Becoming a millionaire is a goal that many people aspire to. There’s an old joke: “Want to become a millionaire, easy? Start with $2 million and invest in real estate.” It’s a funny joke, but of course it’s not the reality here in Lake Tahoe and our surrounding area, given our skyrocketing property values.

The real way to becoming a millionaire is a bit more mundane than all of that excitement. It involves making good choices (difficult!), planning (boring!), and sticking to your plan (is that even possible?). Actually, yes, and if you genuinely want to be a millionaire, a little bit of those three things can go a long way.

There are two main things that mostly determine your success: having good spending habits, and investing wisely.

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Good spending habits start with creating a budget. Identify the things that are important, and cut back on the things that aren’t. Next, avoid high-interest debt. Things like credit card debt and paycheck loans can really ruin your ability to save and invest, while a home mortgage can be a reasonable debt to carry, depending on the conditions of your loan. Third, make a habit of delaying gratification. Rather than buying things impulsively, wait and make thoughtful, well-researched purchase decisions. Finally, prioritize investments. Make sure that you allocate a significant portion of your income to investments, not just spending. Your savings and investments should be treated as non-negotiable budget items.

As for investing wisely, this is something that I’ve written about before in this column. You can cut expenses as much as you want, but if your savings sit in a bank account with 1% interest, it is unlikely that you will ever achieve your financial goals. Keep only a small amount of money in these types of accounts—usually 1-3 months of expenses. With the rest of your savings, consider the following guidelines:

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– Diversify. Diversify. Diversify. Even in a simple “stocks and bonds” portfolio, you should have stocks/funds from different sectors, companies of differing sizes, and both value and growth stocks. You should invest in companies both in and out of the United States. And you bonds can be of varying grades, different types of companies, differing durations. If you want to add real estate and some alternative investments to your portfolio, that can be reasonable as well, in some cases.

– Invest at a low cost. It is not unusual that I come across investments where the overall expense ratio is close to or above 2%. High fees like these can really eat into your investment growth! Look for low-cost funds, usually ETFs, and work with a professional who focuses on developing an effective, low-cost portfolio for you.

– Keep a long-term perspective. Nothing beats the compounding of interest over the course of many years. Have a portfolio design that allows you to comfortably stay invested even through the dips and surges of the markets.

– Consistency. Consistently contribute to your investments. Automatic contributions from your income can help you build wealth steadily.

If being a millionaire is your wish, then following these basic guidelines will help make it happen. There are no guarantees, but at least you can stack the deck in your favor.

However you choose to make your millions, invest smartly and invest well!

Larry Sidney is a Zephyr Cove-based Investment Advisor Representative. Information is found at https://palisadeinvestments.com/ or by calling 775-299-4600 x702. This is not a solicitation to buy or sell securities. Clients may hold positions mentioned in this article. Past Performance does not guarantee future results. Consult your financial advisor before purchasing any security.