Scott and I talk about real estate a lot. Like, a lot a lot. We worked for a company called BiggerPockets for more than a decade, and shared the same roof as some very enthusiastic landlords. So it might surprise you to hear us spend an entire episode on how to get rich without real estate.
But rental properties aren’t for everyone. Maybe you don’t want to deal with tenants. Maybe your local market makes the numbers look silly. Maybe you’d rather have a root canal than fix a toilet at 11 p.m. on a Saturday. That’s fine. There are plenty of other paths to wealth, and some of them are a better fit for where you are right now.
Here are five of them, plus a few honest warnings about each one.
First, the Four Pillars
Before we get into the list, it helps to know where each idea fits. Scott likes to say there are four ways most people build wealth: spend less, earn more, invest, or create. (There are some bonus options, like winning the lottery or marrying someone with excellent cash flow, but we don’t recommend building a plan around those.)
Scott’s point is that each pillar matters more at different stages. When you’re starting out on a median income, spending less is your most powerful tool. As your career grows, earning more starts doing the heavy lifting. Once your net worth gets into the $500,000 to $1 million range, investment returns take on a much bigger role. And creating something, like a business, tends to work best for people who are close to financial independence or already past it.
I think about it in terms of time and money. When you’re young, you usually have more time than money, so you protect every dollar. When you’re older, you’ve got kids, a career, and a house that always needs something. Your time gets scarce, and earning more often becomes easier than squeezing another dollar out of your grocery budget.
Some of the five ideas below are investing. A few drift into earning and creating. All of them can make you rich, and none of them require a single tenant.
1. The Stock Market (Specifically, Index Funds)
When most people think of investing, they picture one of two things: real estate or the stock market. Scott and I are both big index fund investors, and the reasoning is pretty simple.
When you buy a broad index fund, you’re betting on the economy as a whole. Workers keep getting more productive thanks to new technology, whether that’s the internet or whatever AI turns into. Over the long haul, the stock market has delivered returns north of 10% a year. Most index fund investors plan around something in the 7% to 10% range, which is a reasonable long-term assumption.
Scott invests in US large cap index funds. My household runs a little more tech heavy. My husband, Carl, is a tech guy, and he likes the tech-focused indexes. We also hold VTSAX. Our returns have been a bit higher than average lately, but so has our risk. A more volatile fund can go up faster, and it can also drop faster. Keep that in mind before you go all in on the shiniest sector.
What I love about index funds is how easy they are. You can invest $1 or $100,000. You can sell anytime, though we’d strongly suggest you don’t. The dividend yield on a broad market fund runs around 2%, and reinvesting those dividends compounds your returns over time.
Scott has invested consistently for more than a decade and plans to keep going for the next 50 years. He’s actually put more cash into index funds than into real estate. I’ve been investing in the stock market for about 30 years, and the chart keeps going up and to the right. There are bumps along the way, and everyone remembers 2008 and March 2020. Zoom out, though, and the trend is hard to argue with.
Warren Buffett says his favorite holding period is forever. If you keep buying, keep holding, and don’t panic sell when the market drops, history suggests you’ll do just fine.
Scott offers a gut check, “If you don’t believe in index funds, you’re betting that the American economy will shrink and workers will get less productive for decades. If that happens, real estate and small businesses won’t do well either. Almost nothing will.”
For the full argument, read The Simple Path to Wealth by JL Collins. He’s been on our show a few times, and it’s still one of our favorite money books.
2. Become a 401(k) Millionaire
This one pairs nicely with the first. You can buy those same index funds inside retirement accounts and get a tax break for doing it.
A traditional 401(k) comes out of your paycheck before income taxes. You don’t pay tax on the money going in, it grows, and you pay tax when you take it out. Withdraw outside the rules and you’ll pay penalties too.
For 2026, you can contribute up to $24,500 to a 401(k) as an employee. Your employer can add more on top of that, and many will match part of your contributions. That’s free money, so please take it. If you’re self-employed with no employees, a solo 401(k) lets you contribute as both the employee and the employer, which can push your total way higher.
Here’s the fun math. If you put $24,500 a year into a 401(k) and earn 8%, you’d cross $1 million in about 19 years. That’s a fully passive millionaire plan with zero broken water heaters.
If your employer doesn’t offer a plan, open an IRA. Any major brokerage can set one up in a few minutes. The 2026 limit is $7,500. For people earning under $100,000, Scott thinks a Roth IRA is the best place to start, and it’s his favorite vehicle overall.
There are also strategies for early retirees to move money from pretax accounts like a 401(k) into a Roth IRA over time. It’s called a Roth Conversion. It takes a few hours of reading up front, and then you carry it out over a decade or two.
3. Switch Jobs
This is where we wander from investing into earning more, but stick with me. Most companies have more money in their hiring budget than in their retention budget. Translation: the biggest raise you’ll ever get may come from a different employer.
Back in Episode 97, we talked with Financial Mechanic. She started applying to software engineering jobs and realized she was underpaid at $65,000. She applied to eight or nine companies, negotiated harder each time, got a lot of practice, and doubled her salary when she switched.
Knowing your market value is one of the most important career skills you can build. What do people with your skills earn? What would it take to move to the next pay band?
Let’s use the example of an accountant. Say the going rate is $65,000. You might be fantastic at your job, but there may be 1,000 other people who could do it about as well. Build the skills of a controller, and your market value could jump 30%, 50%, or more.
