Can young people become millionaires?
They can if they begin investing early!
Listen to Grant Sabatier, “the millennial millionaire,” as he shares why and how he embraced an early investing strategy.
Grant took advantage of a bear market and made millions of dollars when the market recovered. He stresses the importance of having both a short-term and long-plan for investing. Doug and Grant discuss his strategies and discipline, and explore the successes and failures of Grant’s investment journey.
Should young investors invest aggressively?
Doug answers the question of when someone should begin saving.
The answer is simple… right now! Millennials should start putting aside a percentage of their income as soon as they begin working. Ignore the impulse to wait until “things are financially easier” to save, since saving is a habit.
Doug explains how mutual funds and index funds work, and encourages creating a long-term plan for stock market investing. Unlike older or late investors, a young investor may be able to afford more risk and use more aggressive investments — and become more conservative as retirement approaches.
Listen for some investment techniques that may help increase a young investor’s confidence (and hopefully, success). New and experienced investors alike may benefit from watching a video about Monte Carlo simulations.
If you’re not already receiving updates on new episodes, sign up now, and as a special bonus, receive Doug’s free ebook The Retirement Planning Book.
Interview With Grant Sabatier
Be inspired as Grant Sabatier, whose liquid net worth increased from just $2.26 to $1,000,000 in just five years, shares his journey towards wealth.
Douglas Goldstein: I’m very excited to be talking to Grant Sabatier, who was called “The Millennial Millionaire” by CNBC.
Grant, I think you went from $2.26 to $1,000, 000 in about five years through side hustles and investing.
Is that true or is that like the myth of Grant?
How Grant Sabatier Went from $2.26 to over $1,000,000 in Liquid Net Worth
Grant Sabatier:No, it's totally true. From 2010 to 2015. I went from $2.26 to over $1,000,000 in liquid net worth, in my investment accounts.
Douglas Goldstein: And that was because you married someone who was hugely wealthy?
Grant Sabatier: It’s because I spent most of my time working.
During those five years, I went from one income stream to seven, and focused on investing 100% of my side hustle income.
I was a beneficiary of the growth in the market from 2010 until now, and I’ve been able to use that really heavily to my advantage.
But just through a lot of tried and true saving, diversity of income streams, and investing, I was able to build my wealth pretty quickly, and reach financial independence at age 30.
Douglas Goldstein: This sounds a little bit crazy. I'm trying to ask this question in a nice way but I know that people are thinking, Is this guy nuts? Did you just go insane and say, “I’m going to become a millionaire” and stop everything and start working?
Grant Sabatier: Kind of, honestly.
Douglas Goldstein: Alright, but I think if that's what it takes, you do what it takes.
Grant Sabatier: Yes. It’s one of those things where I was 24, back in 2010. I was back at home with my parents and basically didn't have anything, and I needed to start over.
I'd been through a few jobs, had blown through all of my money, and was starting from scratch, and I knew that I had one thing still on my side, which was time.
I was only 24 and I was like, “I want to make as much money as I can, as quickly as I can, and I'm going to try this out.”
I didn't set out with a $1 million goal. I set out to try to make as much money as possible because I knew that the market was low, and that if I could get money into the market, I could benefit from the growth.
I figured, “Hey, if you can make some sacrifices today, there's a chance that you could reach early retirement and then have the rest of your life to do whatever you want.”
I made that my number one priority and put everything I had behind it, and luckily enough I was able to accomplish it. Now I wake up every morning and can do what I want, and yes it's a sacrifice.
Douglas Goldstein: You do whatever you want. You do this cool thing.
You've got this website, millennialmoney.com and you’ve got a podcast. You write about it, you teach about it.
Let's say you chose not to do that, because I know you make money on those things as well, a million bucks today, and I'm not knocking it because it’s a huge amount of money. But that's not enough to retire on for someone who's 30, right?
Is $1,000,000 Enough for Grant Sabatier to Retire?
Grant Sabatier: The interesting thing is I make about $1 million a year now with my other income streams.
I'm growing my net worth at a faster rate than I did, even during that five-year period.
I call this theory, “The compounding interest of life effect.”
Because I invested so much of my time in building relationships, building multiple companies - I own four different companies - I've been able to benefit from the growth of all of those, and the relationships, and the investment.
It's not just the money; it's the fact that the seeds that I invested in the companies that I've launched are returning larger returns now than when I started.
It's not like I stopped everything and just started blogging. Blogging is one of the many things that I do that generates income.
Douglas Goldstein: All those businesses seem to bring a great cash flow into you, Grant.
One of the things you touched on before, which is where I'd like to focus, is you said you wanted to get money into the stock market, and I presume that when other people talk about getting money into the stock market, they're talking about long-term growth.
For a guy who's in his 20s, we say great; if you can invest for the next 40 years, you'll be doing fantastic.
It sounds like you see it as more of a short-term approach. What were you looking to do, and how do you manage your stock investments in order to make them as profitable as they are?
Grant Sabatier: That's a great question. I have a short- and a long-term view in the market. I have a strategy for when I'm investing money that I need in the next five years, versus money in the long-term.
