By Lina Irawan 
In an era in which “get rich quick” schemes involving cryptocurrency and day trading dominate social media feeds, a quiet army of everyday workers is building substantial wealth using a strategy that is remarkably boring—and remarkably effective. While platforms like TikTok and Reddit buzz with tales of overnight fortunes made from meme stocks, NFTs, or volatile altcoins, a more steadfast approach, rooted in disciplined saving and balanced asset allocation, continues to quietly mint millionaires. According to financial expert and best-selling author David Bach, recent data reveals a specific asset allocation formula shared by hundreds of thousands of retirement account millionaires: the 70/30 rule.
Bach, renowned for his financial literacy advocacy and as the author of The Automatic Millionaire, recently shared insights on The Diary of a CEO podcast, delving into the unassuming habits that underpin true wealth accumulation. He underscored recent statistics from Fidelity Investments, a leading provider of workplace retirement plans, which indicate a staggering rise in individuals achieving millionaire status solely through their 401(k) accounts. Fidelity’s data shows there are now approximately 654,000 "401(k) millionaires" in the United States. These individuals haven’t relied on entrepreneurial ventures, inheritances, or high-stakes trading; their fortunes are entirely derived from their employer-sponsored retirement accounts, typically invested with a relatively conservative long-term outlook.
These self-made retirement millionaires defy the flashy image often associated with immense wealth. The Wall Street Journal aptly labels them "moderate millionaires," highlighting their prudent, disciplined approach to financial growth. Their profiles often mirror what UBS’s global wealth reports have termed "everyday millionaires" – individuals who reach significant wealth milestones through consistent saving and smart investing over decades, rather than through sudden windfalls. These are often middle-income professionals, teachers, nurses, or small business owners who prioritize financial security and leverage the power of time and consistency. They embody the antithesis of the speculative investor, preferring slow and steady accumulation over rapid, high-risk gambles.
When financial analysts examine the strategies employed by these ordinary employees to amass such substantial fortunes, a clear and consistent pattern emerges. They didn’t engage in speculative trading of meme stocks, nor did they attempt to time the market – a notoriously difficult, if not impossible, feat for even professional investors. Instead, their success is predicated on two fundamental pillars: consistent saving and adherence to a specific, diversified investment mix. Their portfolios typically allocate roughly 70% to stocks for long-term growth potential and 30% to bonds for portfolio stability and capital preservation. This simple yet powerful formula has proven to be a bedrock for sustained wealth building. Bach further clarified the exact formula, stating, "The exact formula they saved [was] 14% of their gross income… and then how they invested the money is key. You have to be invested for growth and growth means stocks." This 14% savings rate, often achieved by maximizing employer 401(k) contributions (especially with matching funds), is a common benchmark recommended by financial planners to ensure a comfortable retirement over a typical 30-40 year career.
Boring is Beautiful: The Rationale Behind the 70/30 Split
The 70/30 split stands in stark contrast to the high-risk, high-reward strategies frequently marketed to younger investors today through social media and online forums. Bach succinctly articulated this divergence, arguing that "sexy is how you go broke," while "boring is beautiful" when it comes to building enduring wealth. This philosophy champions patience, diversification, and a long-term perspective over speculative fervor.
The rationale behind the 70% allocation to stocks is straightforward: equities have historically been the most powerful engine for wealth creation over extended periods. Despite short-term fluctuations and market corrections, the stock market, particularly broad market indices like the S&P 500, has demonstrated an average annual return of approximately 10% over many decades. This growth allows investors to outpace inflation and significantly grow their capital through the compounding effect. Stocks represent ownership in companies that innovate, produce goods and services, and generate profits, contributing to economic expansion over time.
The complementary 30% allocation to bonds serves as a crucial ballast for the portfolio. Bonds, essentially loans to governments or corporations, typically offer lower returns than stocks but provide greater stability and a more predictable income stream. In times of market volatility or economic downturns, bonds often perform well, or at least decline less severely than stocks, offering a cushion that helps to mitigate overall portfolio losses. This diversification is vital not just for financial reasons but also for psychological ones. A balanced portfolio with a bond component helps investors "stay the course" during market pullbacks. Seeing a portfolio lose 20% instead of 30% can make the difference between panicking and selling at a loss, versus remaining invested and allowing the market to recover, thus preserving long-term returns. It minimizes the emotional rollercoaster that often derails even well-intentioned investors.
Bach noted that these successful investors typically utilize low-cost, broadly diversified index funds to achieve their desired market exposure, rather than attempting to pick individual winning stocks. Popular examples include the Vanguard Total Stock Market Fund (VTI), which provides exposure to virtually every publicly traded U.S. company, or the NASDAQ 100 (QQQ), which tracks the 100 largest non-financial companies listed on the Nasdaq Stock Market, heavily weighted towards technology. The appeal of index funds lies in their simplicity, low expense ratios, and inherent diversification, which virtually eliminates individual stock risk. The goal is not to beat the market daily, but rather to capture the market’s overall growth and allow the "miracle of compound interest" to work its magic over decades. By reinvesting dividends and capital gains, the returns themselves begin to earn returns, accelerating wealth accumulation exponentially.
Automation: The Unsung Hero of Wealth Building
However, the 70/30 rule is only half the equation. The mechanism that truly powers wealth-building, according to Bach, is automation. He emphasized that the primary differentiator between the wealthy and those living paycheck to paycheck is not necessarily income level, but rather the consistent implementation of a "pay yourself first" system. This principle flips the traditional saving model on its head. Instead of attempting to save what is left over at the end of the month—which, for many, is often nothing—the "pay yourself first" approach ensures that savings and investments are prioritized before any discretionary spending.
