittsburgh native has elevated his internet price to $530,000 and now spends a lot of his time sharing private finance tips about his TikTok account, {Dollars} With Drew. 

“The truth that I’m doing that is what’s, I believe, stunning about private finance and investing,” Lee instructed Benzinga. “I did take private finance and investing critically in my twenties. And, now I’ve this internet price, and now I’ve the runway to have the ability to pursue a ardour of mine and never simply need to work.”

In line with a 2022 survey from Investopedia, three out of 4 millennials between the ages of 26 and 41 years outdated stated they have been considerably burdened about managing their funds. Whereas a majority of them expressed confidence of their monetary data, many stated they have been involved concerning the tradeoffs related to making main monetary selections revolving round healthcare, homeownership, retirement preparation and childcare, in accordance with Investopedia’s ballot. And even if many millennials might consider they’ve a robust understanding of private finance, the reality is that a comparatively small share of them can show monetary literacy. 

Lee, nevertheless, was taught to be frugal — a trait that he largely credit for serving to him construct wealth rapidly — and make investments the place he might. He considers each of his mother and father financially literate and recalled how they inspired him to begin saving for investments and open a 401K account as quickly as he entered the workforce. After he graduated from Penn State in 2013, he landed a job as an industrial engineer with a wage of about $62,000. 

At 23 years outdated, Lee got here throughout a e-book that, he stated, taught him about “90% of what I must know and what I believe most individuals must find out about private finance and investing.” The e-book was “I Will Train You to Be Wealthy,” by private finance knowledgeable Ramit Sethi. Whereas Lee’s mother and father had solely given him “high-level fundamentals” about investing, Sethi’s e-book helped to stipulate what he wanted to do, Lee instructed Benzinga. 

See Additionally: 7 Steps To Millionaire By 35

“I’m extraordinarily analytical by nature … like I’m all the time making an attempt to optimize issues in my life,” Lee stated. “After I graduated faculty, I used to be like, ‘Okay, I’m getting cash now.” I actually needed to seek out out what [to do] with this cash.”

Whereas residing properly under his means in Pittsburgh and later Cincinnati, Lee stated that he would additionally scour Reddit’s private finance discussion board to be taught all he might. Yearly, he was in a position to save and make investments between $20,000 and $25,000 yearly in low-cost index funds by his tax-advantaged accounts — together with his 401K, Roth IRA, and HSA — whereas modeling the accounts on the Bogleheads three-fund portfolio. It additionally helped that he lived in cities that had a low price of residing. 

At this time, Lee repeatedly spends his time on TikTok, breaking down his internet price to his almost 73,000 followers. Of the $523,000 he has, $80,000 of it’s in a Roth IRA, $226,000 of it’s in a 401K, $18,000 of it’s in a HSA, $13,000 of it’s in a taxable brokerage account, $6,000 of it’s in a 529 plan, and the remaining is break up in money, rental property fairness, major house fairness, cryptocurrency and his two automobiles. 

When requested what recommendation he would give to a millennial who’s seeking to put money into right now’s financial system and construct wealth, Lee stated there are 4 key gadgets to remember: 

Mirror On Your Targets: Too usually, many individuals wish to construct wealth with out having a transparent concept concerning the journey it takes to attain a excessive internet price. 

“It’s important to actually take into consideration what you need your life to appear like,” Lee stated. “Do you envision your self climbing the company ladder and dealing til you’re 65 years outdated and dealing your means all the best way up? Or do you envision your self possibly retiring if you’re 55, 50, 40 or 35?”

In line with Lee, it’s essential to first work out the trail one’s keen to take. From there, “you’ll be able to design your life to satisfy no matter purpose that’s,” he stated. For instance, if an individual desires to spend some huge cash on holidays, that implies that there are different bills — from hire to automobile funds — they might want to scale back so as to nonetheless align with their monetary objectives.

Price range Accordingly: Dwelling under one’s means so as to accumulate wealth entails budgeting effectively. Whereas most specialists advocate following the 50/30/20 rule — spending 50% of the earnings on wants, 30% on desires and the rest on financial savings — Lee stated that budgeting needs to be primarily based on one’s objectives. 

“If any person desires to retire once they’re 35, they’re going to have to avoid wasting much more than 20%,” Lee stated. “So you actually received to consider your objectives. If 20% is sufficient financial savings to satisfy your objectives, then that’s nice.”

In Lee’s case, the 32-year-old determined to take a position aggressively early on, maxing out his Roth IRA and HSA by computerized contributions. From there, he lived off the rest, which amounted to roughly $2,000 a month. At instances, Lee would discover himself ready for the subsequent paycheck to come back in so as to pay no matter payments he had. 

“[Because] it was all automated, I didn’t have to consider it,” he stated. “If that cash would’ve hit my checking account, then I’d’ve had the choice to spend that cash on sneakers or had the choice to spend on no matter else.”

Improve Your Earnings: Merely being frugal isn’t sufficient to construct wealth. It’s additionally essential to seek out methods to extend one’s earnings, whether or not by a elevate or a facet hustle.

“Improve your earnings and play offense or cut back your bills and play protection,” Lee stated. “Ideally, [you should do] each, however these are the nuts and bolts — your incomes and your spending —  which can be going to have a a lot, a lot larger affect in your monetary success than what you’re truly investing in.” 

If You’re Investing In Index Funds, Focus On Allocation: Basing the make-up of his funding accounts on the Bogleheads three-fund portfolio, Lee instructed Benzinga that 75% of his funds are U.S. index funds, together with U.S. complete market (resembling FSKAX), S&P 500 (resembling FXAIX) and prolonged market index funds (resembling FSMAX). Many of the remaining funds are worldwide index funds, together with worldwide complete market (resembling FZILX), worldwide rising (resembling FPADX) and worldwide developed market funds (resembling FSPSX). Not one of the cash is in bonds. The composition displays not solely Lee’s danger tolerance however his perception that he’s “younger sufficient proper now the place I’ve sufficient time on my facet to get better from market downturns.”

Nonetheless, Lee advises individuals to finally choose the asset allocation or diversification that they really feel works for them. As a substitute of worrying an excessive amount of about which index funds are thought-about the “greatest,” buyers ought to take into consideration how the allocation of these funds might help them attain their objectives, he stated. Regardless of a shaky financial system right now, the 32-year-old stated he stays optimistic that investing now’s well worth the worth. 

“If in case you have time in your facet, you bought to grasp the historic information and perceive that the market has all the time recovered each single time,” Lee stated. “I actually really feel assured that 30 years from now, in 2053, we’re all going to be saying ‘I want I invested extra money in 2023’ even by this downturn that we’re dealing with.” 

Learn Subsequent: Study These 10 Investing Classes Earlier than It is Too Late

This story is a part of a brand new sequence of options as regards to success, Benzinga Encourage.

Picture: Courtesy of Drew Lee