Making Millions

[geeman]

Being young (22 years old in my case) has its advantages, (1) You can take fiscal risks without drastic consequences (losing home, no $ for family…) (2) You have years and years of wealth saving ahead of you. But, looking ahead I don’t see any way of accumulating a decent amount of money (over a million or its equivalent in years to come) without owning a business or being a high level executive. In my case I make 45K and when all is said and done, I am pulling in maybe 33k a year. When I see that 33k figure I just want to quit my current job and start a business. I almost want to get fired to give me the motivation to start some type of successful business. So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

 

[Mr._johngalt]

Being young (22 years old in my case) has its advantages, (1) You can take fiscal risks without drastic consequences (losing home, no $ for family…) (2) You have years and years of wealth saving ahead of you.  But, looking ahead I don’t see any way of accumulating a decent amount of money (over a million or its equivalent in years to come) without owning a business or being a high level executive.  In my case I make 45K and when all is said and done, I am pulling in maybe 33k a year.  When I see that 33k figure I just want to quit my current job and start a business.  I almost want to get fired to give me the motivation to start some type of successful business.  So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

Well, I worked more like 5 to 9 for my "minimal salary" which was mostly in your range (although quite a few years back). However, a huge chunk of that time was workin' for myself (PT work, side jobs, small businesses,
real estate). I think you can do it under your conditions if you LWBYM
for a long period of time. I never made a million (actually I did but I spent it) . OTOH, I was able to ER anyway. Others here will be more specific.
I mostly stick to sarcasm and invective

JG

 

[Patrick]

  So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

You mean legally?   

 

[retire@40]

I almost want to get fired to give me the motivation to start some type of successful business...So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

First, if you have to get fired to get motivated to start your own business, you will probably fail anyway, so don't bother trying to get fired.  Don't keep depending on someone else to determine your future.  Be a man and start your own business on your own motivation.  Then quit that low-paying job and don't look back.

http://www.jgeoff.com/godfather/gf1/actman.wav

Second, you can amass a large portfolio even as an employee, but you may have to work until you are 65 under the whip of your master boss.  Not an option for most people here.

 

[geeman]

retire@40: I like your thinking...I guess I'm just scared at this point. First of all I don't know what kind of business to start? I currently do computer work on the side but there are so many other companies in the area that do they same thing...Real estate interests me, but everyone tells me it's too late to get into the REIT game...?

 

[Andre1969]

I'd say the best thing to do is try to start saving some money every month. Even if it's just a little bit, it will grow over time. If your company has a 401k plan, and offers a match, at least put in enough money to get the maximum match from them. That's basically free money.

If you're only 22 and already making $45,000 per year, I'd say you're off to a damn fine start. I only broke the $45k barrier back in 2004, at the ripe old age of 34! Just remember that the more you can sock away at a young age, the more time will be on your side, through the magic of compounding.

I wish I had started younger, and jumped into a little more whole-heartedly. I didn't put anything into a mutual fund until I was 21, and didn't start contributing to my company's 401k until I was 27. I caught up pretty quickly though, and was investing pretty heavlly by the time I was 29. I'm doing pretty well right now, I think. I could always do better, but I could always be worse off, too! I feel comfortable though, and that's probably the most important thing. Still, if I'd started a little younger, I'd be a little more comfortable right now!

 

[retire@40]

...I guess I'm just scared at this point.  First of all I don't know what kind of business to start?  I currently do computer work on the side but there are so many  other companies in the area that do they same thing...Real estate interests me, but everyone tells me it's too late to get into the REIT game...?

So what that there are so many other companies in the area doing the same thing?  Is that what a doctor says when he is about to rent a room in a large medical building with hundreds of other doctors?  Provide better hours, give better service, do house calls, care more about your customers' needs, do things that make you unique.

It's never too late to get into anything.  Just do it well and get up when you fall down.

 

[Mr._johngalt]

retire@40:  I like your thinking...I guess I'm just scared at this point.  First of all I don't know what kind of business to start?  I currently do computer work on the side but there are so many  other companies in the area that do they same thing...Real estate interests me, but everyone tells me it's too late to get into the REIT game...?

Click on MRGALT2U and read some of my posts (you will only need to go back 200 or so, no need to read all 5,700) Then, if you wish I would be glad to add specifics in order to flesh out some of what I did and did not do.

JG

 

[SteveR]

If you do it the old fasioned way...saving it...based on the following you will have $1MM by age 59.

Assume:
current cash $10,000
save 15% of gross income per year (this assumes no increase in salary) which would be $562 per month

Invest at 6%

A 401(k) would be better since you would also get company match.  

A company with stock options will also add to the pile if they stay above water and AMT does not eat you alive.

Other options that yeild higher returns will obviously get you there faster.  

Starting a business is risky but can pay off if you are willing to stick with it and start over when you fail.  It is not for everybody but the few that really make it big did so by hard work, sacrifice and luck.

 

[Mr._johngalt]

So what that there are so many other companies in the area doing the same thing?  Is that what a doctor says when he is about to rent a room in a large medical building with hundreds of other doctors?  Provide better hours, give better service, do house calls, care more about your customers' needs, do things that make you unique.

It's never too late to get into anything.  Just do it well and get up when you fall down.

