This Millennial Investor’s Net Worth Reached A Half Million In Less Than 10 Years. Here’s How He Did It.

By all accounts, Drew Lee isn’t a typical millennial in his age group

While the average person under the age of 35 has a net worth of $76,000, Lee has a net worth nearly seven times that. In less than 10 years, the 32-year-old Pittsburgh native has increased his net worth to $530,000 and now spends much of his time sharing personal finance tips on his TikTok account, Dollars With Drew

“The fact that I’m doing this is what’s, I think, beautiful about personal finance and investing,” Lee told Benzinga. “I did take personal finance and investing seriously in my twenties. And, now I have this net worth, and now I have the runway to be able to pursue a passion of mine and not just have to work.”

According to a 2022 survey from Investopedia, three out of four millennials between the ages of 26 and 41 years old said they were somewhat stressed about managing their finances. While a majority of them expressed confidence in their financial knowledge, many said they were concerned about the tradeoffs associated with making major financial decisions revolving around healthcare, homeownership, retirement preparation and childcare, according to Investopedia’s poll. And despite the fact that many millennials may believe they have a strong understanding of personal finance, the truth is that a relatively small percentage of them can demonstrate financial literacy. 

Lee, however, was taught to be frugal — a trait that he largely credits for helping him build wealth quickly — and invest where he could. He considers both of his parents financially literate and recalled how they encouraged him to start saving for investments and open a 401K account as soon as he entered the workforce. After he graduated from Penn State in 2013, he landed a job as an industrial engineer with a salary of about $62,000. 

At 23 years old, Lee came across a book that, he said, taught him about “90% of what I need to know and what I think most people need to know about personal finance and investing.” The book was “I Will Teach You to Be Rich,” by personal finance expert Ramit Sethi. Whereas Lee’s parents had only given him “high-level basics” about investing, Sethi’s book helped to outline what he needed to do, Lee told Benzinga. 

See Also: 7 Steps To Millionaire By 35

“I’m extremely analytical by nature … like I’m always trying to optimize things in my life,” Lee said. “When I graduated college, I was like, ‘Okay, I’m making money now.” I really wanted to find out what [to do] with this money.”

While living well below his means in Pittsburgh and later Cincinnati, Lee said that he would also scour Reddit’s personal finance forum to learn all he could. Every year, he was able to save and invest between $20,000 and $25,000 every year in low-cost index funds through his tax-advantaged accounts — including his 401K, Roth IRA, and HSA — while modeling the accounts on the Bogleheads three-fund portfolio. It also helped that he lived in cities that had a low cost of living. 

Today, Lee regularly spends his time on TikTok, breaking down his net worth to his nearly 73,000 followers. Of the $523,000 he has, $80,000 of it is in a Roth IRA, $226,000 of it is in a 401K, $18,000 of it is in a HSA, $13,000 of it is in a taxable brokerage account, $6,000 of it is in a 529 plan, and the rest is split in cash, rental property equity, primary home equity, cryptocurrency and his two cars. 

When asked what advice he would give to a millennial who’s looking to invest in today’s economy and build wealth, Lee said there are four key items to keep in mind: 

Reflect On Your Goals: Too often, many people want to build wealth without having a clear idea about the journey it takes to achieve a high net worth. 

“You have to really think about what you want your life to look like,” Lee said. “Do you envision yourself climbing the corporate ladder and working til you’re 65 years old and working your way all the way up? Or do you envision yourself maybe retiring when you’re 55, 50, 40 or 35?”

According to Lee, it’s important to first figure out the path one’s willing to take. From there, “you can design your life to meet whatever goal that is,” he said. For example, if a person wants to spend a lot of money on vacations, that means that there are other expenses — from rent to car payments — they may need to reduce in order to still align with their financial goals.

Budget Accordingly: Living below one’s means in order to accumulate wealth involves budgeting efficiently. While most experts recommend following the 50/30/20 rule — spending 50% of the income on needs, 30% on wants and the remainder on savings — Lee said that budgeting should be based on one’s goals. 

“If somebody wants to retire when they’re 35, they’re going to have to save a lot more than 20%,” Lee said. “So you really got to think about your goals. If 20% is enough savings to meet your goals, then that’s great.”

In Lee’s case, the 32-year-old decided to invest aggressively early on, maxing out his Roth IRA and HSA through automatic contributions. From there, he lived off the remainder, which amounted to approximately $2,000 a month. At times, Lee would find himself waiting for the next paycheck to come in in order to pay whatever bills he had. 

“[Because] it was all automated, I didn’t have to think about it,” he said. “If that money would’ve hit my bank account, then I would’ve had the option to spend that money on sneakers or had the option to spend on whatever else.”

Increase Your Earnings: Simply being frugal isn’t enough to build wealth. It’s also important to find ways to increase one’s earnings, whether through a raise or a side hustle.

“Increase your income and play offense or reduce your expenses and play defense,” Lee said. “Ideally, [you should do] both, but those are the nuts and bolts — your earning and your spending —  that are going to have a much, much greater impact on your financial success than what you’re actually investing in.” 

If You’re Investing In Index Funds, Focus On Allocation: Basing the makeup of his investment accounts on the Bogleheads three-fund portfolio, Lee told Benzinga that 75% of his funds are U.S. index funds, including U.S. total market (such as FSKAX), S&P 500 (such as FXAIX) and extended market index funds (such as FSMAX). Most of the remaining funds are international index funds, including international total market (such as FZILX), international emerging (such as FPADX) and international developed market funds (such as FSPSX). None of the money is in bonds. The composition reflects not only Lee’s risk tolerance but his belief that he is “young enough right now where I have enough time on my side to recover from market downturns.”

Still, Lee advises people to ultimately pick the asset allocation or diversification that they feel works for them. Instead of worrying too much about which index funds are considered the “best,” investors should think about how the allocation of those funds can help them reach their goals, he said. Despite a shaky economy today, the 32-year-old said he remains optimistic that investing now is worth the price. 

“If you have time on your side, you got to understand the historical data and understand that the market has always recovered every single time,” Lee said. “I really feel confident that 30 years from now, in 2053, we’re all going to be saying ‘I wish I invested more money in 2023’ even through this downturn that we’re facing.” 

Read Next: Learn These 10 Investing Lessons Before It’s Too Late

This story is part of a new series of features on the subject of success, Benzinga Inspire.

Photo: Courtesy of Drew Lee

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