I happened to have the advantage. The market was so low when I started in 2010.
Every dollar that I invested then is now worth $3.25. It was a mixture of index funds, and some individual equities. I actually only invest about 10% of my holdings in individual equities.
I have some real estate as well, but over that time period, I got lucky in a couple of senses and now have individual equities.
My stakes have grown so much that 40% of my net worth is in individual equities, and I'm in the process of re-balancing that and putting it back into index funds.
But I've just been the beneficiary of some bullish Amazon growth, Facebook growth, and some other holdings as well, just tried and true index fund, Vanguard Total Stock Market Index, total international stock market index, and some emerging market funds.
With all of those combined, I’ve beaten the S&P by at least 3% every year since 2010 from my holdings and I don't consider myself an advanced investor by any means.
Douglas Goldstein: How did you choose the stocks? Let's dive into that. What was your model, other than I guess you buy in Amazon and you look in to your friends on Facebook?
How Did Grant Sabatier Choose Which Stocks to Buy?
Grant Sabatier:It's pretty interesting, especially for Facebook.
I was at the University of Chicago, and we were the second school to get access to Facebook. I was user number 18,000 on Facebook.
They used to tell you what user you were. I was an early, early user of the platform. Immediately when it went public, I dumped a bunch of money into it.
Bought it at $32 a share and I've held onto that. I've been buying Amazon since 2010 and started getting into it at about $280, and I've consistently invested in Amazon through the years.
I staked a large position last February at $500 and it recently hit a $1000, so I only invest in equities and companies that I believe in and of products that I use.
It's pretty simple. Once I started seeing Amazon diversify beyond books, and it was so easy to order things, and then once Prime launched, I saw that as being a game changer.
You can get anything in two days, and I've had the fortune of being two or three years ahead of a lot of trends in my life. I think it's because I'm a millennial on the older end of the spectrum.
I'm 32 now, but I've been very lucky to be coming of age at a time when certain things were new in the market, and I've been able to capitalize on them.
Douglas Goldstein: How many different individual stocks do you own?
Grant Sabatier: I have a portfolio of 11 individual equities now. Not very broad.
Douglas Goldstein: Not too broad, but that's okay. It’s giving you something you can follow. What's your worst stock story?
Grant Sabatier’s Worst Stock Story
Grant Sabatier:My worst stock story is when I first started investing in stocks.
It was 2008, when I got my first job out of college and I didn't know anything about investing. I thought you just put money into the stock market. I made the mistake that a lot of people make, and I'm thankful that I made it really early.
I charted to day trade. I bought a number of stocks that I thought would go up and I was stupid enough. I was reading websites like The Street, and all of these, Motley Fool, and all of these ones that are like, the stocks are going to jump and obviously whenever anyone is writing about it, that's already been priced in.
I bought a lot of different equities and lost about $3,000 in three or four days. I did that twice, and I was like, “I'm never day trading again”.
Recently, for the first time ever, I shorted a stock. I've never done that before, but I shorted Snapchat, which I'm super happy about. I'm still shorting Snapchat, and I'm excited about that play.
But lo and behold, a lot of it's just been companies that I use myself. I'm an Apple investor. I was an early Netflix investor.
I was fortunate enough to buy A-Square shares, class-B shares, before they were released to the market pre-IPO on a secondary market exchange. I still own A-Square and believe in the company. And yes, most of them are the ones I use myself.
Douglas Goldstein: That's your main criteria. Do you then dive in and do the research, the fundamental research, on the stocks?
Does Grant Sabatier Do Fundamental Research on Stocks before He Buys Them?
Grant Sabatier: No, I don't. I find a lot of that research … Everyone has a different theory.
I understand P ratios and all of the technical aspects just because I've learned myself. There's a great company called, Simply Wall Street. It's a company based out of Australia.
I love those guys, and they've created what's like the Pinterest of stock investing, and they've got this platform where you can log in and it visualizes.
You can visualize all of the basic fundamentals and cash flow, cash flow projections, analyst ratings. It's an incredible platform.
I use that and hang out, and check out undervalued stocks. But once again I have to feel really motivated to add a new position to my portfolio.
Most of the cash that I'm getting, I'm dumping into index funds or occasionally buying more Amazon stock.
There is this one company, 2U. I recently invested in it and it’s an online education provider. I don't look at the fundamentals.
Douglas Goldstein: Got it. You look at the company you like and what they're doing.
Interesting, and I know that you talk about this a lot in many different areas. Grant, we're just about out of time, but in the last few seconds tell me how people can follow you and follow your work.
How to Follow Grant Sabatier
Grant Sabatier: Check me out at millennialmoney.com and @Millennialmoney on Twitter. It's the best place to find me.
Join my newsletter, check me out on Twitter, or check out my podcast. It's Millennial Money Minutes.
There, episodes of “personal finance in five minutes or less” are released every morning.
I'm working on a book that will be out next spring with Penguin Random House, and I’m super-excited to bring the millennial money strategy to the world.
Douglas Goldstein: Okay. Great. Grant Sabatier, thanks so much for taking the time.
Grant Sabatier: Thanks Doug, I appreciate it.