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Old 04-07-2008, 08:53 PM   #21
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I just started investing a few months ago and have been able to max out my 2007 Roth IRA, put 10% of my net income in mutual funds, and put 6% in my 401k since my company will match 50% up to 6% I put in. I'm saving up some money to invest in Real Estate down the road as well. My goal is to be worth $10 million by the time I'm 60. Do you think my current plan will allow this? Any advice about a great personal finance plan is much appreciated. Thank you.
RLCMA,

First and foremost, living below your means and investing the difference is the foundation of building wealth. You are doing well on this. Never forget this; without it, nothing else can be done.

So you have a good foundation. That said, Milton's questions are very relevant. Your post didn't include enough information to answer your questions, and you should RUN away from anyone who claims to answer the questions based on the information you gave.

For a basic primer on personal finance, I recommend The Automatic Millionaire by Bach, and The Four Pillars Of Investing by Bernstein.

You have a good start. Keep going!
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Old 04-07-2008, 09:19 PM   #22
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Well I'm 29 years old now. I currently invest about $4,320/year in mutual funds, max out my IRA every year, and put $3,600/year in my 401k. Once my salary continues going up I'll be able to do more but I'm still a young professional so I don't make 6 figures yet.
Correct me if I'm wrong, but you're investing $14,720/year ($4,320 in mutual funds, $5,000 IRA, $3,600 in 401(k) with $1,800 employer match).

At this rate, assuming you are starting at $0 (since you haven't mentioned your current net worth), you'd have just under $2 million by age 60 (assuming a 8% annual rate of return).

Note, however, that assuming inflation averages 3%, and you're currently 29, that $2 million will be worth $800,000 in today's dollars. At a 4% SWR, it would produce $32,000/year in income (in today's dollars). That's a very solid amount. Combined with even a modest Social Security entitlement, it should easily allow you to retire in comfort.

In order to reach $10 million instead of $2 million, you'd need to be investing $6,250/month instead of your current $1,226.

On the other hand, that $10 million would produce a steady income of $160,000/year in today's dollars, probably way more than you'll need.
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Old 04-07-2008, 10:01 PM   #23
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How do you know a $500k condo will be worth 10 million in 30 years? Real estate values are dropping, if you didn't know.
Not dropping in San Francisco, if you didn't know! But we're looking at returns over time right? Thirty years...11%, do the math. But if things change..adapt. There are people here getting 15%+ long term see the Real real estate appreciation rate thread.
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Old 04-08-2008, 08:42 AM   #24
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Not dropping in San Francisco, if you didn't know! But we're looking at returns over time right? Thirty years...11%, do the math. But if things change..adapt. There are people here getting 15%+ long term see the Real real estate appreciation rate thread.
The housing crunch just hasn't reached there yet, but it will. I seriously doubt that real estate in SF will continue the rise at that rate for 30 years. And if an earthquake hits SF, and it likely will, property values would drop like a stone, insurance or not. See: New Orleans. Buying a $500k condo in SF to make 10 million in 30 years would be an extremely risky investment. No sure thing.
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Old 04-08-2008, 09:26 AM   #25
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Thanks for all your feedback. Bear in mind, I would not be looking for these investments to make me wealthy. Rather, I would rely on Real Estate Investments to make me most of my money. I just like investing in my 401k, IRA, and Mutual Funds so I don't put all my eggs in one basket. At the same time, I'm not sure I could do without "things". I like having a nice car and a nice place to live so I'm not sure I'll change that about myself but who knows.
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Old 04-08-2008, 09:42 AM   #26
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The housing crunch just hasn't reached there yet, but it will. I seriously doubt that real estate in SF will continue the rise at that rate for 30 years. And if an earthquake hits SF, and it likely will, property values would drop like a stone, insurance or not. See: New Orleans. Buying a $500k condo in SF to make 10 million in 30 years would be an extremely risky investment. No sure thing.
Well, if it isn't worth $10M in 30 years, you'll still have the condo and can get a planter for the deck to plant those Dutch tulip bulbs in.
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Old 04-08-2008, 10:01 AM   #27
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The housing crunch just hasn't reached there yet, but it will. I seriously doubt that real estate in SF will continue the rise at that rate for 30 years. And if an earthquake hits SF, and it likely will, property values would drop like a stone, insurance or not. See: New Orleans. Buying a $500k condo in SF to make 10 million in 30 years would be an extremely risky investment. No sure thing.
So are you guys huddled in your bunker in Iowa predicting the demise of SF real estate? Even if the historical rate drops 20% (unlikely) your're still looking at $6.3M or more likely 10% if there is a drop which will get you $8.5M. New Orleans compared to San Francisco? What was their value BEFORE Katrina? Hey, be a pessimist and work with the 20% drop, but buy TWO!
Here's a development that's planning to be around after the next big one. Sorry though I believe they're all sold and $500,000 wouldn't get you in the door.
One Rincon Hill - Wikipedia, the free encyclopedia
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Old 04-08-2008, 10:03 AM   #28
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I'm not sure I could do without "things". I like having a nice car and a nice place to live so I'm not sure I'll change that about myself but who knows.
With such focus and determination, success is inevitable.

