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Re: What to do after you reach 1 million?
Old 02-23-2007, 12:06 AM   #61
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Leonidas


I don't have a problem believing it possible at all. In 1987 I was 28 years old and I lost nearly your net worth in a day.
Now, that would be an interesting story.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 12:15 AM   #62
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Re: What to do after you reach 1 million?

Tough for sure. Drip and Spanky should really stop.

Wab, thanks.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 12:19 AM   #63
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Re: What to do after you reach 1 million?

The thing is. The people who have done it understand that is can be done. And they have valuable knowledge. I've learned a thing or two.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 12:21 AM   #64
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Re: What to do after you reach 1 million?

Harm, if you got to $1M this way then you can get to $2M in pretty much the same way. Don't mess with it.

Consider this cautionary tale that my FIL used to share with me every couple of months during my first two years of ER:

In the early days of radio a new announcer, fresh on the job, was assigned to broadcast the time of day live at the top of the hour. The eager but inexperienced employee was required to be standing by in the studio at least 10 minutes before he went on the air. When all was in readiness he kicked back his chair, put his feet on the desk, and read the newspaper.
While the announcer was "standing by", an elderly janitor slowly wheeled his water bucket in the door and slouched toward the far corner of the large room with his mop in his wrinkled hands. The announcer alertly looked at the clock, brought down his feet, leaned forward, keyed the microphone, and smoothly informed his audience "This is CBS. The time is now ten o'clock." He then shut off the microphone, kicked back again, and resumed reading his newspaper.
The janitor watched this performance in silence, contemplated his mop, and then asked "Is that your job?"
The announcer looked over at him, smiled, and said "Yep."
The janitor replied "Don't f*** up."

If you only want to enjoy life then it's probably not worth sweating the $300 not saved on a PC. But if you want to get to $2M, not just enjoy life, then continue the habits that got you to your first million.

BTW spouse and I still pick up pennies on our evening walks. Today we found fifteen cents... I thought I was being lured into a trap.

And you can beat that mortgage rate with PenFed CDs, let alone investing in the stock market for the next 15 years. If you could swap that 15-year mortgage for a 30-year loan at the same rate then you'd be in hog heaven. But there's nothing wrong with keeping the current loan and putting more savings into the market.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 01:19 AM   #65
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Peaceful_Warrior
Building of wealth is HIGHLY psychological.
Very true.

And I can relate to Harm being paranoid, the more we accumulate the more paranoid we get. We never had anything to lose before, but now there is a light at the end of the tunnel and it's very tempting. It would really, really suck to have it go *poof* and have to work 15 years pass expected FIRE date.

Quote:
Originally Posted by Harm
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.
If anything would make me call this BS it's this. Your portfoilo swings $8k in a day? What is it invested in?
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Re: What to do after you reach 1 million?
Old 02-23-2007, 01:28 AM   #66
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by neeps

If anything would make me call this BS it's this. Your portfoilo swings $8k in a day? What is it invested in?
1.2% daily swings are not all that uncommon in an all-stock portfolio. I have seen
plenty of 2% swings. In early 2004 I had a 17% drop in 5 weeks. You just have to
have confidence in your investment style.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 02:04 AM   #67
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by CyclingInvestor
1.2% daily swings are not all that uncommon in an all-stock portfolio. I have seen
plenty of 2% swings. In early 2004 I had a 17% drop in 5 weeks. You just have to
have confidence in your investment style.
Ahh...yes, much too early/late for my feeble brain. I did the math and saw 10% shifts, 1-2%, I believe.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 04:26 AM   #68
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Harm
Tough for sure. Drip and Spanky should really stop.

Wab, thanks.

Uh, what part of "...I'll leave it at that...." did not get through?

The stage is yours, monsieur!

[bows out]

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Re: What to do after you reach 1 million?
Old 02-23-2007, 05:40 AM   #69
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Re: What to do after you reach 1 million?

Go to the record store and buy the Barenaked Ladies album with the song "If I Had a Million Dollars". Listen to it and do that. Don't forget the monkey.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 05:49 AM   #70
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Re: What to do after you reach 1 million?

Harm.. Hi! I'm at the threshold, too, in that right now our net worth is right around where it needs to be. And we have near-zero earned income now.

So basically, our future = the future of our investments. Scary.. but also looking back over the long run not as scary as it might seem at first glance.

I have no idea why so many people seem to think you're pulling our chain.
Quote:
I think the OP's story is missing a few details on how he generated the first million.
The money just grows.. that's the beauty of it.
Just looking at my Roth account.. I rolled it over from a SAR-SEP in 1998. The 1998 value was $63k. I made $2k contributions 1998-2002 and $3k contributions in 2003 and 2004. Rolled over $15k in 2005. So that's a total of $94k in-- almost 1/4 of which just last year.
The current value is $233k.

Pretty easy to multiple the end result x4 and work back out how it could be done over eight years even starting with way less but given 10x or 20x the intervening contribution values...

I never had a high income and couldn't save nearly as much as the Harm family from earnings. The key is getting the pot to start out with, though. And as Nords said, if it ain't broke don't fix it. Just keep chugging along.

As for the change in perception.. I don't have it since I was neither A.) so frugal that I would build a computer (or a chair, or knit a sweater) from scratch in order to save $$.. nor B.) the kind of person who could easily find a way to spend $100k/year.

When I really wanted a 'luxury' I just went out and I bought it without qualms.
It's just that there are very few luxuries that I really want.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 06:56 AM   #71
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Nords
Harm, if you got to $1M this way then you can get to $2M in pretty much the same way. Don't mess with it.
Real or not, sounds like the OP is looking for validation to get more aggressive and risk tolerant with his holdings, as if crossing the $1mm threshold changes the basics of investment. Maybe a little selective heeding of the advice.

