The Two Things You Need to Do to Become a One Percenter

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The 1% usually don’t get rich by accident. Most of them don’t inherit their wealth, and most of them aren’t any smarter or more hardworking than you or me.

They simply do two things that you don’t (or haven’t yet):

1. Save significant chunks of money consistently over a longterm period
2. Achieve a strong return on savings over a longterm period

Yes, we’ve all heard about people who get wealthy by building a massive business or who invested in Apple and hit the jackpot. Good for them. Too bad that fairytale just isn’t gonna happen for you. You are going to have to follow the above rules and crush it if you want to be in the 1%.

And you are going to have to do it the hard way.

Let’s Examine These Two Rules

Rule #1: Save significant chunks of money consistently over a longterm period

As I see it, there are two ways to increase the “chunks” of money that you consistently save:

a. Earn more money OR
b. Spend less money

Notice that I list “earn more money” first.

If you aren’t able to earn a high income (for example, maybe you make less than $30,000 per year), then you probably aren’t using your time effectively by learning to invest. Your time might be better spent developing a skill that will allow you to earn more money. On the other hand, if you earn a high income (maybe you make over $50,000 per year) and aren’t able to save $2,000 – $3,000 per month or more, you are spending too much money.

Related: How Much Money Do You Need to be “Rich” and Is It Worth It?

Once again, you need to figure out how to reduce your monthly expenses before there is any point in learning how to invest. In my opinion, achieving a strong return on a $5,000 investment is unimpressive. Why put in hours of work to try (and probably fail) at getting a 1-2% boost in return? That’s just $50 -$100 on your $5,000 in the bank, and unless you are a prodigy, any outsized returns are probably just lucky.

The return on your time is incredibly negative if you don’t have significant capital to invest.

Rule #2: Achieve a strong return on your savings over a longterm period

This is where those one percenters really separate themselves from the rest of us. Achieving a strong return over a longterm period isn’t necessarily hard, but it does require two things:

a. A clear understanding of the rule book (better known as “tax laws”)
b. A foundation in Real Estate

Once able to consistently earn and save large chunks of money on a regular basis, a future one percenter needs to study and have a working knowledge of tax laws and understand how to value an investment.

Think of wealth creation like a game or a sport. There is no possible way you can play and have a fair chance at winning any competition without knowing the rules! Before working out, attending practice, or scoring a touchdown, every single football player gets started by watching the game and learning the rules. This obvious undertaking is completely ignored by most Americans, but I’d guess that about 1% of the country knows the rules inside and out.

Related: How to Get Rich: 7 Awesome Ways to Build Big Wealth Today

To my second point, some of you might think it controversial to list “a foundation in Real Estate” as a must for any of us aspiring to be in the 1%. This is BiggerPockets. Come on. Do I really have to spell out why Real Estate should absolutely be the first significant investment any future one percenter makes? Whatever.

Here goes.

3 Reasons Real Estate Should Be Your First Significant Investment

1. A first investment in Real Estate (as in a primary residence for most) returns part of your living expenses back to you. If you rent for $700 per month, your return on that $700 is negative 100%.  

On the other hand, if you buy a small property that ends up costing you around $700 per month to live in and maintain, then your return on that $700 is a flat 0% for the few hundred that go towards principal (because paying down principal builds your equity in the property; you are basically moving money from your bank account and into your equity in the property) and perhaps negative 70% (depending on your tax bracket) for the interest, as mortgage interest on a primary residence is tax deductible.

Instead of a negative 100% return, you might now be achieving a negative 60-70% return on an expense that you would have to pay anyway! That might seem unimpressive, but it is WAY better than negative 100%. I challenge you to to find me any other investment that returns you 30% or more annualized. Ever wonder why the majority of the net worth of an average American is in the value of their home?

2. While boosting your return on living expenses by 30-40%, you are simultaneously earning a shot at appreciation.

The average annual rate of property appreciation in the United States is about 5% per year. That’s not going to beat the S&P, but combined with the benefits of increasing your return on living expenses, its a nice bonus.

3. Real Estate, if purchased correctly, can produce cash flow for you in perpetuity.

This is something that BiggerPockets users are quite familiar with and can talk about in greater detail than I. But the first investment should absolutely be a property that can cash flow if a tenant were to occupy it instead of you.


When it comes down to it, all I did here is list out four things you knew already. They are obvious to anyone attempting to build wealth with time tested strategies:

1. Earn more money
2. Spend less money
3. Know the rules (of investing)
4. Buy Real Estate

If you don’t earn a lot of money and save a lot of money, make no mistake – Real Estate Investing is NOT for you.

You can certainly make money in the Real Estate Industry through wholesaling, selling, marketing for investors, or by working at BiggerPockets, but do not mistake that for “investing.” Those types of work are no different than any other line of business in the sense that you aren’t making money off of your money; you are creating value for yourself with your TIME and SKILL.

Develop skills and earn money by applying yourself to them with your time, and then invest.

On the other hand, if you are able to regularly and significantly save and invest, then you need to be learning the rule book and playing the (investing) game. Unless you have access to investments that the rest of us don’t, then Real Estate is the way to go.