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Bear in mind, I would not be looking for these investments to make me wealthy. Rather, I would rely on Real Estate Investments to make me most of my money.
Get thee to a Robert Kiyosaki seminar!
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Old 04-08-2008, 10:12 AM   #29
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I don't think 10 million is doable unless you hit the lottery.
Funny you should say that. Here's a quote from one of our forum real estate experts and naysayer.

"A couple months ago spouse and I spent 26 consecutive days rehabbing our rental. We juggled three contractors and did our own HGTV "Groundbreakers" yardwork so it was great exercise but not much fun. For the last five years it's been rented to my parents-in-law, who we thought would be living in it for the rest of their lives-- our long-term care gift. I expected to depreciate it for two more decades and we may still do that. However now that the PILs have returned to the Mainland the property has essentially been dropped back into our laps. It was never part of our ER planning, and it's slowly dawned on me that we've won the real estate lottery."

And he was only getting 9%!! So if you PLAN, by doing the research and the math, it's still almost as exciting. "slowly dawned" does that provoke a great mental image? Duh? Fire bad.
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Old 04-08-2008, 10:21 AM   #30
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With such focus and determination, success is inevitable.

Get thee to a Robert Kiyosaki seminar!
Thank you for registering to attend the free Learn to be Rich™ Training at the Crowne Plaza Hotel, 32083 Alvarado-Niles Road in Union City on Wednesday April 16, 2008 6:00PM. Be sure to mark your calendar because this 1½ hour training is one you won't want to miss! At your fast-paced, action-oriented Learn to be Rich™ Training, you'll discover:

• How to raise your financial I.Q.
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Be prepared to learn a step-by-step system that will show you how to put the dynamic principles of the blockbuster bestseller Rich Dad Poor Dad into vibrant action in your life.


Come Ready to Learn and Depart Ready to Earn,

The Rich Dad® Education Training Team

I gotta go just to see why you guys hate him so! Submit your questions now.
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Old 04-08-2008, 10:28 AM   #31
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http://www.beaconeconomics.com/peopl...ron1230071.pdf
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Old 04-08-2008, 11:01 AM   #32
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Well, if it isn't worth $10M in 30 years, you'll still have the condo and can get a planter for the deck to plant those Dutch tulip bulbs in.
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Old 04-08-2008, 11:22 AM   #33
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Not dropping in San Francisco, if you didn't know! But we're looking at returns over time right? Thirty years...11%, do the math.
Whoa whoa whoa, hang on a second here.

Are you seriously saying that you not only believe that San Francisco is immune from the current subprime problems, but that housing prices will continue to appreciate at 11% per year for the next 3 decades

Do you honestly not see how ridiculous that sounds? That's saying that a dwelling worth $500,000 today will be worth $11,446,148 in 30 years. You said "do the math," well there you go. There's the math.

Considering that such a dwelling is probably not very flashy and borders on "bargain basement" today, do you really think that same "no frills" dwelling will be worth $11M in 30 years?

Say a family who earns an upper-middle class income of $150,000 can barely afford that $500,000 dwelling today. That is, they'd be stretching to afford a dwelling worth 3.3 times their annual household income.

In 30 years, assuming 3% inflation, a similarly-well-off family will earn $364,089. If they were to buy a similar dwelling, now worth $11,000,000 in your example, now they'd be buying a dwelling costing 30 times their income!

