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Re: What to do after you reach 1 million?
Old 02-22-2007, 08:38 PM   #41
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Re: What to do after you reach 1 million?

Building of wealth is HIGHLY psychological. Where you are at mentally will help drive where your finances go.

Right now you're saying that you are a bit afraid. This fear will hurt you considerably.

$1 million doesn't buy you a lot of freedom today, that much is true. However, what it does buy you is the piece of mind that you've done it.

AND, it did not take you 32 years. Look at how long you've been actively working since you decided to build wealth, and that's more likely accurate.

Anyway, the point I'm really trying to get to is this: If you're always fearful, then you are limiting your potential for success. Many many people have gone broke (several times) before finding their niche and becoming incredibly wealthy.

Others have done it the slow but sure way, like yourself. And others have done it somewhere in the middle.

Really what you have to ask yourself is: "Am I ready to educate myself for wealth building?"

If you are willing to educate yourself, then you have a lot of potential. Especially if you lose the fear and learn to start leveraging other peoples' money so you don't put yourself at risk.

If you really want to accelerate your wealth, learn about corporate structures first. Then decide what kind of business you want -- real estate provides a lot of tax advantaged ways to build wealth. When you combine business with real estate you get:

- Wealth building while your personal assets are protected (i.e. very unlikely to lose them).

Also, make sure you are insured well to protect yourself.

If you're interested then I just finished reading a book a few days ago I think would be good for you:

"Loopholes of the Rich - How the Rich Legally Make More Money and Pay Less IN Taxes"

Quote:
Originally Posted by Harm
I've never run a business before or bought "real estate", other than my house. So I'm a bit afraid. Should I be? I feel $1 million doesn't buy me much freedom. For some reason, I'm more afraid of losing it because it took me 32 years to get it. The more I get up, the more paranoid I get.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 08:39 PM   #42
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Leonidas
*poof*[/i] and I knew I was not anywhere near as smart as I thought I was. The next day I talked with my broker and she offhandedly said that she had been talking to some of her clients "who have real money" and I knew a million bucks wasn't as big as I thought.
Aha - there's the answer!

What to do after you reach 1 million? Wait for the 'pucker test' and get back to us with your grade.

Then you shall become truly worthy - wear the FIRE merit badge - maybe get a certificate from sgeeee if he's in the mood - give advice on talk shows - yadda,yadda.

heh heh heh
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Re: What to do after you reach 1 million?
Old 02-22-2007, 08:40 PM   #43
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Leonidas
I'm not ready to jump and call Harm a fraud. Thanks to luck, the bull market of all times, and some good advice I had that kind of net worth before I was his age. I've got 16 years on him now and am worth a lot more, but there are plenty of people here with less $ than me that know a heck of a lot more about some of this stuff.

There was a time that I thought I was the smartest SOB around, right up until October 1987. On Black Monday I watched about a million of my dollars go *poof* and I knew I was not anywhere near as smart as I thought I was. The next day I talked with my broker and she offhandedly said that she had been talking to some of her clients "who have real money" and I knew a million bucks wasn't as big as I thought.

Modified to add:

I don't have a problem believing it possible at all. In 1987 I was 28 years old and I lost your net worth in a day.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 08:42 PM   #44
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Re: What to do after you reach 1 million?

I think the OP's story is missing a few details on how he generated the first million.
If he can generate & save money so fast, he should be giving us advice, not the other way around.

Never the less, here are my suggestions for the 2nd million.

1. You’re a "rich" guy. You can afford to take more risk. Look into getting rid of all insurance except for liability insurance. You might want to spring for an umbrella policy though.

2. Look for non or low performing assets. Look around the house, sell stuff that you don't need or use. Add that money to your investments.

3. After the first Million, your income adds less and less into your net worth. You need all your investments to really perform. Don't be the day trader guy who touts 25% returns in a 25K account. You’re playing with big bucks now. Go for 10% in a 1M, and be happy when you get it.

4. As others mentioned, study the tax code. There is "gold" in those words.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 08:52 PM   #45
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Re: What to do after you reach 1 million?

Peaceful_warrior,

I read a book Wealth Cycle investing that talks about the same thing, LLC's and such. But have you ever done this yourself? It's the doing and how that is always hard.

You see, the book says you need a team to be rich. But getting to my first million, I didn't have a team! I do things myself, do my own taxes, don't have a finanacial advistor, a bookkeeper, a housekeeper. I mean, the book is saying I need all these to be rich. I just get lost because I didn't get my first million this way.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 09:09 PM   #46
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Re: What to do after you reach 1 million?

Quote:
What now?
The name of this site spells it out for you. Retire Early.

Fergawdsakes man. You're in an enviable position, having that much money at your age. But that is NO guarantee that you couldn't be hit by a truck tomorrow. Unless you cannot WAIT to get to work because you love your job so much, get out and carpe diem.

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Re: What to do after you reach 1 million?
Old 02-22-2007, 09:11 PM   #47
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Re: What to do after you reach 1 million?

I should be giving advice?

My advice to get to 1 million. Save alot and save early. Don't go out when you are young and say, oh, I'll wait and save next year, their is so much to buy, so much I've ever wanted. It doesn't work that way. Second, I would tell you to watch who you marry. Marry someone who sees the same mountain as you and even better yet, will work and match your salary.

After you have kids, forget about saving. You will have to live off what you have saved and HOPEFULLY, it will get you to 1 million. It did for me. With $700,000 in investable assets, my portfolio can go up OR DOWN $8000/day. With an average about $2500 up and down on average. That is powerful stuff.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 09:53 PM   #48
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Re: What to do after you reach 1 million?