I'm with Nords. He's all but FI if he stays patient, disciplined, diversified. Almost nothing can change that other than adrenalin toxicity, and it sounds like that has already set in a little.

Harm, if you absolutely must get greedy gutsy with your hard-saved nest egg, at least carve out a portion of it, say $200k, and consider that to be play money. Put it all in the next Great American Company or Hedgefund Du Jour which only you and a few close associates know about, and best of luck to you. At least you'll have the other half million left over.

And if you do happen to earn tens of millions, you'll wake up and realize that $2-3mm gets you about 99.99% of all the happiness you're ever gonna see anyway.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 07:51 AM   #72
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by REWahoo!
Better dance with who brung you.
Excellent comment, very well said
The next million will come faster, if for no other reason, you have 1 million already earning you money (unless it is in a checking account).
It looks like you are doing something right, why change?
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Re: What to do after you reach 1 million?
Old 02-23-2007, 08:17 AM   #73
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Gumby
Go to the record store and buy the Barenaked Ladies album with the song "If I Had a Million Dollars". Listen to it and do that. Don't forget the monkey.
Awesome song!

Don't think that you now need to take large risks to advance your portfolio. What you have been doing has been working so just keep doing it.

As for Harm being full of it (which I don't think he is), even if he is, it is a great question and an interesting thread.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 08:21 AM   #74
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Spanky
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%


The OP mentioned that he had a Roth IRA for a number of years. So I think that caps his income to 160K at least for the first couple of years.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 08:25 AM   #75
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Re: What to do after you reach 1 million?

Harm,

Congratulations to you on your successes up to this point. You are in a wonderful position at the young age of 32. As you know, over the past 80 years, the S&P 500 has returned 7% per year after inflation. With a 6% real return, your money in today's dollars doubles every 12 years. So in all likelihood, you are looking at something like $4 million in today's dollars when you are 56, even if you never contribute another dime to your nest egg. At a 4% SWR, this would provide 160K of income in today's dollars. So long as you are not withdrawing from this nest egg (i.e. you keep working), you don't need to worry about pulling money out of your portfolio in a down market, as we RE's do.

You mentioned you were a TA in graduate school. From this I infer you probably have a graduate degree, maybe even a PhD. With an income of 150K at age 32 , you obviously have talent. You are just entering your prime earning years. My guess is that your career is the source of the "great wealth" you mention. I would focus on this and put your investments on "automatic pilot" in a Vanguard equity index fund.

As your income grows, you might want to consider buying the most expensive home you can afford in a "prestige" location. Homes in nice towns with good schools have been very good investments over the long term. People don't lose money over the long term buying homes in places like Greenwich, CT, Scarsdale, NY, or Lake Forest, IL. These are "safe" leveraged investments that will provide you and your family with a nice lifestyle while you are working. They will hold, or increase, their value relative to other real estate.

In summary, I am suggesting not taking big risks with your accumulated nest egg as it will provide a nice fallback position for you 20 years from now. Take the "risk" in your career going for the brass ring. Good luck.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 10:02 AM   #76
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by wab
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.
Only problem with that is after inflation that 2.5M will look a lot like 1M does today
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Re: What to do after you reach 1 million?
Old 02-23-2007, 10:37 AM   #77
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Harm
...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...
As you get closer to FI, your time becomes more valuable. But being frugal (but not cheap) is still important, no matter how much money you have.

Frugal means not being wasteful. Cheap means denying yourself something you want even though it is well within your means and will not hurt you financially.

I'm also in my 30s and I'm almost in your same financial situtation, but if I see a clean penny on the ground, I still pick it up. I spent thousands of dollars on vacations last year, but my net worth still went up every month. I enjoyed every second of time on vacation with my family more than I would have enjoyed earning more money. So I view my money as a tool that gives me more time to enjoy.

I've kept the same philosophy about money when I hit $100K, $200K, $300K, etc. As long as you respect money and don't worship it, you'll be fine no matter if you're a millionaire or billionaire.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 10:54 AM   #78
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by Rich_in_Tampa

And if you do happen to earn tens of millions, you'll wake up and realize that $2-3mm gets you about 99.99% of all the happiness you're ever gonna see anyway.
Good prescription, Doc.

As a matter of fact, (IMHO) if the heavy lifting is in the background, children raised, etc. etc., and only you & a spouse left, fortunantly for us, you can
drop the above numbers downward, and still be happy

Disclaimer: Helps to be a tournament golf playing & fly-fishing "Bum".

"Left arm straight, right elbow tucked at impact, grip it and rip it."

Don't need no stinkin $10,000,000.00
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Re: What to do after you reach 1 million?
Old 02-23-2007, 11:06 AM   #79
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Re: What to do after you reach 1 million?

He should to be able to hit the $2 mil mark in about two years based his record of 35% annualized return from 1999 to now.
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Re: What to do after you reach 1 million?
Old 02-23-2007, 11:22 AM   #80
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Re: What to do after you reach 1 million?

Quote:
Originally Posted by retire@40

Frugal means not being wasteful. Cheap means denying yourself something you want even though it is well within your means and will not hurt you financially.

An excellent distinction. Being cheap seems pointless, since you are only given one life on this earth, while being frugal makes perfect sense - you end up with more money so you don't have to be cheap

I've never understood the 'spending money is inherently bad' notion that cheap people have. What a way to live.

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