4 Ways Millionaires Make Money Without Taking Big Risks

Some people think millionaires made their money by taking big swings -- like launching startups, flipping properties, or gambling on crypto. But the truth is a lot of wealthy people build their fortunes the slow and boring way.

In 2024, the number of 401(k) millionaires surged by 27%, according to Fidelity Investments. These are ordinary folks who achieved millionaire status by simply working their regular job and investing a portion of each paycheck. Not very risky at all.

If you're looking to build wealth without taking on big risk, here's how millionaires quietly (but effectively) stack their money.

1. Keep cash in a high-yield savings account

When it comes to storing cash, high-yield savings accounts (HYSAs) are as risk free as it gets.

Not only do HYSAs earn up to 10x more interest than traditional savings accounts, but they're FDIC insured. This means the money is protected up to $250,000 per account holder, even if the bank goes out of business.

Millionaires make sure their cash is safe and working hard for them at all times. If you don't have an HYSA right now, check out these top high-yield accounts, all FDIC insured and earning up to 4.40% APY.

2. Slow, consistent investing habits

Millionaires don't time the market. They trust a method called dollar-cost averaging (DCA), where you invest a set amount on a regular basis -- no matter what the market's doing.

By investing a fixed amount of money every month, you'll naturally buy more shares when prices dip and fewer when they're high. Over time, this smooths out your cost and removes the emotion from investing.

It's no wonder 401(k) plans and IRAs are built around this strategy. It encourages steady contributions and helps long-term investors stay the course, even when markets get choppy.

3. Invest in index funds and target-date funds

Millionaires love simple, low-cost ways to grow their money. That's where index funds and target-date funds come in.

• Index funds track a specific market (like the S&P 500), giving you instant diversification across hundreds (or thousands) of companies.
• Target-date funds automatically shift from growth to conservative assets as you get older, so they get less risky as you approach retirement age.

These funds tend to have low fees and solid long-term returns. From 1926 to early 2025, the S&P 500 has returned an average of about 10% per year. It's not a get-rich-quick move, but it's one of the most proven ways to build long-term wealth.

Almost all online brokers offer both index funds and target-date funds. They're usually available inside most retirement plans, too.

And there's no harm in running your investment plans by a professional. This short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

4. Diversify income streams

Just like you spread your investments across different baskets, building multiple streams of income diversifies your paychecks. If one income source slows down or disappears, you've got others to fall back on.

Here are a few ways to start building income on the side:

• Earn dividends from stocks
• Rent out a room or property for passive real estate income
• Pick up a side hustle
• Monetize a hobby

These might not seem like much at first, but they can scale over time. For example, when I bought a rental property in Texas about 10 years ago, it only brought in a couple hundred bucks a month after expenses. But over time, rent grew, the mortgage stayed fixed, and I got more efficient with management. Now it consistently puts $800 in my pocket every month.

The bottom line

You don't need to take big risks to build wealth. In fact, a more reliable path to becoming a millionaire is by playing it safe and sticking with boring investments.

Risky bets might make headlines. But I'd rather earn a guaranteed 4.00% in a risk-free account than cross my fingers on hitting the next big thing.

Want to earn up to 4.40% APY with zero market risk? Open a top high-yield savings account today.