Janitor Turns Millionaire Because of Passive Income

Janitor Turns Millionaire Because of Passive Income

Do you know what the average salary of a janitor is? Approximately $25,000. With a modest living quarters, food, transportation, and clothing, there often is very little left for retirement planning. However, with the right passive income moves, even a janitor can become quite wealthy.

The Story of the Janitor

The news story seemed impossible and had the attention of the entire nation. “Janitor passes away and leaves over a million dollars to charity.” Reporters everywhere asked the same question, “How on earth could a janitor have acquired so much wealth?” Some assumed that he must have had an inheritance. Or, perhaps he was married and his wife earned a hefty income. And, if either of those assumptions were untrue, then he must have earned more money through other work. Janitors don’t just die as millionaires.

The Simple Truth

The janitor absolutely did give over a million dollars to charity, but it wasn’t because of an inheritance, a working wife, or a second career. No, he just lived frugally and invested a small portion of his earnings on a consistent basis. Technically, an investment in the stock market is considered “portfolio income”, but since there is absolutely no effort involved, I unapologetically refer to it as passive income.

How Much Needs to Be Invested to Earn a Million Dollars?

So, how much did this janitor likely invest each month to earn his million dollars? Let’s take a look.

If he began investing at the ripe age of 20, that means he would have had a solid 45 years of investing under his belt before retiring at age 65. So, what if he invested just $100 a month and earned an average of 10% per year? How much would that turn into after 45 years?

By contributing less than 5% of his earnings each year, the janitor would become a millionaire in his 45th year of investing! To be exact, the investment is worth $1,056,982.12!

What If Your Earn More and Contribute More?

What if you are in a position that earns $60,000 each year and you contribute a mere 5% (or $300) of your earnings? How much would you expect to earn over the course of 45 years?

First of all, you would reach the million dollar mark by your 34th year! Then, by year 41, you’d be at $2 million, and by the 45th year, you’d have $3 million saved up in your retirement account! Isn’t that amazing! All from just $300 a month.

I think we all have quite a lot to learn from this janitor. First of all, we could all be a little more frugal, and secondly, we can learn to earn a passive income just by investing consistently in our future!

Do you already invest? Are you earning your passive income?

8 Responses to Janitor Turns Millionaire Because of Passive Income

  1. lisa lo says:

    Boy if only I would have taken all the money I spent on pet food all of these years, I’d be a zillionaire!
    dangnabbit

    • Derek says:

      Haha, yeah, the small dollars here and there really start to add up after a while. If it was invested instead, you probably would have quite the nice nest egg right now. I bet you do love your pet though – there’s a positive in that!

  2. I love stories like this. Passive income rocks! I invest as much as I can and try to cook up some side hustles. I love the idea of getting out of full time employment and it’s great to read about other people’s hustles so it’s nice to see examples of people achieving such financial success simply by investing.

    • Derek says:

      I absolutely love side hustles. The extra money is very satisfying and not overly difficult to acquire. We enjoy putting the money toward our home loan. Thanks for the comment! Love to read them!

  3. I love stories like this, but 10% returns seems optimistic.

    • Derek says:

      Yeah, 10% is pretty high, but it’s conservative compared to most financial planners, who quote that the market has risen an average of 12% per year for the past 40+ years. Through index funds with low fees, 10% is definitely possible.

  4. Corey says:

    Thats where I am struggling, I am currently 20 and have the ability to put this type of money away each year but I dont know where to go to find a 10% type interest.

    • Derek says:

      It’s a tough call. First of all, I would advise that you pay down all of your debts – car, student loans, house. Then, save up your money for a few different types of investments (to diversify). If I were you, I’d take a look at some index funds, some real estate, and perhaps a small business start up (by small, I mean really small, like less than $100 for start-up).

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