8. Your Secret Sauce

8. Your Secret Sauce

“To get rich, you have to be making money while you’re asleep.” David Bailey

Using the calculator below, John can now estimate how much he is going to make by investing all of his leftover income of $432 until his age of retirement normally. Since the age of retirement in the US is currently 67 years old [1] and John is 20, that means that his "Duration" will equal 47 years (67 − 20 = 47).

He plugged his numbers into the calculator below to see how much he will have once he reaches the retirement age:

When John reaches the age of retirement (67 years old in the US [1]) he will have about $3,500,000 saved with a passive income of $318,791 per year.

Passive income is "income that requires little to no effort to earn and maintain" [1]. Some examples of passive income are rental properties and investment accounts—what you made on the previous page!

John's "Passive Income" number is his "Final Value" multiplied by 9% —the amount of money he will take out of his saving accounts every year when he retires. And by the way, John's passive income of $318,791 is more than enough for him to live comfortably in retirement.

But did you notice how John's "Final amount" would be the amount that he would make it he invested "normally"? This means that John would ride the stock market average rate of return of 9.05% for the last 144 years [1]. But, John can do better by picking a better investment strategy. Much better.

M1 Finance (the service you signed up for on the previous page) offers many "Expert Pies" that on return 10% per year on average.

M1 Expert Pies are "professionally curated allocations of securities (ETFs or individual stocks) created by the staff at M1. All M1 Expert Pies are based on generally accepted investing methodologies" [taken from M1 Finances support page].

While 10% is only one digit more than 9%, that extra digit adds up in the long run. Check out how that extra 1% changes John's "Final Value" and "Passive Income" in the interactive calculator below. Remember, nothing has changed from the calculator above besides the "Interest" amount:

With a 10% annual return on his money, John will have about $5,000,000 saved with a passive income of $497,235 per year when he reaches the age of retirement. The extra 1% per year made John $1,430,223 richer than if he had a 9% annual return!

Step 16: Choose your secret sauce

To also get a steady 10% annual return like John will, first head over M1 Finance's expert pies page by clicking here.

If you'd like to get to M1 Finance's expert pies manually, head over to the main page of your M1 Finance account and click the "Research" tab to get to a page like this one:


Afterwards, click the "Expert Pies" tab to get to this page:


Now that everyone is on the same page, glance over M1 Finance's expert pie options.

If you would like to invest responsibly—only invest in moral companies—choose the "Responsible Investing" square. If on the other hand, you're looking for the highest returns that M1 Finance's expert pies have to offer, they are usually located under the "Hedge Fund Followers" square.

Since John is planning for retirement, he clicked the "Plan for Retirement" square to get to this page:


John will retire in 47 years so he changed the "I plan to retire in" tab to 2060. You can find what time you will retire by doing the math current year + years until retirement. Remember, you found out the number of years you have until retirement at the beginning of this page!

Once you have found the year that you will retire, change the "I plan to retire in" tab to the year closest to it:


Now John is faced with three expert pie options: 2060 aggressive, moderate, and conservative. John chose the "2060 Aggressive" option because he isn't worried about his retirement money until he needs it.

If you are closer to retirement that John is, consider choosing the "Conservative" option. If you're alright with some risk but not a lot, choose the "Moderate" option.

Now that John has picked his investing pie, he clicked the "2060 Aggressive" option to get to this page:


He then clicked the "Add to Portfolio" button on the bottom left to get to these options:


Since John's only has retirement accounts, he then clicks his "Roth IRA" account and then the "Add" button to get to this page:


On this page, make sure that the expert pie you picked is at 100% allocation. If it isn't, you won't be able to click the "Save" button at the top right of the page.

Change the pie name and its description to whatever you want and then click "Save" to get to this page:

Before you click "Confirm", read M1 Finance's terms of use page here. The past performance of every investment strategy does not indicate its future performance!


For example, although John's chosen "2060 Aggressive" pie has returned ~10% every year over the last five years, that does not mean that it will also return 10% every year afterward. We'll talk more about this dilemma soon, but for now, let's wrap up the guide.

Remember to also set up investment strategies for all of your investment accounts! For John, that means that he will add the "2060 Aggressive" expert pie strategy to his 401(k) as well as his IRA account.