Book SummaryThe Millionaire Fastlane, by MJ DeMarco

1-Page Summary1-Page Book Summary of The Millionaire Fastlane

In The Millionaire Fastlane, multimillionaire entrepreneur and investor MJ DeMarco challenges conventional wisdom about how to create wealth and offers a simple formula to shortcut your path to riches and early retirement. As we’ll explore in this guide, according to DeMarco, all financial strategies follow one of three formulas, each representing a distinct attitude and approach that determines both the amount of money you can accumulate and the speed at which you can achieve your financial goal. Each formula also reflects the control you have over your finances and how you use your time to make money:

• Formula #1: Insatiable Consumption: Spending more than you earn creates debt and a lifetime of poverty. You lack control over your finances and must spend your time paying debts.
• Formula #2: Hopeful Accumulation: Relying on a job and market investments restricts your income and doesn't guarantee a wealthy retirement. You can’t control how much you earn as you rely on a set salary or wage, and you must spend time working until retirement.
• Formula #3: Active Production: Leveraging time to create passive income creates unrestricted wealth and freedom. You spend just a short amount of time creating an ongoing income stream that you have...

The Millionaire Fastlane Summary Formula #1: Insatiable Consumption

DeMarco defines the Insatiable Consumption formula for wealth as: job + debt = a lifetime of poverty. He argues that insatiable consumers are more motivated by the illusion of wealth than actual wealth. According to him, they spend more than they earn on luxury items and experiences because they feel like they deserve the best without having to work for it. They also crave the pride, admiration, and respect that rich people enjoy, and they believe that they can achieve the same positive feelings simply by looking rich.

(Shortform note: In the same way it creates an illusion of wealth, buying things to impress or outdo others creates an illusion of happiness. In The Happiness Hypothesis, Jonathan Haidt explains that the desire to project wealth limits your ability to feel intrinsically happy because it leads to an endless competitive cycle: You feel happy when you buy something that projects wealth. However, when someone else buys something more expensive, it devalues your purchase and leaves you...

The Millionaire Fastlane Summary Formula #2: Hopeful Accumulation

DeMarco defines the Hopeful Accumulation formula for wealth as: job + market investments = restricted income and a mediocre retirement. According to him, hopeful accumulators follow popular methods touted by financial advisors as a guaranteed path to a comfortable retirement: Get an expensive education, work hard for 40 to 50 years, sacrifice pleasures, budget every cent, buy a house, and funnel all surplus money toward pensions, safe investments, and savings accounts.

(Shortform note: It may be confusing that DeMarco opposes the methods outlined in this formula, only to later note that they’re excellent ways to promote financial discipline. To clarify, his argument is that relying solely on these methods won’t guarantee wealth—they should only be used as part of a plan to create wealth. We’ll explore his ideas about this in Formula #3.)

Sacrificing Time and Money Creates the Illusion of Control

DeMarco argues that this formula severely limits your chances of creating wealth because it’s entirely dependent on a number of factors that you can’t control: the value of your education, the time you spend working, the economy, interest rates, and your health and well...

The Millionaire Fastlane Summary Formula #3: Active Production

DeMarco defines the Active Production formula for wealth as: unrestricted profits + investments and assets = massive wealth and early retirement. He argues that active producers are motivated by the goal to create and enjoy wealth. However, unlike insatiable consumers, they don’t confuse “get rich quick” with “get rich easy.” DeMarco explains that they’re willing to practice discipline and forfeit short-term comfort while they work on maximizing their income and net worth. As a result, they achieve extraordinary wealth in a short period of time and can buy what they want without fear of incurring debts.

(Shortform note: DeMarco characterizes active producers as individuals willing to make strict financial sacrifices and de-prioritize their present happiness and comfort in service of becoming extraordinarily wealthy in the future. But, is this sacrifice really worth it—and will having enough wealth to buy whatever you want really make you happy? Arguably not. Research shows that, instead of making you happier, **[excess wealth and materialism encourage narcissistic tendencies and diminish your overall...

The Millionaire Fastlane Summary The Active Producers’ Checklist

DeMarco claims that, unless you have a realistic chance of becoming a highly-paid celebrity or professional athlete, your fastest route to wealth is to become an active producer and start a business that has the potential to create millions of dollars in passive income. Then, invest that income so its compound interest can preserve and build your wealth. Throughout the rest of this section, we’ll cover DeMarco’s suggestions for finding the right type of business and investment opportunities to dramatically increase your income.

Create Passive Income

According to DeMarco, passive income comes from businesses that offer value to customers, have the potential for growth, and only require periodic support to survive. He explains that wealthy businesses generate passive income either by selling low-priced products and services (for example, books and apps) to millions of customers, or by selling high-priced products and services (for example, property and luxury vacations) to a few customers. He explains that a less common structure is selling high-priced products to millions of customers—the owners of these types of businesses have the potential to become...

Shortform Exercise: What’s Your Financial Formula?

DeMarco argues that all financial strategies fall into one of three formulas—Insatiable Consumption, Hopeful Accumulation, and Active Production. This exercise will help you clarify what formula you’re currently using.

According to DeMarco, there are two possible motivations that explain why you want money: the desire to look rich and the determination to create and enjoy wealth. What motivates you to earn money and why?

Shortform Exercise: Generate Valuable Ideas

DeMarco suggests that you can get into the mindset of an active producer by considering ways to improve the value of products and services that you use.

Think of one product or service that you spend your money on. What value does it offer? What problem does it solve? (For example, you might spend your money on software that helps you to manage your taxes.)