The 70/30 Investment Rule That Distinguishes Millionaires From the Rest
At a time when social media is flooded with “get rich quick” promises tied to crypto and day trading, a large group of ordinary workers is accumulating significant wealth through a method that is both simple and powerful. Financial authority and bestselling writer David Bach points to recent data identifying a common asset allocation strategy among hundreds of thousands of retirement millionaires: the 70/30 rule.
Bach, who wrote The Automatic Millionaire, was a guest on The Diary of a CEO podcast to talk about wealth-building habits. He cited statistics indicating there are now about 654,000 “” in the U.S., individuals whose comes solely from a conservatively managed retirement account. The Wall Street Journal refers to these frugal, affluent investors as “,” a group similar to UBS’s “”.
Examining how these typical employees built such s reveals a consistent approach. They avoided speculative meme stocks and market timing. Rather, they saved regularly and followed a precise investment allocation: approximately 70% in stocks for long-term growth and 30% in bonds for stability.
“The precise formula involved saving [was] 14% of their gross pay … and then their investment approach is critical,” Bach stated. “You must invest for growth, and growth comes from stocks.”
Boring is beautiful
The 70/30 allocation stands in contrast to the high-risk approaches frequently promoted to new investors. Bach contended that “Sexy is how you go broke,” while “boring is beautiful” for creating lasting wealth. The 70% stock portion enables considerable growth over many years, and the 30% bond portion offers protection from market swings. This mix assists investors in “staying the course” during downturns, avoiding the loss-causing mistakes of panic selling.
Bach mentioned that accomplished investors often use index funds to gain this exposure, like the Total Stock Market fund (VTI) or the 100 (QQQ), instead of trying to select specific winning stocks. The objective is not daily market outperformance, but to allow the “miracle of compound interest” to accumulate over time.
Yet, the 70/30 rule is just one component. According to Bach, the true engine for wealth accumulation is automation. He stressed that the key distinction between the wealthy and those struggling financially is often not income level, but having an automated “pay yourself first” process.
“If your financial strategy isn’t automatic, it will not succeed,” Bach cautioned. He noted that 70% of Americans live paycheck to paycheck, typically because they try to save whatever remains at month’s end—which is often nothing. In contrast, “automatic millionaires” arrange for deductions to happen immediately upon receiving their pay, directing 12.5% to 14% of their income straight into their 70/30 portfolios before any spending occurs.
Think about whether you really want that sandwich or drink
For individuals who believe they cannot save to invest, Bach provided a striking example. He calculated how much money must be spent needlessly each day to waste $10,000 annually. The figure is $27.40, equivalent to a pricey lunch or several after-work beverages. On the other hand, investing that daily $27.40 in the market for 40 years could potentially expand to more than $4.4 million, assuming a 10% yearly return.
Although the 70/30 strategy fuels growth, the daily discipline to save that money is essential. “We will see the number of millionaires in the U.S. rise from 8 million to 24 million within just 20 years,” Bach observed, linking this surge to two main wealth drivers: stocks and real estate. With the global economy poised for potential transformation from AI, Bach expressed his view that the coming ten years offer “the greatest opportunity to build wealth in our lifetime.”
Certainly, the expectation that steady compounding over 30 or 40 years will produce reliable wealth is heavily reliant on continued economic stability, a benefit more accessible to U.S. investors than to those in nations like Argentina. Given persistent geopolitical strife, climate-related expenses, and the rapidly growing effect of AI on employment, the coming decades may prove much less predictable than the last half-century. The U.S. national debt of $38.6 trillion and growing skepticism about the dollar’s enduring role as the world’s primary reserve currency are increasing signs that the 21st century will be markedly different from the 20th.
Generation Z appears to be largely disregarding Bach’s guidance. While it is accurate that Americans in this roughly 15-year cohort, up to age 28, are beginning to invest sooner than earlier generations, they demonstrate a greater preference for risky and alternative assets, extensive use of fintech and social media, and comparatively inadequate retirement planning. Surveys indicate cryptocurrency holds unusual popularity with Gen Z adults, with , while 32% to 41% own individual stocks and roughly one-third utilize mutual funds or ETFs. One analysis found that alternative investments (crypto, private markets, and real estate–style assets) constitute about 31% of younger investors’ holdings, compared to only around 6% for older investors.