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Old 07-03-2014, 03:34 PM   #41
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There's always the "rule of 72." Divide 72 by the expected or hoped for portfolio return. As an example, a 10% return would double your assets in 7.2 years. Going from $100k to $200k in 30 months is either with an excellent return or with additional savings.

That's it in a nut shell and the classic power of compounding example.


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Old 07-03-2014, 05:02 PM   #42
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This is kind of the same as the "Critical Mass" discussions. IMO, "compounding takes over" when the portfolio hits my definition of "critical mass" which is when the effects of an average year's return (say 6-8%) exceeds contributions. We're a few years away from that yet, but that is largely based on a high savings rate. For some, $250k might be that point! Thus I think the answer is going to be different for everyone.
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Old 07-03-2014, 05:39 PM   #43
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I loved reading your post. It's a great way to look at our numbers (and you are so right about the "raise" we get in our portfolio with compounding effect. ) I don't feel so bad now that I got a very low percentage raise this year.

This was my epiphany last year too. My attitude at work improved greatly and stress lowered when I realized hey I'm seriously on track to retire early! Even with many years to go, I was well on my way to do what others won't, especially those who are intensely career-first driven. Now, I don't care what my perf rating is and don't chase raises. This completely disarms a Boss' leverage who uses $ to manipulate employees. Threats of "this will affect your ratings" no longer influence me.

True empowerment...I love it


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Old 07-03-2014, 05:44 PM   #44
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This is kind of the same as the "Critical Mass" discussions. IMO, "compounding takes over" when the portfolio hits my definition of "critical mass" which is when the effects of an average year's return (say 6-8%) exceeds contributions. We're a few years away from that yet, but that is largely based on a high savings rate. For some, $250k might be that point! Thus I think the answer is going to be different for everyone.

That does sound right for the first milestone. The second milestone may be when investment returns exceed annual income.
My first ah-ha milestone was actually a much lower threshold. It was during the late 90's Irrational Exuberance when a daily investment gain exceeded my regular paycheck. Wow!


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Old 07-03-2014, 09:21 PM   #45
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My own Net worth growth looked like this:

$250,000 - April, 2004 (36 years old)
$500,000 - October, 2006 (2.5 years later)
$750,000 - January, 2011 (4.25 years later) Net worth dove back to $389K in 2008.
$1,000,000 - August, 2012 (1.67 years later)
$1,250,000 - July, 2014 (0.9 years later)
$1,500,000 - July, 2015 (1 year later)

So it took me the first 36 years of my life or 14 years of my adult post-college life to get the first $250K. Lately have been increasing by that amount in a little over a year. Of course the performance of the stock market has a huge impact on all the above.
You're good, Sky, you already know your portfolio's worth next July. I'll believe you...I want our NW to keep trucking up. Now, more seriously, is this your as one-person's portfolio? If so, you've done great. We have similar trajectory of growth as yours, but with dual income (and two kiddos) and very similar age group.
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Old 07-03-2014, 09:44 PM   #46
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At 42, I have $352, 184 saved. I hope by 50 I will be a millionaire. It would be so cool! I wouldn't know what to do with myself.

Did any of the millionaires in this thread tell people besides immediate family when you reached that milestone?
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Old 07-03-2014, 10:06 PM   #47
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I think $250K is a significant milestone and it also represents a value where the portfolio is increasing at a rate that is higher than the savings amount you are putting in.

Here is the math: assuming that the person is under 50, you have $17,500 limit for pre-tax 401k/403b type savings. $250,000 x 8% = $20,000 --> which is greater than the $17,500 from paycheck savings.

I understand that my example does not include any company match or additional after tax savings.
There's no way to determine if a person's portfolio is increasing at a rate that exceeds their savings unless you know that individual rate. Thus, $250K might be "critical mass" for one person, but $1.2M might be it for someone else. IMO, it all depends on savings rate... the point at which average annual growth eclipses savings is "it", IMO!
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Old 07-03-2014, 11:55 PM   #48
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Did any of the millionaires in this thread tell people besides immediate family when you reached that milestone?

Another thread started recently discussing exactly that question. A good read, check it out.


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Old 07-04-2014, 11:11 AM   #49
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I have a friend that's been selected to appear on "Who Wants to Be a Millionaire" and was telling another friend about it and it occurred to me that Hey, I am one.

My perception of what it would be like to be a millionaire and the reality are much different. I see the double to 2 mil being my FI number and what I contribute makes little difference, compounding is doing the real work now.
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Old 07-04-2014, 12:01 PM   #50
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Another thread started recently discussing exactly that question. A good read, check it out.

I believe this is the thread that Turbo is talking about.

Who would you let know about your financial situation?
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Old 07-04-2014, 02:46 PM   #51
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It's due to Bedford's Law, A.K.A. "First-Digit Law".

To get from 100 to 200, you have to double (i.e. 100% gain).
To get from 200 to 300, you only have to "half again" (i.e. 50% gain).
To get from 300 to 400, takes 33% gain.
... etc...
To get from 900 to 1000, takes only 11% gain.
Then you start all over again, buidling up from 1000 to 2000.

So the good news for the OP is that it gets faster from here -- until you hit $1M.
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Old 07-05-2014, 12:39 AM   #52
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It's due to Bedford's Law, A.K.A. "First-Digit Law".