What’s your get-to-the-one-percent plan? How does real estate figure in to your wealth building strategies?

I want to hear from you — leave me a comment below!

About Author

Scott Trench

Scott Trench is a perpetual student of personal finance, real estate investing, sales, business, and personal development. He is CEO of, a real estate investor, and author of the best-selling book Set for Life. He hopes to now share the knowledge he has acquired with others so that they will have the tools they need to repeat his results in just 3-5 years, giving them the option to go anywhere they want in the world, work any job, start any business, or finish out the journey to financial independence and retire young. Scott lives in Denver, Colorado and enjoys skiing, rugby, craft beers, and terrible punny jokes. Find out more about Scott’s story at, MadFientist, and ChooseFI.


  1. Hey Scott,

    Good stuff. I was thrilled to see a post with this topic, as this is my area of expertise. I write about topics similar to this on my site, The Vacant Road ( I don’t typically promote right off the bat, but if you are looking for help in this area I know we can also assist.

    Whether you’re a business owner, or individual, I almost always encourage my clients to focus on increasing revenue and just simply managing expenses. Don’t focus too much on reducing expenses, unless they’re astronomical. You can only go so far until your product/service, or lifestyle begins to suffer. Real growth is achieved by increasing revenue.

    True wealth is achieved by saving money and using those savings to invest in cash flowing assets, like rental real estate. The faster you save and invest, the sooner you will be rich, wealthy, or financially independent. Which ever you prefer to call it.

    Of course, education is the most important step. Pick an asset class and study it. Thoroughly understand it. Then take action. If real estate is your desire, then learn how to do it properly. I always suggest joining a local investing club and seeking a mentor.

    Best of luck on your journey to the 1%. With some discipline it will not be as difficult as most people believe.

    • Scott Trench

      Thank you Jeff. I agree that real growth comes much easier with increased revenue, and I point to cutting expenses in this article because I think that cutting back on expenses is a great first step (one can immediately cut back on costs, whereas developing a profession takes time and dedicated effort).

      Best of luck to you as well.

  2. I love the part in the conclusion about how earning money in real estate is not investing. One of the podcasts I listened to the other day said, “There’s a difference between being a real estate entrepreneur and investing,” and it stuck with me here too. I am working to learn as a real estate agent to investors, so I can earn from the experience later. I’ve realized (a little late) that unemployment don’t grow large investment portfolios, plain and simple. As much as I wanted it, studied it, believed it would happen, Thinking to Grow Rich doesn’t always work just like that. I am back to square one, starting to earn again, with a clearer plan of how I will get up there in that 1%. It’s great to read this and confirm that this new plan will work! Thank you for writing.

    • Scott Trench

      Thank you Shaylene – yes I think that’s a good way to look at it! As I mentioned in the article, there are lots of ways to build wealth with Real Estate – many of them are simply careers with benefits and drawbacks like any other industry.

  3. Good post on building wealth in the long run. But I believe it takes way more effort to be in the top 1% in the world. I believe you still need a very strong business to be in the top 1%.

  4. Scott,

    WIth all due respect, someone making $50,000 per year isn’t able to save $2,000 – $3,000 per month.

    A $50,000 salary at a job, after taxes, is approximately $35,000 and divided by 12 months is $2,916 per month.

    Your point of saving as much as possible is a good one, but just wanted to point this out.


    • Sean, I noticed the math problem, also. However, a person making $50,000 per year who purchases real estate that rents for enough to cover all expenses including the mortgage will contribute the portion of the monthly payments that is principle toward their net worth each month. This could allow the person to “save” over $3000 per month if he/ she owns 30 rental properties which average $100 per month. This has been my strategy. In 8 years, the mortgage for 17 of the properties will be paid off, then I plan to quit the $50,000 per year job. It all started with me saving $4000 from my first job (paying $18,000 per year) and using it as a downpayment for my first duplex.

    • Scott Trench


      I’m glad you noted that. Perhaps you might think it would be more reasonable if I loosely define “saving” to encompass anything that results in “increasing one’s net worth”.

      Without some strategy and benefits, I agree that accumulating $2,000 – $3,000 in net worth per month would result in a poor quality of life at $50,000 per year. That said, I believe that there are two key things that one can do achieve that savings rate, while maintaining comfort.

      1) Contribute $12,000 to a 401(k) (if available) – This reduces taxes and is a powerful way to build wealth over the long term.
      2) Purchase a primary residence – if your Principal and interest are $1,000 even, then on average you are “saving” another $500 per month (I know that mathematically it will be less than that for the first years of the loan and more towards the end of the 30 year time period – but let’s just go with the midpoint for this purpose).

      If we can agree that someone making $50,000 per year can do these two things, then they are “saving” $1,500 a month automatically. I think it then becomes very reasonable to suggest that they are able to save another $500 to even $1,500 on top of that per month, depending on lifestyle choices.

      What do you think?


    • Scott Trench

      Kingsley – I deliberately chose the numbers that I did to spark debate. I disagree that there is a math error. A savings rate like that which I describe in this article may not be desirable to you, but that’s the point. Becoming a 1 percenter requires long term dedication to several facets of finance – earning more, spending less, and knowledgeably investing.

