Dave Ramsey reveals the 2 things that 'really cause' Americans to get their first $1M to $5M in net worth — how many are you doing right now?

1. Invest steadily in growth stocks

Consistently investing in growth-oriented mutual funds through a tax-efficient account is one of the primary things that “cause people to get their first $1 million to $5 million,” Ramsey said in a YouTube Short uploaded in February. Eight out of 10 millionaires surveyed by Ramsey Solutions said they invested in their company’s 401(k) plan, while 75% of them also said that consistently investing over the long-term was one of the primary reasons for their financial success.

Growth mutual funds have had an exceptional run in recent years. If you invested $10,000 in the Fidelity Growth Company Fund (FDGRX) 10 years ago it would be worth over $50,000 today. It’s had an average annual growth rate of around 18.9% over the last decade. The top holdings in this fund are some of the best-performing tech stocks of the past decade, including Nvidia and Apple.

Someone with a well-paying job and a little financial discipline could have used this fund to become a millionaire. For instance, assuming that 18.9% annual rate, a person earning $100,000 a year could inject 10% of their gross salary each month into this growth fund and accumulate nearly $1 million in interest within 18 years.

However, past performance isn’t an indicator of future returns. Tech and growth stocks have had an incredible run over the past decade but there’s no way to predict their growth rate going forward.

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2. Pay off your home

Another consistency amongst the millionaires is a focus on paying off their primary residence. The average millionaire pays off their family home in just 10.2 years, according to Ramsey Solutions expert Rachel Cruze.

The share of mortgage-free U.S. homes jumped to a record high in 2022, just shy of 40%, according to Bloomberg. The rate of mortgage-free homeownership actually climbed five percentage points between 2012 and 2022.

This asset is a major contributor to the wealth of ordinary Americans. The median sales price of a home in the U.S. was $412,300 in the second quarter of 2024, according to the Federal Reserve Bank of St. Louis.

Unfortunately, many Americans and first-time homebuyers face an uphill battle to get to this stage. A report by the Joint Center for Housing Studies of Harvard University shows that, in 2022, the housing costs of approximately 12 million renter households exceeded half their income. Such high expenses make it difficult to accumulate savings for a down payment. Plus, elevated mortgage rates make paying off a home early more difficult.

A shortage of housing units is compounding this crisis. The country faces an estimated housing shortage of 4 million to 7 million units, according to Pew.

For Americans looking to accumulate their first $1 million, focusing on housing can be significantly more challenging than investing in a 401(k) or growth mutual fund.