To get from 100 to 200, you have to double (i.e. 100% gain).
To get from 200 to 300, you only have to "half again" (i.e. 50% gain).
To get from 300 to 400, takes 33% gain.
... etc...
To get from 900 to 1000, takes only 11% gain.
Then you start all over again, buidling up from 1000 to 2000.

So the good news for the OP is that it gets faster from here -- until you hit $1M.
Great explanation.It does get easier.It's amazing how hard it is to get started to the first 100k.Then after that is accomplished it starts growing and building momentum into a snowball.
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Old 07-05-2014, 08:54 AM   #53
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It's due to Bedford's Law, A.K.A. "First-Digit Law".

To get from 100 to 200, you have to double (i.e. 100% gain).
To get from 200 to 300, you only have to "half again" (i.e. 50% gain).
To get from 300 to 400, takes 33% gain.
... etc...
To get from 900 to 1000, takes only 11% gain.
Then you start all over again, buidling up from 1000 to 2000.

So the good news for the OP is that it gets faster from here -- until you hit $1M.
A few days ago I changed the scale on one of my graphs, because my total was getting very close to the $1M mark. But, for the very reason you stated, I only changed the top of the range to $1.1M, rather than $2M. It makes my $995,381 look a bit more impressive. .

Another thing that was kinda cool though, was getting to the point that I changed the minor tick marks from $50K intervals to $100K intervals. Seems like not that long ago, I had $10K intervals.

Oh, as for milestones of days gone by, I remember once upon a time, getting excited when my portfolio went up by a whopping $500 in one day. That would have been the late 90's, and in those days, it really did seem like a big deal. My weekly takehome from my main job was under $400, unless I worked overtime. At my second job delivering pizzas, I could bring home $500 or more on a really good week...but that took its toll, both on my body and on my car. My mortgage (PITI) was about $792. And when I finally bought a new car in late 1999, its monthly payment was $347.66.

So, in doing those comparisons, a $500 daily jump in NW seemed like a really big deal. And it was, because I didn't have a whole lot saved up yet, so it would take a pretty big market jump to see that kind of rise.

Nowadays, a slight blip in the market can make my NW jump by several thousand bucks. I'll sometimes get into one of my jaded, it's-no-big-deal moments, but then I'll make myself snap out of it by calculating how many weeks of takehome pay, mortgage payments, or whatever that would equate to. And that makes me a lot more appreciative.
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Old 07-06-2014, 07:43 PM   #54
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Anecdotal, but
Jan 1996 31K
Jan 2004 270K
Jan 2007 560K
Jan 2010 770k
Jan 2012 975k
Jan 2014 1400K

YMMV and we started saving close to the max around 2010.

It stuns me when the daily portfolio gains exceed 5 figures, although the next day usually cannibalizes the gains.
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Old 07-06-2014, 09:01 PM   #55
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It took us about 15 years of saving to get to 300K. In the ten years since then, we have added 1.4 million to the 300K. Once your investments get to the point that they grow or shrink (anyone remember 08-09?) more than the amount of $ you earn in a year, then the investments seem like they take on a life of their own. The amount we save each year no longer has a huge impact on our balance.
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Old 07-06-2014, 09:20 PM   #56
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It took us about 15 years of saving to get to 300K. In the ten years since then, we have added 1.4 million to the 300K. Once your investments get to the point that they grow or shrink (anyone remember 08-09?) more than the amount of $ you earn in a year, then the investments seem like they take on a life of their own. The amount we save each year no longer has a huge impact on our balance.

Please help me quadruple to quintuple my savings in ten years. I'll do unspeakable things for your secret.





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Old 07-07-2014, 11:24 AM   #57
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For me it wasn't a specific number, it was losing the race with my money. Throughout the 90's I always wanted to contribute more new money than my already invested money earned. Me competitive, not at all.

I started saving 9% (incl 3% match) of my annual household income and increased it every year to stay ahead of investments. By 2003 I was saving just over 50% and lost the race for the first time. Our income had hit a plateau and I was not willing to spend even less to save more. We were pretty comfortable at that point. So I had to concede to the power of compounding interest.
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Old 07-07-2014, 11:32 AM   #58
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So I had to concede to the power of compounding interest.
That is a happy way to lose a race
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Old 07-07-2014, 11:48 AM   #59
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You're good, Sky, you already know your portfolio's worth next July. I'll believe you...I want our NW to keep trucking up. Now, more seriously, is this your as one-person's portfolio? If so, you've done great. We have similar trajectory of growth as yours, but with dual income (and two kiddos) and very similar age group.
Thanks for pointing out the error. Last two dates should have been 2013 and 2014! (Not letting me edit that for some reason?)

Yes, one person portfolio. Been divorced since 2000. One child who is starting college in about 5 weeks. Plan to FIRE in 4 years, maybe sooner as I am not sure I can take my job for that much longer.
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Old 07-07-2014, 12:41 PM   #60
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For me $500k is going to the first 'critical mass' because that's when it will generate more than what I'm trying to invest this year (and hopefully in the future too). The next 'critical mass' will be when it generates equivalent of what my expenses are. The final 'critical mass' will be when it matches what I make in a year but I hope to ER before that. On some days I just want to push the fast-forward button and be 10 years into the future...but then I'll be 10years older too. I guess you really can't have your cake and eat it too
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