How to Make the First $1 Million

It has been said that making the first $1 million is the hardest so you need an investment strategy to accelerate your gains. You can use a proven formula for growing your portfolio to create multiple streams of passive income and financial independence.

We have all heard the rope drops with your first $1 million. This is the proverbial target to move from lower class to the esteemed wealth threshold. While it is true that a million isn't what it used to be, it is still a good target to achieve financial independence. However, the first $1 million is the hardest to achieve. Let's explore why it is so challenging and share some thoughts on fast tracking to a millionaire status.

Measured by net worth, there are now more than 11 million people in the U.S. with more than $1 million. Having money makes it easier to make more money through investments and the ability to take more risks. To increase your wealth, you need to take a little more risk (think growth) which will be alleviated after your acquired wealth is invested into less risky investments (think monthly dividend stocks).

One of the biggest challenges to reaching a million dollars is the slow rate of savings and the time required to grow your investments to this level. Let's face it, the 60 year plan is not what we are looking to implement today. We need to be more creative with our investments.

One of the reasons that the first $1 million is so hard is that it is such a large amount of money relative to where most people begin. To go from $500,000 in assets to $1 million requires a 100% return - a level of performance very hard to achieve in less than six years.

To go from $1 million to $2 million likewise requires 100% growth, but the next million after that requires only 50% growth (and then 33% and so on...).

In fact, many wealthy people can and do "live off the interest." That is, they put a portion of their fortune in a relatively safe portfolio of income-generating assets and live off of that - allowing them to be more adventurous with the rest.

With the Passive Income Monthly Plan, we focus on investing in monthly dividend stocks as the income-generating assets. For those needing to accelerate the asset growth plan, here is an option for investing for growth that can be eventually converted into income assets.

One option is to use an investing app called Stash. This is a micro-investing app where you can get started with $5. You can purchase fractional (portion of a share) shares in all investments. You can connect your bank account to make regular funding and also get a debit card for cash back. This allows you to not fund your account but to make it systemic with dollar cost averaging over time. Let's say you invest $20,$50, $100 or more each paycheck. You run your purchases through the debit card for cash back and even free stock at some retailers. And, you get free stock when you sign up and invite friends.

So you have an account setup, how do you go about investing for growth. Let me share how I like to approach growth using the "house money." For example, if you invest in a security for $10, when it reaches $20 it has doubled our investment. At this time, you can sell the security for $20 making a $10 per share profit. Here is the tip: only sale half of the shares which returns your original investment of $10 per share. If you keep the other half of share, you are now playing with "house money." Then, you take the profits from your sale and 1) invest into another growth opportunity; or 2) invest the profits into a monthly dividend stock to create an income-generating asset.

You can do this over and over to accelerate the growth of your wealth. It is similar in theory to flipping houses but with stocks and funds. This works great in a strong bull market or with alternative investments. If you start with $100 and double it 25 times, you will have $1.6 million! Now, you see how this can create wealth at a faster rate. I would consider stacking your investments across 4-10 investments at the same time. This increases the number of potential doubles working at the same time.

Now, back to setting up this theory in Stash. We already discussed the automatic funding with your paycheck or other passive income strategies. I would suggest investing in alternative assets. Here are a few to get started:

BLOK - The “blockchain” is a peer-to-peer shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. BLOK does not invest directly in blockchain technology, but invests in companies actively involved in the development and utilization of blockchain technology. This is an emerging technology with significant growth in the near future.

Corporate Cannabis (MJ) - Mainstream marijuana is a young, volatile industry. This investment combines legal cannabis cultivation, distribution, and medical applications with big tobacco stocks to focus on the benefits global cannabis acceptance may bring. Again, a high growth opportunity with a few doublein the future.

All That Glitters (GLTR) - Precious metal coins have been an indicator of wealth for millennia - far longer than that tattered bill in your wallet. An investment in precious metals may protect you from paper money losing its value over time. Also, this is nor correlated to stocks as it is a hedge against market

Real Estate Tycoon (VNQ) - Buying real estate is a powerful way to diversify and generate income. Invest in these mighty landlords to earn rental revenue from commercial, hotel, and residential properties.

Up and Coming (VWO) - What do China, Taiwan, India, and Brazil have in common? Rapid economic development. This international investment includes emerging economies that span from Latin America, to Africa, Europe, Asia, and the Middle East.

All of these funds are riskier than average but we are looking for fast growth. If you like, you can allocate your dollars across all of these investment pods. It is important to think of this as one part of your passive income monthly plan. In other accounts such as Robin Hood or WeBull, you can focus on monthly dividend stocks. And, continue to generate more income from cash back, shopping sites, surveys and other activities.

If you start with the target of $1 million, you should track your progress each month. Remember, we are looking for doubles - not home runs - to level set our risk appetite.

Continue to read our articles for more suggestions to invest your way to $1 million and a lifetime of passive income.