10 Mistakes Standing Between You and Your First Million

With inflation attacks the value of money is reducing at a fast rate and you will need more moolah as time goes on.

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Dreaming of being a millionaire was a chimera till few decades ago. However, with inflation attacks the value of money is reducing at a fast rate and you will need more moolah as time goes on. That is one of the reasons that one million is often thrown around as a common goal. The sunny part is that it is easier to reach the millionaire mark now than at any time before, provided you aware of the mistakes that stand between you and your first million.

Entrepreneur India

Entrepreneur got in touch with Avelo Roy, Cofounder and CEO of Kiuqi, LLC (Chicago), Executive Partner, Pongworks (Chicago) and Co-owner and Director, ECC Engineering Pvt. Ltd. (Kolkata) and Arun Thukral, MD & CEO, Axis Securities – to find those roadblocks.

Avelo Roy feels that being a millionaire is a side effect of a unique way of thinking and acting that is way different from the lifestyle design of a common man. “There are close to 15 million millionaires in the world according to Forbes list 2015. But schools and colleges will not teach you how to be millionaires because they are designed to produce workers. Only a millionaire can teach you how to be one,” he opines. Here is what he lays down as hurdles in the journey towards your first million:

1. Unclear goals never yield clear results

Carefully take the time to set a vision, a dream, and a life goal. Be specific about exactly what you want to accomplish and when. Rather than saying, “I want to be a millionaire one day”, write down, “I will make at least a million dollars in revenue for my healthcare startup by my 35th birthday”.

2. Don’t just dream, start executing NOW!

Planning for tomorrow is nice but what are you doing today? So break down your big dream into small chunks. Then write down the list of things you need to accomplish in the short term, mid-term and long term to achieve your well defined, measurable goal. This is your master list.

Now break down those tasks from the master list into smaller tasks and add them to your daily to-do list. Accomplish small victories every day.

Examples of breaking down million dollar goals:

  • Get 5000 customers to pay $17 per month for 12 months
  • Get 2000 customers to pay $42 per month for 12 months

3. Trying to execute alone is no fun and takes way too long

Get a mentor to guide you on strategy and principles from a high level. Let your mentor tell you what mistakes he/she made so that you can avoid it. Get connected to your mentor’s network and meet people who can catapult your startup faster and further than you could have ever done on your own strength.

Get a cofounder who has skills you don’t have and who thinks in ways that complement yours. Surround yourself with a team of people who are smarter than you so that your company reaches levels beyondthe limits of your own skills and abilities.

4. Stop rushing to pay your debts with your initial earnings

The middle class mentality teaches us to get rid of our debt as soon as possible. One of my mentors taught me otherwise. He negotiated with his bank to pay a bare minimum amount per month while he was drawing a meagersalary from a startup he joined. He helped get the startup to 18 Million in revenue in 3 years and paid off the student loan in one day.

Rather than cremating your money in the loan account, pay a little and grow the rest through investments at a rate larger than your loan interest. Settle the loan amount in a much shorter time.

5. Stop being a selfless victim

Your biggest asset is YOU so invest in yourself if you want to succeed. You can help others much more when you are well nourished. Constantly gain knowledge and inspiration from experts, self-development books, biographies and blogs by experts in your field of work.

Spend Smart! Instead of buying 10 cheap sets of clothing, buy 2 name brands and 3 designer sets from Amazon. Amazon typically sells them for real cheap (especially designer clothes made in Thailand) and they just make you look great!

Externals do matter. People feel much safer investing in those who are not in need. It should feel like an opportunity to invest in you whether you are seeking an investment or a job.

“Solution to every problem lies within. As we dwell on the mistakes we make that resist us from earning our first Million, we have to introspect ourselves,” says Arun Thukral, before pointing out the five hurdles in the way to one’s first Million:

a) Lack of Discipline: 

Generally, people think about the expenses and whatever is left after spends is to be invested. Do just the opposite; invest first and utilise the balance amount for expenses.  Discipline is of foremost importance to achieve any goal in life. Inculcate the habit of disciplined investing with Systematic Investment Plan (SIP). Like little drops of water make a mighty ocean, similarly disciplined investments through SIPs can yield astronomical results over a period of time. Focus should remain on long term goals rather than chasing returns on short term basis by taking adventurous & risky positions. When we decide for our fitness, we don’t begin lifting heavy weights, right in the beginning; we start with light weights and gradually build stamina. Similarly, start investing the savings in small parts, and build the portfolio, bit by bit. 

b) Reacting to Market Noise: 

People tend to overreact to news in stock markets that are only temporary in nature. It is important to detach yourself from noise and rather check if the underlying structural or fundamental story is intact. Market guru Warren Buffet says “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”. Consider the noise as buying opportunities as quality stocks also get battered down during turbulent times.

c) Getting Attached: 

Some people get emotionally attached to a particular asset class and concentrate their savings in gold (jewellery) or real-estate (property). Similarly, there are others that invest in stock markets but get attached to one or two stocks that they like due to emotional reasons. Be wary of your emotions as they can distract you from thinking rationally. Inclination to a particular asset class or stock just because one may like it personally increases portfolio concentration risk. In case the asset class or stock goes through downturns or negative cycle, it can lead to substantial wealth erosion. Diversify your Investments through asset allocation to increase predictability of returns as when one asset class or a subset of that falls there are others to compensate for the loss. 

d) Fear of Loss: 

Investors react more to a loss than to a gain of similar magnitude. Equity has given maximum returns in long term, yet only 3-4% of population is invested in stock markets. This fear of loss, acts as biggest impediment to investing right. The best way to counter this is to invest regularly for the long term through SIP and rely of proven rupee cost averaging philosophy.

e) Impulsive investments:

People rely on hearsay and invest their hard earned money in stock markets based on tips from friends / relatives expecting it to grow overnight. Now compare this to how you typically make a buying decision - you read the features, compare prices, check out the product, seek various reviews and then finally make a purchase. But when it comes to investing, we invest impulsively without any thorough background check or sound research advice. For successful investing in stock markets, you should either research well in the stock or rely on expert research advice. This to my mind is the mistakes that stand between you and your first million.