When your skills grow and your employer doesn’t recognize it, that’s when you test the market. Consider the return on that time. We spend hours trying to trim $500 from a monthly budget. Updating your resume and sitting through a few interviews might take less than 20 hours and could raise your pay by $1,000 a month.
There’s also a link between your savings and your earning power. Picture two job offers. One pays $80,000 plus a $5,000 bonus. The other pays $60,000, but the bonus could double your salary, and you think there’s a 50/50 shot you’ll get it. On average, the second job pays $90,000. If you live paycheck to paycheck, you can’t risk it. If you have a healthy savings cushion, that riskier offer starts to look like an opportunity. A strong financial foundation lets you go after higher-upside jobs.
One more thing. You have to be a great employee. If you interview like a rock star and then coast once you’re hired, that big raise won’t last long. The way you grow your pay is by taking on more responsibility and finding ways to add value. Either your current employer rewards you, or you walk into your next interview knowing exactly what you’re talking about.
4. Buy a Boring Business
Browse a business-for-sale marketplace and you’ll find HVAC companies, dry cleaners, plumbing outfits, small trucking businesses, sanitation services, and asphalt paving companies. None of these will go viral on TikTok. Many of them quietly throw off a lot of cash.
Here’s why the opportunity exists. Roughly 10,000 baby boomers retire every day, and many own businesses like these. A lot of their kids don’t want to take over. Some of these businesses generate $300,000 to $750,000 a year in seller’s discretionary earnings, or SDE, which is the owner’s salary plus the profit they take out.
These businesses often sell for two to three times SDE. Buy a business earning $200,000 for $600,000, and that’s a 33% return on the purchase price. Try finding a $600,000 duplex that does that. (Keep in mind that SDE includes paying yourself for the work, so some of that return is really your salary.)
There’s also not much competition from buyers. I think that’s because these businesses take a lot more work up front than a rental property. You may have to learn a whole industry, or find someone trustworthy who knows it. Hiring will keep you up at night. Expect this to be a full-time job for at least six months, maybe a few years.
They also tend to have no moat. Warren Buffett prefers businesses with a wide moat because they’re hard to compete with. A local plumbing company only stays on top through its reputation, and you’ll have to keep earning that reputation every day.
The upside can be huge, though. Many of these businesses have run on word of mouth for 35 years and don’t even have a website. A little modern marketing and some systems can go a long way.
On Episode 325, Tim Delaney told us about buying a liquor store that didn’t have a point of sale system. Prices were simply stickers stuck to the bottles. They closed the night of the sale, counted inventory, and the next morning it was his. Cody Sanchez joined us on Episode 416 to explain what she looks for when buying these companies.
There’s an odd gap in this market. The people most excited about buying a boring business are often in their 20s and don’t have $200,000 lying around. The people who do have the money often earn $150,000 to $250,000 at their jobs and have zero interest in running a dry cleaner. If you can bridge that gap, you’re in a great spot.
You may also need less cash than you think. SBA loans are available, and seller financing is common. This business is the seller’s baby, and many owners are happy to stick around for a year or two to make sure it’s in good hands.
Franchises belong in this bucket too. A franchise comes with a playbook covering where to buy supplies, how to set up the menu, and how to train staff. The upside is usually more limited, but so is the downside, and you’ll have plenty of fellow franchise owners to learn from. There are success stories and horror stories, so do your homework before you sign anything.
5. Start a Side Hustle or Small Business
Starting a side hustle is a great way to test an idea without quitting your day job.
Most small businesses fail because there’s no buyer for the product or there was never a real plan. People love to say 90% of businesses fail in the first two years. That’s not quite right. Bureau of Labor Statistics data shows about 20% close in the first year and roughly half are gone within five. Still not great odds, so research the demand, look at the location and the community’s needs, and write an actual plan. Social media can be a nearly free way to get the word out.
But you have a question you need to answer. Are you building an asset, or are you just self-employed? Some side hustles are just a second job wearing a business costume. Others can become systems that keep producing income without you, and that you could sell one day.
Be warned that many side hustles pay less per hour than people’s day jobs. If you’re a CEO driving for Uber Eats on the weekends (I’m looking at you, Scott), that’s probably not the best use of your time. But if your side hustle could pay really well once you can give it more hours, it may be worth sticking with even if today’s hourly rate stinks.
Scott has an interesting approach to failure. If most businesses fail, start more of them. Give each idea a serious 90-day test, and you’ll get four tries a year. You’ll probably strike out on a bunch. But after five years, you’ll have tested 20 ideas, and if two of them work, they could bring in thousands a month on top of your index fund investing.
He also suspects a lot of failed businesses come from people who tried one idea, gave up, and never used what they learned on attempts three, four, and five. Going in knowing that the process gets you there is a lot more useful than expecting your first idea to be a home run.
Pick the One That Fits Your Life
You can absolutely get rich without real estate. If you’re early in your career, a Roth IRA and a few well-timed job switches might do more for you than any rental property. If you’ve got some cash saved and a high tolerance for chaos, a boring business might be calling your name. And if you just want to stay hands-off, an index fund and a long holding period is a perfectly good plan.
Whatever you choose, do your research first. That goes for franchises, side hustles, and everything else on this list.
And if you’ve found a creative way to invest outside real estate, come tell us in the BiggerPockets Money Facebook group. Someone once told us about horse breeding. We still have questions.
Leave a Reply