"Unless your financial plan is automatic, it will fail," Bach warned, highlighting a critical behavioral insight. He pointed out that a significant portion of the population, seven in 10 Americans, currently live paycheck to paycheck. This precarious financial state is often a direct result of deferring saving until after all expenses are met. The "automatic millionaires" circumvent this common pitfall by setting up automatic deductions. The moment their paycheck arrives, a pre-determined percentage—typically 12.5% to 14% of their gross income—is automatically directed into their 70/30 investment portfolios. This ensures that their wealth-building contributions are made consistently and without conscious effort or willpower, removing the temptation to spend the money elsewhere. This seamless, recurring investment is the bedrock upon which compound interest can truly flourish.
The Power of Small Sacrifices: Think About That Sandwich or Drink
For those who feel they cannot afford to invest, Bach offered a sobering and highly relatable calculation, famously dubbed the "Latte Factor." He challenged listeners to consider how much money they would need to waste daily to squander $10,000 in a single year. The answer, surprisingly, is just $27.40. This seemingly small sum could be the cost of a daily gourmet coffee, a high-priced sandwich, a few drinks after work, or a couple of streaming subscriptions. The implications are profound: small, seemingly insignificant daily expenditures can accumulate into substantial amounts over time.
Conversely, Bach illustrated the immense opportunity cost of such spending. Investing that same $27.40 a day into the market, assuming a modest 10% annual return (in line with historical stock market averages), could grow to over $4.4 million over 40 years. This powerful example underscores that consistent, even small, contributions, when compounded over decades, can lead to life-altering wealth. While the 70/30 rule provides the engine for growth, the discipline to identify and redirect that daily capital from consumption to investment is absolutely crucial.
Looking ahead, Bach expressed considerable optimism for wealth creation, predicting, "We’re going to see an increase of 8 million millionaires to 24 million millionaires in the U.S. in just 20 years." He attributes this projected wealth boom to two primary escalators: stocks and real estate, both of which have historically demonstrated significant appreciation over the long term. Furthermore, with the accelerating impact of artificial intelligence on industries and productivity, Bach believes the next decade represents "the greatest opportunity to build wealth in our lifetime," suggesting that technological advancements will drive new economic growth and investment opportunities.
A Look Ahead: Opportunities and Uncertainties in the 21st Century
To be sure, the assumption that steady compounding over 30 or 40 years will yield predictable wealth depends heavily on future economic stability. Such a long-term, relatively low-stress investment approach is a luxury primarily available to investors in stable, developed economies like the United States, in a way it isn’t in a country like, say, Argentina, which has experienced chronic hyperinflation and political instability. The current global landscape presents a complex mix of opportunities and significant uncertainties. Ongoing geopolitical tensions, the escalating costs and impacts of climate change, and the accelerating disruption artificial intelligence will bring to labor markets could make the next few decades look far less reliable and predictable than the relatively stable period of the late 20th century.
Domestically, America’s burgeoning national debt, which currently stands at over $34 trillion, and growing doubts about the U.S. dollar’s longevity as the world’s dominant reserve currency, serve as mounting evidence that the 21st century is shaping up very differently from the 20th. These macroeconomic pressures could introduce unprecedented volatility, higher inflation, or slower economic growth, potentially challenging the assumptions behind historical market returns and the consistent efficacy of traditional investment strategies. While the core principles of diversification and long-term investing remain sound, the environment in which they operate is undeniably evolving.
Gen Z’s Contrarian Path: High Risk, High Reward?
Intriguingly, contemporary data suggests that Generation Z seems to be actively ignoring Bach’s time-tested advice, charting a significantly different course in their investment habits. While it’s true that Americans in this roughly 15-year generation, reaching up to 28 years old, are investing earlier than previous generations—a positive trend—their investment profiles show a pronounced tilt toward riskier and nontraditional assets. This cohort demonstrates heavy reliance on fintech platforms and social media for financial guidance, often leading to relatively weaker retirement preparation compared to prior generations at similar life stages.
Surveys consistently highlight the unusual prominence of cryptocurrency in Gen Z adults’ portfolios. Research indicates that between 44% and 55% of young investors start with or primarily use crypto, a stark departure from the traditional entry points of stocks or mutual funds. Additionally, 32% to 41% hold individual stocks, often influenced by online trends and influencer recommendations, while only about one-third utilize mutual funds or exchange-traded funds (ETFs) that offer broad market diversification. A Bank of America analysis further underscores this generational divide, revealing that "alternatives"—a category encompassing crypto, private markets, and real estate-style plays—make up about 31% of younger investors’ portfolios, compared to a mere 6% for older, more established investors.
This high-risk appetite among Gen Z can be attributed to several factors. Growing up in the shadow of the 2008 financial crisis, burdened by student loan debt, and facing soaring costs of living, many young people feel that traditional, slow-and-steady wealth building is insufficient to achieve their financial goals. The allure of rapid gains from volatile assets, amplified by social media narratives of "to the moon" successes, creates a powerful "Fear Of Missing Out" (FOMO). While early investment is commendable, the lack of diversification and overexposure to speculative assets could lead to significant setbacks, especially for those with limited capital to absorb losses.
In conclusion, while the financial landscape of the 21st century is undoubtedly more complex and uncertain than previous decades, the enduring principles championed by financial experts like David Bach remain remarkably pertinent. The "boring but beautiful" strategy of consistent, automated saving, coupled with a balanced 70/30 allocation to stocks and bonds, continues to be a proven pathway to substantial wealth for hundreds of thousands of everyday Americans. As younger generations navigate their financial journeys, the wisdom of discipline, diversification, and long-term perspective may prove more valuable than ever, offering a steady hand amidst the tempting, yet often perilous, siren song of "get rich quick" schemes.