The 70/30 rule that separates millionaires from everyone else

Bach, author of The Automatic Millionaire, recently appeared on The Diary of a CEO podcast to discuss the habits of the wealthy. He highlighted recent statistics from Fidelity Investments showing there are now approximately 654,000 “401(k) millionaires” in the United States, meaning their fortune is entirely derived from their retirement account, usually relatively conservatively invested. The Wall Street Journal calls these thrifty and wealthy investors “moderate millionaires,” and they share a strong resemblance to UBS’ “everyday millionaires.”

When analyzing how these ordinary employees amassed such fortunes, a clear pattern emerged. They didn’t trade meme stocks or time the market. Instead, they saved consistently and adhered to a specific investment mix: roughly 70% in stocks for growth and 30% in bonds for stability.

“The exact formula they saved [was] 14% of their gross income … and then how they invested the money is key,” Bach explained. “You have to be invested for growth and growth means stocks”.

Boring is beautiful

The 70/30 split contradicts the high-risk strategies often marketed to young investors today. Bach argued “sexy is how you go broke,” whereas “boring is beautiful” when it comes to building long-term wealth. The 70% allocation to stocks allows for significant appreciation over decades, while the 30% allocation to bonds provides a cushion against volatility. This balance helps investors “stay the course” during market pullbacks, preventing panic selling that destroys returns.

Bach noted successful investors typically utilize index funds to achieve this exposure, such as the Vanguard Total Stock Market Fund (VTI) or the NASDAQ 100 (QQQ), rather than picking individual winners. The goal isn’t to beat the market every day, but to let the “miracle of compound interest” work over decades.

However, the 70/30 rule is only half the equation. The mechanism that really powers wealth-building, according to Bach, is automation. He emphasized the primary differentiator between the wealthy and those living paycheck to paycheck is not necessarily income, but the existence of a “pay yourself first” system.

“Unless your financial plan is automatic, it will fail,” Bach warned. He pointed out that seven in 10 Americans currently live paycheck to paycheck, often because they attempt to save what is left over at the end of the month—which is usually nothing. The “automatic millionaires” set up their deductions to occur the moment they are paid, ensuring that 12.5% to 14% of their income goes directly into their 70/30 investment portfolios before they can spend it.

Think about whether you really want that sandwich or drink

For those who feel they cannot afford to invest, Bach offered a sobering calculation. He asked listeners how much money they would need to waste daily to blow $10,000 in a year. The answer is $27.40, like a really expensive sandwich or a few drinks after work. Conversely, investing that same $27.40 a day into the market over 40 years could grow to over $4.4 million, assuming a 10% annual return.

While the 70/30 rule drives the growth, the discipline to find that daily capital is crucial. “We’re going to see an increase of 8 million millionaires to 24 million millionaires in the U.S. in just 20 years,” Bach noted, attributing this wealth boom to two primary escalators: stocks and real estate. As the global economy faces potential shifts due to AI, Bach said he believes the next decade represents “the greatest opportunity to build wealth in our lifetime.”

To be sure, the assumption that steady compounding over 30 or 40 years will yield predictable wealth depends heavily on future economic stability, and is a luxury available to American investors in a way it isn’t in a country like, say, Argentina. And with ongoing geopolitical tensions, climate costs, and the accelerating impact of artificial intelligence on labor markets, the next few decades could look far less reliable than the past 50. America’s $38.6 trillion national debt and doubts about the 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.

Gen Z seems to be actively ignoring Bach’s advice. While it’s true that Americans in the roughly 15-year generation reaching up to 28 years old are investing earlier than previous generations, they show a higher tilt toward riskier and nontraditional assets, heavy use of fintech and social media, and relatively weak retirement preparation. Surveys show crypto is unusually prominent for Gen Z adults, with 44%–55% starting with or primarily using crypto, while 32%–41% hold individual stocks and around one-third use mutual funds or ETFs. Alternatives (crypto, private markets, and real estate–style plays) make up about 31% of younger investors’ portfolios in one Bank of America analysis, versus about 6% for older investors.