Investing

Ask AI: How Can You Become a Millionaire?

Austin Smith

Published: July 6, 2024 10:39 am

Last Updated: July 6, 2024 10:40 am

ChatGPT provided five ways to become a millionaire: save and invest wisely, increase your income, eliminate debt, minimize taxes, and live below your means. While all advice is sound, some points, like increasing income, are quite vague. Adding more specific strategies, such as focusing on an investing rate rather than just saving and targeting high-value niches within professions, can enhance these recommendations. Overall, ChatGPT’s advice is rated B+, with some additional insights for a more comprehensive approach.

Transcript:Austin. OpenAI is all the rage thanks to ChatGPT.And, you know, the number one question on a lot of people's minds is, how do I become a millionaire?What are the ways to do it? So, you know, we went and we checked with ChatGPT and we got our answers.So what did ChatGPT reveal? And most importantly, do you agree with it?Yeah, you know, the answers were pretty good. And I think the conclusion is we agree on balance, but there's some more color we'd like to add to it.So here was GPT's five ways to become a millionaire.One is save and invest wisely. Great advice, certainly advice that we support.And GPT says you should consistently save a portion of your income and invest in diversified assets like stocks, bonds and real estate.Maximize contributions to retirement accounts and take advantage of employer matches. Great advice. We support that.And just to remind people out there, of course, your employer matches are effectively free money. So we always advocate that people max out any employer matches that they can take advantage of.So great advice from GPT there.Number two, GPT says to increase your income. This one's pretty vague, but objectively, it's good advice, right?If you make more money, it's easier to become a millionaire.But GPT says seek opportunities for career advancement, higher paying jobs or side hustles to boost your income, develop new skills or certifications that can increase your earnings potential.Objectively good advice, but extremely vague here. So we'll give GPT maybe a B minus grade on that recommendation.Item three, GPT said eliminate debt. They said pay off high interest debt quickly and avoid unnecessary interest payments and consider consolidating or refinancing debts to lower interest rates.This is 10 out of 10 advice. We always recommend this. Credit card and other debt out there, whether it's a mortgage or credit card or high interest debt could reach or anywhere from 7 percent up to the mid-20s, depending on the debt instrument we're talking about here.It's extremely hard to build wealth when you're paying interest out of those levels. A good investor can expect to make 10-12 percent a year on average. You really do need to eliminate that high expensive debt first.GPT, well done here.Number 4, they say minimize taxes. This is just additionally good advice but somewhat generic.GPT recommends using tax-advantaged accounts and deductions to reduce your tax liability and they say consult a tax professional to optimize your tax strategy.Good advice here, not a lot to add.And then lastly GPT recommends you live below your means. They say keep your expenses lower than your income even as your earnings grow and focus on needs over wants to prioritize long-term financial security.I'm actually going to add a little bit of color to that one.You know GPT says that you should live below your means. That's true, but as we've seen with soaring inflation that might actually not be enough.So instead of focusing on a savings rate which is simply how much money you save, we would recommend you focus on an investing rate which is how much of your income are you able to reinvest and put into productive assets like stocks, bonds or real estates every year to not just keep pace with but hopefully beat that inflation demon which really canEven if you are to make it to your status of becoming a millionaire, inflation can really reduce how useful that those dollars are.So instead of simply living below your means and focusing on a savings rate, we would say focus on maximizing your investment rate.And the second is GPT says to increase your income. Of course, that's great advice to becoming a millionaire, but it was somewhat nonspecific.As I often tell my children, the best way to earn a lot of money is to provide a lot of values to others.Keep in mind that the range of pay, even for great professions like being a lawyer, can be quite wide.We recommend finding a niche within that sector, and it can be quite lucrative. Being a corporate tax lawyer can make you a lot more than just being a lawyer, broadly speaking, and someone who's passed the bar.All in all, excellent advice from GPT here. I don't think there's anything we would disagree with.Some of it is somewhat broad and vague, but all in all, five good tips to becoming a millionaire. I give ChatGPT a B+, and AustinGPT an A.I think the thing that you highlighted there was really just, we've seen time and time again, things for retirement like Social Security, those benefits, they only provide a portion.Most people get more income from their retirement accounts.So that maximizing contributions, if you can put aside 10% of your income, put it into productive assets, as you mentioned, like investments, and take advantage of employer benefits, do that with eliminating debt, the two areas that you mentioned, you're going to be in the 90th percentile.So I think just remembering those two things is gonna put you ahead of nine out of 10 people alone. So that is great advice right there.