I Started Investing on a $46K Salary: How You Can Build a Portfolio To Double Your Salary, Too

According to the National Study of Millionaires conducted by the Ramsey Solutions team, only 31% of the 10,000 participants involved earned average salaries of $100,000 over the course of their careers, and one-third never made six figures during any working year.

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While your first job may not pay you enough to feel like you’re rich, the good news is that many other regular people have been able to become millionaires on modest salaries.

Jonathan Ross, the founder of Texas Probate Pros , earned an annual salary of $46,000 per year at his first job. Through wise saving and investing , he was able to build a portfolio worth $100,000 within five years and quit his job to start his own business.

Here is a look at how you can turn a modest salary into a substantial investment portfolio based on the experience and advice of Ross and others.

Also see the salary needed to take home $100,000 in every state.

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How Did Ross Save So Much?

Ross did his best to find investment ideas through free investing newsletters so he knew what to do with his money. While most of his money was in index funds, he occasionally risked some money in speculative stocks, like Activision at the time.

“I did this by investing the old-fashioned way,” he said. “I saved 20% of my salary in Roth IRAs every year, year in and year out. I invested this money, about half in S&P 500 funds and the other half in more speculative stocks.”

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What Advice Does Ross Have for Others?

Ross’ advice is similar to that of many other financial experts over the years. The Ramsey survey also found that 75% of millionaires attributed their financial success to regular and consistent investing.

“My main advice for someone who wants to save on a small salary is to get started,” Ross said. “Even if they start at 10% of their salary, invested properly, it will grow. It might seem like it takes forever for the investments to increase, but at some point there will be a tipping point when they notice that it’s actually growing and that their efforts paid off.”

How You Can Build a Portfolio on a Modest Salary

Here’s how you can build a portfolio that’s equal to your salary or more if you start investing today.

Save 10% to 15% of Your Income

“You need to find ways to try to save 10% to 15% of your income,” said Erika Kullberg, an attorney, personal finance expert and founder of Erika.com . “Over time, you can work this up, but get in the habit of saving.”

Jade Warshaw, a notable financial expert, also has urged readers to save at least 15% of their income for retirement. This figure is common among financial experts as it ensures consistent investment in the future.

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“You could also take advantage of a 401(k) that your employer might sponsor, get the maximum benefit out of any company match if they offer it, and watch those savings grow,” Kullberg said. “Even if you start putting away small sums of money, over the long run, the magic of compounding can help that small sum grow.”

Reduce Consumption

All financial experts urge people to reduce consumption and frivolous spending in order to save more for the future. While experts such as Suze Orman may suggest cutting back on dining out, others would urge you to cut the cable. Either way, the goal is to reduce consumption if you’re on a fairly modest salary so that you have more flexibility.

“Ultimately, it’s about reducing consumption today to save for your future,” Ross said. “That might mean stopping eating out. It might mean moving to a smaller, less expensive place. But if your goal is to save for your future, it is all well worthwhile.”

Learn How To Invest

Once you get into the habit of saving money, you want to learn about investing so that your money will work for you.

“I continued saving and increasing my emergency fund and retirement accounts,” Ross said. “I like saving in a Roth IRA because, in an emergency, you can withdraw money without penalty, unlike other retirement accounts.”

Kullberg added, “Create the habit by beginning with a low-cost index fund or exchange-traded fund.”

The main benefit of investing in index funds is that you’re ensuring that you build over time, even when the stock market experiences volatility. As your income changes, you can adjust a portfolio.

Kullberg added, “Contribute on an automatic schedule, whether you’re contributing to your investment accounts or your emergency savings account.

Stay Patient Over Time

Both experts agreed that patience and long-term thinking are key to building a respectable portfolio, especially if you’re starting with your first job out of college.

“Avoid the temptation to chase quick returns or timing the market, which often leads to losses,” Kullberg said. “Instead, focus on building a diversified portfolio aligned with your risk tolerance and financial goals.”

Ross noted that he enjoyed watching the account increase, even though it happened slowly. He looked forward to every milestone, from $5,000 to $25,000 and up. He knew that over time, it would pay off, and he urged others to do their best to stay focused.

“I think the bottom line is that I enjoyed thinking about a future where I would be financially comfortable, or at least not worried about what would happen if I lost my job,” Ross said. “Working toward that security helped keep me patient.”

This article originally appeared on GOBankingRates.com : I Started Investing on a $46K Salary: How You Can Build a Portfolio To Double Your Salary, Too