I agree with the doubters here. I read everything written by Harm, and I think he full of it.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 09:55 PM   #49
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Re: What to do after you reach 1 million?

Dont doubt him. He's a lawyer AND a fighter pilot, fer chrissakes.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 09:57 PM   #50
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Re: What to do after you reach 1 million?

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Re: What to do after you reach 1 million?
Old 02-22-2007, 10:50 PM   #51
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Re: What to do after you reach 1 million?

LOL
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Re: What to do after you reach 1 million?
Old 02-22-2007, 10:57 PM   #52
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Re: What to do after you reach 1 million?

No matter whether Harm's for real or not, this has been an interesting thread.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:00 PM   #53
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by dmpi
I think the OP's story is missing a few details on how he generated the first million.
If he can generate & save money so fast, he should be giving us advice, not the other way around.

Never the less, here are my suggestions for the 2nd million.

1. You’re a "rich" guy. You can afford to take more risk. Look into getting rid of all insurance except for liability insurance. You might want to spring for an umbrella policy though.

2. Look for non or low performing assets. Look around the house, sell stuff that you don't need or use. Add that money to your investments.

3. After the first Million, your income adds less and less into your net worth. You need all your investments to really perform. Don't be the day trader guy who touts 25% returns in a 25K account. You’re playing with big bucks now. Go for 10% in a 1M, and be happy when you get it.

4. As others mentioned, study the tax code. There is "gold" in those words.
Advice #3 is really good. Think about your portfolio as a whole. Advice #4, that's gotta be so difficult. I would probably have to hire a tax advisor or something.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:06 PM   #54
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Re: What to do after you reach 1 million?

The claim of reaching $1 mil seems plausible if the following conditions are true:
1. Start work at age 24 (after graduate study) in 1999.
2. Dual income of $200K in 1999 and $300K now (5% increase per year).
3. Yearly expense in $45K in 1999 and $60K now (5% increase per year).
4. Yearly contribution of $30,000 to 401K. (maxing out 401K)
5. Invest all income after tax and expenses.
6. An annualized return of 10%


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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:10 PM   #55
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Re: What to do after you reach 1 million?

Harms:

I have no reason at all to doubt your claims or net worth. I also reside in the NW and have seen how house values have climbed. At a $150K annual salary, you and your spouse make almost 3 times the amount I did as a single person prior to my retirement 3 years ago. Plus, you also didn't get caught up in the 2000 tech bust. I can see how a high salary such as yours, combined with frugality and continued (and reasonable) investments in the equity market can easily add up to a million or more within a decade.

I'd say just keep on doing what you're doing. You must be doing something right. Congratulations and Good Luck!

Toejam

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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:24 PM   #56
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Harm
Some of you people think it's not possible to have 1 miillion net worth by 32. I don't understand.

Let's see, I had no debt (parent's paid for my college)

I was a TA in graduate school... earned some money there.
Married someone who earned my same salary.
Sold stock in 1999 to buy a house.
Rode the 2000-2002 market because lots of money went to the house downpayment.
All the while, extra money went to buy stocks at depressed levels.
Maxed out 401K, Roth (when we could), IRA.
Added to taxable accoutns stocks/bonds.
Rode 5 good years of market
Live in the northwest and rode housing boom last 2-3 years.

Not possible?

Interesting choice of words, Harm. "Not possible?" No, it certainly is possible.

Do you seem likely, however, to have done it based on your posting style and rather flip approach to expenses and understanding what accumulating wealth is all about?

I'm a little sorry to say it, but for me, no, I don't buy it, but I'll leave it at that since it is just a hunch and so you can not worry that I will bug you on it further.

8)

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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:35 PM   #57
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Re: What to do after you reach 1 million?

I'm flippent to expenses? I watch them. I told you my expenses are about $60000/year. That isn't so bad. I know people in the $100,000/year in expenses. I have an old cell phone and drive an 11 year old SUV.

I don't think you understand me. Is it more expensive for Bill Gates to pick up a $20 bill off the ground or leave it. The answer is picking it up. You used to probably think a penny was alot. As you grew up, a nickel, then dime. You're views changed right?

So my views started changing as I grew into more money. That said, I didn't get to where I was my spending like mad.... For instance, 3 years ago, I would have gladly saved $300 to build my own computer than buy one. This week I bought a new computer, which cost me $300 more than building it because I thought my time was better served doing something else, like reading a business book and looking for a good stock to buy. I'm starting to feel like my time is more precious...
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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:39 PM   #58
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Re: What to do after you reach 1 million?

If the salary is $150,000 and the expenses are $60,000 now, the annualized return from 1999 to now would have to be about 35% to reach $700K. That's a great return.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:49 PM   #59
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Re: What to do after you reach 1 million?

Wow, tough crowd here today.

Is it possible to get to $700k in investment equity in 10 years? Yes, and without major realestate holdings or owning your own business. The key is two good salaries, low expenses, saving a bunch and a decent market return. Some of folks on this board have done better in as much time.

Some of us started deep in the hole with debt and other expenses and managed to dig our way out to some pretty nice nest eggs. I choose to give the guy the benefit of the doubt. If his is full of it then he will fit right in here.
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Re: What to do after you reach 1 million?
Old 02-22-2007, 11:54 PM   #60
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Re: What to do after you reach 1 million?

Harm, your basic question is whether you're on track to amass $2.5M by age 50, right?

No problemo. Even if you stopped contributing, you'd only need an average return of 7.5% to grow your $700K to $2.5M in 18 years.

Since you'll probably continue to save much of your income, you'll be retired well before 50 even with a very conservative allocation.
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