      Spending less is the first step that most of us can take, because it is something that we can totally control. Maybe saving the majority of your take home pay results in a a downgrade in your current lifestyle. In that case, it is not a “math problem” it is a personal choice. You choose to enhance your quality of life and there is nothing wrong with that. It’s just going to decrease the speed at which you accumulate wealth.

  5. Hey Scott,
    Nice article. One of the biggest roadblocks to not improving your financial position is not making a plan or following through on a plan. You do not make it to your destination on a trip to a place you have never been to before if you do not have a map or a plan. You can follow someone but you never know when they will turn off or change direction, and heaven forbid if they get lost too. Once you decide you are going there find out the best way to get there. If you live in Wyoming and want to go to California, you don’t start driving east. Study your map, plan your stops and you places to rest, get fuel, spend the night, etc. Make sure you have saved enough money for gas and other unexpected contingencies, Make sure your car is properly taken care of and you have learned how to drive it, etc. The same with finances. If your car burns a quart of oil a day it won’t make a long trip, same with some jobs or careers. Once you know where you want to go it’s easier to plan to get there. You set goals, I need a thousand dollars for fuel for the trip, I need good tires and a good spare tire. To invest in a house I need to save the 20% down payment and 6 months of mortgage payments, or enough to fix it up as well if needed. Learn how to screen tenants, get a good lease, etc. I doubt I will ever be in the 1%, I just plan on moving up so my children start out better than I did.

    • Scott Trench

      Thank you Jerry. I totally agree on the personal financial planning side of things.

      If your goal to improve your financial position (which I’d imagine is true of about 100% of BiggerPockets readers) creating a financial plan is an absolute must. I am a HUGE proponent of setting clear goals, planning, and – just as important – reviewing and analyzing plans that have been put in place.

  6. Scott,

    I personally, as a Realtor and finance professional, have no problem with assumptions so far as they are fully disclosed to my clients. In any case, folks on BP are open minded for debates with no legal consequences so I have no problem if you deliberately omitted some numbers for debate purposes..


  7. Great article for someone who knows nothing about financial planning. Total waste for about 99% of us. I can’t believe you are getting supportive comments for this article. And a $700 mortgage payment vs $700 rent is not the same. What about property taxes, insurance, maintenance and everything else. Not to mention most people can’t buy a house for a price that the mortgage payment would equal their rent.

    • Scott Trench


      Sorry you feel that way. I’m going to disagree with your assumption that 99% of BiggerPockets members are uninterested in this type of article, and plan to produce more of them in the future.

      I am currently renting for about $700 per month and am moving to a duplex that will cost me about the same per month when its all said and done (taxes, insurance, etc). I chose to keep the math simple in the article for clarity sake – but if you include taxes, insurance, maintenance, etc the return on property payments should still be in the negative 60-70% range.

      So yes. I believe that most people can find ways to buy a house where the mortgage payment equals their rent.


      • I agree with Chris, this article is very simplistic. Rent vs Buy is not that simple – taxes, maintenance, etc. needs to be accounted. Obviously money for a downpayment… and other many issues.
        But also, the earn more and spend less is as simplistic as it gets. Nobody has ever become rich like that. don’t get me wrong, they are valid tactics, but on their own they’ll get you nowhere…

        • Scott Trench


          I think we are going to have to agree to disagree on this one. I think that almost EVERYONE who gets rich does so by spending less and earning more. Those who get rich some other way are the exception, not the rule.

          Even those of us in this country that earn high incomes (over $50,000 per year) somehow manage to have to work for 40-50 YEARS to afford retirement. This is totally amazing to me and I believe it has way more to do with saving than with earning.

    • Julie Rogers

      They should be able to buy a nicer place and pay the same $700.
      Since you should not buy a property unless it has a positive cash flow, this would mean the current landlord has money left over, positive cash flow, after you pay the $700 rent and all expenses are paid.

  8. Hi Scott.
    Very good points. I don’t hink spending less is much of a priority. I think pay yourself first is.
    The typical 10% rule. Earning more is more likely the best course of action. You need the chunks of cash that are not allocated to daily living. I just received my real estste lic in Ontario last summer. My day job is a CNC Machinst and that pays the daily bills. Real estate is gravy to add cash for investment. Plan to have my first investment property by next year!

    • Scott Trench

      Sean, I hope that you enjoy my next article, which I hope to publish this weekend. I counter the thought that earning more money is the best (short term) course of action for those interested in getting started in Real Estate Investing or achieving a high net worth.

      I think you’ll find it interesting, and I’d love your feedback.

  9. Julie Rogers

    The only reason I have money to invest is the spending less money route. Making more is easy to say, but if that was easy, I want that answer?
    Of course as you pointed out in the article, return on investment is an increase in income.

    Nice article.

  10. Hi, as a ten year old, I have a question:

    If you are a W2 earner, taxes will take a huge chunk of your money away, so is it possible invest in a cheap area like texas without saving so much money.


    From, sam

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