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The best way to get rich and retire early

Recently I got this question from a reader: “I’m 25 and am wondering whether shares are the best avenue to getting rich enough to retire early.” My answer was “no” and here I’ll elaborate on the reasons why.

First, let’s run through how much money you need to retire early. If you ask 100 different people, you’re likely to get 100 different answers on this issue. Here’s my take on it.

My definition of ‘rich’ is this: having enough that you don’t have to worry about money. You are free not to work and do with your time as you wish. You can go on nice holidays when you like. You can live comfortably and say yes and no to things as you please.

Others may think of being rich differently. They may want a mansion. Or the latest Ferrari. Or own a yacht and spend six months living on it in the south of France each year.

Taking my definition of being able to live comfortably and not worry about money, how much would you need to retire early?

I ran a lot of numbers on this but it’s more complex than you might think. It depends on your time frame, circumstances, location, needs, and the time value of money.

To give you some idea though, a Praemium and Investment Trends report found that there are 690,000 high-net-worth individuals in Australia – defined as those who have at least $1 million in investable assets, clear of debt and excluding their own home, business, and super (but including SMSF assets).

The issue is, this is in today’s dollars. Let’s say our 25-year-old reader at the top of the article wants to retire at age 50. They’ll need more than $1 million in investable assets by the time they retire as today’s money buys less in future. Assume that inflation averages 2.5% over the next 25 years, the reader would need the equivalent of $1.85 million by the time they retire.

That’s not including owning a home. The median house price in Australia is just above $1 million. Assume that by the time the reader retires, house prices go up 5% per annum. It would mean the median house would be worth $3.4 million by the time they’re 50 years old.

Add the $1.85 million in investable assets to the $3.4 million required to buy a house debt free and the reader will need $5.25 million by the time they’d like to retire.

These are ballpark figures, though they can give you a rough guide for what kind of numbers are required to become rich and retire early.

It leads to the next question of the best ways to make enough money to fund an early retirement. For most of you, you’re not going to get there by working nine to five. You might – but you’d be in a distinct minority.

Most people must find other ways to make enough to retire early.

Can shares make it happen?

I’ve worked in equities in different capacities for a few decades and have a natural bias towards them. However, even I think that shares alone can’t make you rich in a relatively short space of time. That’s because shares work best over very long time frames that allow for compounding to work its magic.

Let’s run some numbers. Say you have an iron will to get rich and retire early, and you put $20,000 of savings into the share market each year for 25 years. Let’s assume that you put that annual $20,000 into an ASX 200 ETF that will earn 9% per annum. Can shares get you to an early retirement?

That’s doubtful because it would only get you to $1.7 million in total assets in 25 years’ time.

Of course, if you can earn more than the average broad market share ETF, then you can speed up the journey to early retirement. Doing this requires skill, possibly taking on more risk, and undoubtedly having some luck. I recently wrote of 9 common investment strategies used to beat the market.

However, shares alone aren’t likely to get you to an early retirement.

How about property investment?

Given residential property has returned close to 10% per annum for decades, surely investing in real estate with leverage can get you to an early retirement. I’m going to take the contrarian view that residential property could be one of the poorest returning asset classes in future decades and one of the least likely to get you to your ‘early retirement number’.

Why do I say this? Because housing is already so unaffordable and Australians are so indebted that it is going to cap any increase in prices. I think it’s part of the reason that despite recent interest rate cuts, property prices aren’t bouncing hard. And it may also be why rental price growth is tepid despite rental vacancies being near decades-long lows.

Basic math supports the argument for tepid growth ahead. If we assume that wages increase by 3% per annum over the next 25 years, it would be optimistic to believe that house prices will increase by +5% a year. It would mean the national house price to income ratio of 9.7x – already the second highest in the world – increasing further from here.

With pathetic rental yields and the prospect of low capital returns, I can’t see many people retiring early via residential property investments. What was once a sure thing is now anything but.

Of course, there are other forms of property investment – retail, office, industrial, storage, healthcare and so on. Some of these have potential though you’ll need a lot of upfront capital and the skills to make it work.