Do you seriously think that's realistic? Honestly. I'm sincerely curious how you reconcile this crazy math in your head. Do you envision that by 2038, families in San Francisco will be earning $3 million/year (to keep the same 3.3 earning factor that presently exists)? Or do you think people will be signing 300 year mortgages by then? How do you manipulate the math to allow yourself to believe in such a crazily out-of-whack future? Will upper-middle class families be forced to live in crowded community housing developments, being unable to afford even an $11,000,000 "starter home?" Or will San Francisco incomes wildly outpace the rest of the country, such that professionals in San Francisco will earn 10x as much as a similar job anywhere else in the country?
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Old 04-08-2008, 11:55 AM   #34
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I gotta go just to see why you guys hate him so!
These links may help:

ABC News: Who Wants to Be an Entrepreneur?

John T. Reed's analysis of Robert T. Kiyosaki's book Rich Dad, Poor Dad
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Old 04-08-2008, 03:32 PM   #35
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I recommend the following:

1. maxing out 401 k
2. maxing out IRA
3. build real estate by first buying house, and upgrade gradually to more expensive houses (make sure its a good deal) using equity from previous houses. Then downsize when you retire and convert the proceeds to a coservative retirement investment
4. Be an owner or part owner of a business, and have your business rent its work place in a bldg you own. Then when you retire, sell the business and real estate, and convert the proceeds to a retirement investment.
5. Take profits from your business and invest in more businesses/ real estate. Use tax losses from real estate to offset business gains to minimize taxes.
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Old 04-08-2008, 03:37 PM   #36
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How about 1 million?
? are you negotiating with us?
what the other guy said ... learn excel and do the math
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Old 04-08-2008, 04:15 PM   #37
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S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.
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Old 04-08-2008, 05:22 PM   #38
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S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.
Like the man says, 4% Appreciation My *ss.
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Old 04-08-2008, 07:49 PM   #39
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S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.
An yet all the paired sales that I've provided show 12-16% increases yearly from 2004-2005 to 12/2007. Of course, Shiller doesn't report these sales because there is a market for their distortion of the market for people like you who are looking for information that fits your perception of reality because you're so afraid of doing what it takes to earn these results and you want to make sure other people are not moving ahead of you. Sorry but I had to call you on that!
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Old 04-08-2008, 08:09 PM   #40
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Whoa whoa whoa, hang on a second here.

Are you seriously saying that you not only believe that San Francisco is immune from the current subprime problems, but that housing prices will continue to appreciate at 11% per year for the next 3 decades

Hell Yeah!!

Do you honestly not see how ridiculous that sounds? That's saying that a dwelling worth $500,000 today will be worth $11,446,148 in 30 years. You said "do the math," well there you go. There's the math.

Do you honestly not see how ridiculous you sound? When I was about your age a $40,000 house was a upper middle class house. I know plenty of people that bought $25,000 houses back then that are worth over $1,000,000 now.

Considering that such a dwelling is probably not very flashy and borders on "bargain basement" today, do you really think that same "no frills" dwelling will be worth $11M in 30 years?

Oh hell yeah.

Say a family who earns an upper-middle class income of $150,000 can barely afford that $500,000 dwelling today. That is, they'd be stretching to afford a dwelling worth 3.3 times their annual household income.

Dude, I got teachers and garbagemen in my NBHD in $600,000 houses. You wanna go door to door and explain to them how they can't be in a house 10+ times more than their income?

In 30 years, assuming 3% inflation, a similarly-well-off family will earn $364,089. If they were to buy a similar dwelling, now worth $11,000,000 in your example, now they'd be buying a dwelling costing 30 times their income!

People were able to do it the last 30-50 years. The "bubble" may be new to you since you fell out of your crib but this is about my 4th and I'm not that much older than you!

Do you seriously think that's realistic? Honestly. I'm sincerely curious how you reconcile this crazy math in your head. Do you envision that by 2038, families in San Francisco will be earning $3 million/year (to keep the same 3.3 earning factor that presently exists)? Or do you think people will be signing 300 year mortgages by then? How do you manipulate the math to allow yourself to believe in such a crazily out-of-whack future? Will upper-middle class families be forced to live in crowded community housing developments, being unable to afford even an $11,000,000 "starter home?" Or will San Francisco incomes wildly outpace the rest of the country, such that professionals in San Francisco will earn 10x as much as a similar job anywhere else in the country?

There's multi million dollar homes here that are not occupied full time. One of the largest sales was for $65,000,000 and the people sold because it was only one of their several homes and they could afford but could not justify keeping the home that was only getting a few weeks use.
The information is out there and in this age with the internet there is no excuse for ignorance. You do not have to invest in real estate. You do not have to believe me. You should not ridicule something just because you can't "wrap your head around" the incredible wealth that is out there. Prove me wrong!!
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