Finance guru reveals the simple steps ordinary Americans need to take to make their first $1M

Professional financial strategist Dave Ramsey has revealed that normal Americans can become millionaires by investing consistently in growth stock and by paying off their homes.

Between November 17, 2017 and January 31, 2018, his company, Ramsey Solutions, surveyed over 10,000 millionaires across the country, which he claimed was the largest of its kind. 

After reviewing the results, Ramsey, who also hosts a nationally syndicated finance-themed radio show, said he identified two straightforward ways that normal people can amass immense wealth.

The first key to becoming a millionaire is to invest routinely in growth-focused mutual funds.

In Ramsey's survey, eight out of the ten millionaires interviewed said that they invested in their company's 401(k) plan. 

Among the surveyed millionaires, 75 percent of them claimed that investing over a long duration was one of the chief sources of their wealth. 

In a video from The Ramsey Show, the financial guru put it bluntly: ''There's two things that really cause people to get their first $1 million to $5 million in net worth.'

He continued: 'The two primary things are they invest steadily in their retirement plans and good growth-stock mutual funds, like 401K and Roth IRA.'

According to moneywise, growth mutual funds have performed remarkably well in recent years. 

If an individual invested $10,000 in the Fidelity Growth Company Fund ten years ago, that initial sum of money would now be worth well over $56,000 today, which is a compounded average annual growth rate of 18.8 percent. 

The fund boasts some of the most successful tech stocks of the past decade, including Apple and Nvidia.

A smart and prudent investor with a remunerative job could have used this fund to become a millionaire, moneywise pointed out. 

If the Fidelity Fund maintained its 18.8 percent growth rate, someone earning $100,000 could set aside 10 percent of their salary and invest it in the fund. Over eighteen years, the investor could amass $1.1 million.

The second critical step an ordinary person can take to become a millionaire is to pay off their home.

'They pay off their home,' Ramsey said, simply.

According to Ramsey Solutions, the average millionaire paid off their home in only 10.2 years.

In 2022, the proportion of mortgage-free U.S. homes soared to a record high- just short of 40 percent, according to moneywise. 

From 2012 to 2022, the rate of mortgage-free homeownership jumped an impressive five percentage points.

Possession of property is a significant means of acquiring wealth for average Americans.

This step has become more difficult to accomplish in recent years, though.

In 2022, the housing costs of roughly 12 million renter households surpassed half their income, according to moneywise. 

With expenses so high, it has become challenging for ordinary Americans to stow away enough of their savings to make a down payment. 

This difficulty has been aggravated by higher mortgage rates. Additionally, there is a dearth of housing units. According to Pew, there is a shortage of four million to seven million units.

In order to make their first $1 million, ordinary Americans will most likely have an easier time investing in mutual funds than they will paying off their homes.