What about having your own business?

This gets us to what I consider the best way to earn enough to retire early: having equity in a business (hopefully 100%).

Take a look at this list of the world’s richest people:

1. Elon Musk – US$401 billion
2. Larry Ellison – US$300 billion
3. Mark Zuckerberg – US$267 billion
4. Jeff Bezos – US$246 billion
5. Larry Page – US$158 billion

6. Jensen Huang – US$155 billion
7. Sergey Brin – US$151 billion
8. Steve Ballmer – US$149 billion
9. Warren Buffett – US$144 billion
10. Bernard Arnault – US$143 billion

Note: as at August 1. Source: Forbes

What do you see on this list, besides a lot of money and egos? What these ten people have in common is that all of them own equity in a business or businesses. That’s how they’ve generated their wealth.

The same goes for the top 10 wealthiest people in Australia:

1. Gina Rinehart – A$29 billion
2. Harry Triguboff – A$19 billion
3. Mike Cannon-Brookes – A$18 billion
4. Scott Farquhar – A$18 billion
5. Andrew Forrest and family – A$16 billion

6. Cliff Obrecht and Melanie Perkins – A$12 billion
7. Richard White – A$10 billion
8. Anthony Pratt – A$9 billion
9. Bianca Rinehart and siblings – A$8 billion
10. Frank Lowy – A$8 billion

Note: as of February 2025. Source: AFR.

The downside of owning a business is that it involves taking outsized risks compared to investing in shares and property. After all, 20% of new businesses fail in the first year in Australia, and 60% of them are gone after year three.

Because of this, it’s much easier to own a business when you’re young and broke than when you’re older and married with three kids.

Put simply, while business ownership is the best way to retire early, it isn’t for the faint hearted.

Are there other ways to get rich?

I’ve gone through the three main ways to get rich enough to retire early. It doesn’t mean you have to do one of these exclusively. You could have your own business and invest excess cash in shares and property. Or you could have a good-paying job, have a side hustle, and invest spare cash in the stock market.

And potential investments aren’t just confined to shares and property. For instance, there are alternative assets like hedge funds, private equity, and venture capital that can offer the potential for decent returns.

It requires a certain mindset

While the means of getting rich and retiring early are important, just as crucial is the mindset to reach your financial goals. Being in the finance industry, I’ve known wealthy individuals. If I had to narrow down the two most important qualities that these people share, it would be these:

  1. A singular focus on getting rich
  2. A willingness to take risks, often large ones

A lot of people say they want to be rich and retire early but they don’t really mean it. That’s because they don’t have the relentless focus that’s required to make money. The rich that I know are obsessed with making money and the best means to do so. It’s all they think about 24/7, often to the detriment of everything else, including their families.

The second point is that the rich aren’t afraid to make outsized bets on things. They have little fear of failure. Their attitude seems to be that they can always come back after a fall.

That’s not normal. Most people are risk averse and are unwilling to make one bold move, let alone many of them.

In sum, before you embark on the journey to get rich and retire early, you need to look earnestly in the mirror and decide whether you have what it takes to make it happen.

 

James Gruber is Editor of Firstlinks.

 

25 Comments
chriso
August 08, 2025

health, wealth and happiness

Dudley
August 08, 2025

"For most of you, you’re not going to get there by working nine to five. You might – but you’d be in a distinct minority.":

How it is won at least risk, least retail 'deprivation':

Save 80% of after tax income by minimising expenses (Bunk of Dad&Mum for some).
Buy home with cash on knocker after about 4 years.
That avoids the financial drag of rent and mort-gage.

Continue to save X% of after tax income - for retirement (at 55 is better).

Tax rate (base rate company for simplicity) 25%, bank deposit interest 5% / y, inflation 2.5% / y, to 50 y, from 25 y, portion of after tax income saved X%:

Accumulating, saving X%:
Future Value (real) as multiple of after tax income at commencement of retirement:
= FV((1 + (1 - 25%) * 5%) / (1 + 2.5%) - 1, (50 - 25), X% * -1, 0)
= 15.11

Disbursing, spend (1 - X%):
Present Value (real) as multiple of after tax income at commencement of retirement:
= PV((1 + (1 - 25%) * 5%) / (1 + 2.5%) - 1, (90 - 50), (1 - X%) * 1, 0)
= 15.11

Find amount to save, X%, and spend (1 - X%), by varying X% until amount in Accumulation fund = amount Disbursement fund:
= 52%

Peter
August 08, 2025

It is certainly possible to retire early it's just a matter of good asset allocation. I am in my mid thirties and according to your definition I would be a "high net worth individual". I have done this by living in a multigeneration household which has meant that much of my income has been invested and not spent on expensive housing. I anticipate I could retire in 10 to 15 years time. Further, I think many millenials will probably been in a postion to retire early due to inheritances or other intergenaration wealth transfers. Retiring early is a real prospect for many.

BeenThereB4
August 08, 2025

What is so great about retiring early?

At age 80 years I retired last year. I enjoyed working and relationships with clients. If your occupation is rewarding to you and your customers, keep at it.

IZ
August 08, 2025

Work is so much better when you don't need the money. Retire early doesn't necessarily mean you stop working, it gives you the freedom to say no and sometimes yes to things and people.

Ian Ross
August 08, 2025

It's not really about retiring early, it's about being financially independent, which gives you options you don't otherwise have. You can choose to retire if you want, or keep working at whatever it is you want to do. The point is that financial independence gives you choices to do what pleases you.

Lisa
August 07, 2025

Found it amusing that the survey didn't include superannuation (only SMSF) guess financial advisors don't really have the opportunity to make coin on it. Have to say that superannuation would have to be one of the safest and tax advantaged strategies out there.

Kevin
August 07, 2025

People like complication,I don't know why.The price of a good second hand car can make you wealthy.People see what they want to see and hear what they want to hear.

12K( 6K each). to buy 1,000 shares in CBA and NAB.Give or take $500. Now worth ~ $1.5 million if you reinvested the dividends. A 125 X return. All I had to do was listen to people repeating over and over ,you can't do that,those companies are going bust.

Save up as much money as you can,do this,do that,do the other,everybody in the pub said, etc etc etc. Hopefully I 'll still be alive in 2041 to see how things went after 50 years of people repeating you can't do that. Wether I'll still be playing with a full deck of cards or not I don't know. Perhaps just settle for 40 years of people telling me you can't do that.

Anybody got a house that is worth 125x what they paid for it in 1991.Those very high holding costs,rates,insurance, repairs and so many other things.

Kevin
August 08, 2025

While people deny that for the whole of their lives,they will also deny it across generations,forever ! They put a lot of work and complex nonsense into avoiding wealth and making up their own facts. That has amazed me for decades.

Mark
August 07, 2025

James, another very good article and the comments too are thought-provoking, however, you ignored the most important way to get wealthy and retire "early"; invest in your human capital.

Invest in your human capital, work hard, and save. Yes, then you can apply the sage words about investment.

Alternatively, and whilst sexist, you can observe it happening all too readily; be born an attractive female, hang out where wealthy men hang out, and wear a skimpy bikini (sadly, you can buy books that recommend this strategy to young women).

Lisa Romano
August 07, 2025

Hi James, Ireally appreciate your views. I definitely fall into your "more than one" investment approach, having reached "FIRE" (financial independence retire early) aged 50 via: 25 years in my own business and using my 30s decade to buy shares, start my SMSF and acquire leveraged property investments. However, it's also important to know when debt is your friend and when it's time to cash in your chips and consolidate. It is in my view vital to avoid going into retirement while still in debt.

Luke
August 07, 2025

As a former accountant and financial advisor for 15 years I've seen significant wealth generated through business, shares, property. I've seen wealth destroyed when property assets are overloaded and negative gearing taken too far at the pursuit of paying no tax. My own journey consists of a residential home, farmland and index funds . The net cashflow from a diversified portfolio of shares is hard to beat when funding a lifestyle or buying other assets, same with commercial real estate. Barring an inheritance or head start, gearing is often needed at the start to get the asset snowball rolling.
Index funds are hard to beat for the average punter invested over a period of decades. I've started My own son at 17 on this journey.
The big mistake I see is young people chewing up their borrowing capacity and cashflow through massive residential mortgages. Unless your in a capital city these are often a forced savings plan at best if the loan is taken over 30 years, paying off multiples of the original loan in interest. In my experience, a singular focus is needed to build wealth at an early age, with the ability then to take the foot off the gas once an asset base is built. Debt reduction and inflation then do the rest for investors.

Tom
August 07, 2025

Agree with the comments.
As someone who has pursued the 'own business' path for the last 10 years and am now in a position where I can retire, it is a path that I'm not sure I would recommend. It is all-consuming, always-on and relentless.
It's hard to overstate the relentless nature of being fully consumed, particularly mentally as uncertainty dominates.
It's certainly not for many, and I'd recommend against it for most.

Edward
August 07, 2025

As an accountant I have seen many clients become 'rich' through property. What you don't mention is that property can be geared (not necessarily negative gearing though, that is mostly overrated), unlike shares. Borrowing against shares is subject to margin calls and inherently very risky. Gearing against property is low risk and generates outsized increases in your total asset value. Secondly, property investment, if done wisely and with a good deal of research, is a lot easier than share investing and over time becomes very stable. Whilst beating the share market is very hard, even for professionals, that is not the case for the property market. The 10% annual increase is for the whole property market, which, unlike the share market, includes a very large proportion of properties that can be very easily excluded.
Further, unlike shares, there are opportunities with property beyond simply buy and sell: redevelopment, renovate, sub division and so on, which are not overly complicated.
I wouldn't dismiss property investment. I do agree, though, with 'business': the wealthiest of my clients all owned a business (and invested in property). Perhaps they have been lucky, but mostly they were extremely focussed and worked very, very hard, especially in the early years.

Frank
August 07, 2025

I'm not quite sure why that $1M excludes super but includes SMSF assets!

Eve
August 07, 2025

Because the people who run that survey are interested in investors. The SMSF trustee has discretion over how they invest their super money, while those with a superfund account have no discretion other than choice of fund.

Wildcat
August 07, 2025

James, your property number is very misleading but it’s not your fault. 10% for property is wrong. Eg you buy for $1m, renovate for $300k, sell after seven years for $2m. Reported return circa 10% pa. Actual return (assuming renovation done at beginning) circa 6.3%. This NOT allowing for stamp duty and agents fees circa $125k (NSW) and say misc maintenance over 7 years $20k. We are now sub 5% approximately.

There is no allowance in the published real estate numbers for contributed capital for renovations or improvements, transaction costs etc.

People always quote the published real estate return numbers and they complete bunkum.

James Gruber
August 07, 2025

Hi Wildcat,

Yes, all valid points.

James

James#
August 07, 2025

"Wealth consists not in having great possessions, but in having few wants." – Epictetus

OldbutSane
August 08, 2025

Absolutely true and funny there is not much said about having a good saving mindset.

As someone who only ever worked as a salaried employee (on about the average wage) but who saved as much as possible and invested in property, shares and superannuation, I retired at 49, but am still pretty careful about how I spend it.

You don't really need to own a business to retire early (although that is the most likely path to extreme wealth, if that is your goal).

Ramon Vasquez
August 08, 2025

N I C E !!! Regards , Ramon .

AlanB
August 07, 2025

I knew someone rich enough to own a Ferrari. But at age 51 he died of bowel cancer. Our most valuable asset is our health and our next most valuable asset is a reliable stable spouse. If you have good health and a good spouse you're rich. Cherish them.

CC
August 07, 2025

good point !

stephen
August 07, 2025

So true AlanB :)

Disgruntled
August 08, 2025

Life expectancy in the western world is in the 80's

Lifestyle and genetics could mean you live longer, misfortune could mean you don't.

Finding balance in preparing your finances for a longer life but spending some in case it's shorter is the key

 

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