Excellent excellent post. Kudos.

JG

 

[justin]

Geeman,

I'm around where you are in terms of age and compensation. I've done some spreadsheets and figure I'll hit a million pretty easily. It will take a while. The time till I hit a million also depends on whether my wife works or not (she isn't currently).

If you haven't started doing spreadsheet projections of your investments using average growth rates, start doing so now. It will show you how easy it is to acquire a lot of wealth over time. You could spend 30 more years working, all the while letting your money compound year after year. At 52, you're done. You'll probably be a multi-millionaire in today's dollars.

Don't forget that you won't be receiving entry-level pay for ever. Five or ten years out, you will probably be making a good deal more than what you're making now. If your living expenses don't increase over time, then your raises can all be saved and invested. You'll be saving more and more each year at the same time as your invested money will be compounding.

For example,let's say you invest $10,000 this year, and then increase the amount you invest by 2% above inflation each year (from your raises), and do this for 30 years. If you get a real (after inflation) return of 6%, you'll have a little over a million of today's dollars. Remember that the annual contribution includes your company match for 401k. Investing $10,000 in a tax-deferred account won't cost you the full $10,000 either, due to tax savings.

 

[retire@40]

If you do it the old fasioned way...saving it...based on the following you will have $1MM by age 59.

Assume:
current cash $10,000
save 15% of gross income per year (this assumes no increase in salary) which would be $562 per month

Invest at 6%

Good luck doing that for the next 38 years with a boss running your life the entire way.  And your $1mil will be worth about $300K in 38 years.

 

[BristolBane]

So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

A few ideas off the top of my head of things you can do in your spare time and keep a 9-5 job.

- Real estate: Landlording, flipping fixer-uppers, raw land speculation.
- Trading: Stocks, options, futures
- Playing poker
- Living a frugal lifestyle

 

[geeman]

I am quite interested in real estate, but I think buying right now would be a big mistake, especially in my area.

 

[WanderALot]

I started out making a lot less than you and hit the 100k mark of savings/investment about 5 years after I started working. At that point, I was making about $60k. This was without the benefit of stock options or large bonuses. The only things that I did religiously was max out my 401k/IRAs and save. I invested in funds and some stocks, but none of them were high-flyers.

Everyone always talking about the miracle of compounding and the benefit of starting early, but it's easy to get discouraged at the slow rate of net worth growth. I will tell you what someone once told me: "The first 100k is the hardest to get, after that it gets quite a bit easier".

 

[SteveR]

Retire@40 said:

Good luck doing that for the next 38 years with a boss running your life the entire way.  And your $1mil will be worth about $300K in 38 years.

Well, all I can relate to is my own experience and that of several other close friends that have done it the hard way working in various types of companies.  While owning a business may work for some it is not going to work for everyone.  I never let my boss run my life.  How many self-employed folks can really say their time is their own?  You have customers to deal with, products or services to provide, inventory to maintain, records to keep, taxes to file and maybe employees to manage.  The buisness owns you and your time belongs to the business.  Sure a few may have a business that allows them to name their own hours but not many do.  

I made a decent living and saved enough to have a very comfortable retirement when I am ready.  Sure I had to deal with a boss..........I am married.

Also, I did not have more than a few thousand in the bank and no investments 15 years ago. So it can be done in far less time than 30 years even without owning a business.

 

[justin]

"The first 100k is the hardest to get, after that it gets quite a bit easier".

That makes sense. The growth from $100-200k of investments should be about $10-15k/yr or so. This will probably be as much as what you are saving every year. At that point, your investment returns will start driving your growth in net worth more and more, and your contributions will impact your net worth growth less and less (this is a good thing!).

 

[geeman]

That makes sense. The growth from $100-200k of investments should be about $10-15k/yr or so. This will probably be as much as what you are saving every year. At that point, your investment returns will start driving your growth in net worth more and more, and your contributions will impact your net worth growth less and less (this is a good thing!).

I guess that's why the richer get richer...I just need to get to the point where my investments make me $$$

 

[Andre1969]

It'll get easier with time. I remember back in the late 90's when I'd check how much my investments went up after a good day on the market. If I saw a $500 increase, I'd practically jump for joy. But now, even on a day when the market barely registers a blip, I might see an increase of $1000. And on a good day it's more like $2-3,000. Now, if only it would do that every day!

 

[geeman]

Yeah, I guess I'm at a hard point in my financial career...I'll stick it out.

 

[wabmester]

I almost want to get fired to give me the motivation to start some type of successful business.  So I guess my question is are there ways to accumulate large sums of cash just working 9-5 (minimal salaries 45-65k a year) without owning a business?

Listen to your inner businessman.   Being an employee is fine, as long as you don't do it for more than 5 years or so.   Consider your employment an extension of your education.   Learn all you can about how the business operates.    And then graduate to your own business.    Forget about running your own business while still being employed.   Both jobs will suffer.

 

[justin]

Listen to your inner businessman. Being an employee is fine, as long as you don't do it for more than 5 years or so. Consider your employment and extension of your education. Learn all you can about how the business operates. And then graduate to your own business. Forget about running your own business while still being employed. Both jobs will suffer.

Don't be afraid to be a corporate (or government) slave for the next decade or two. Find an employer/career you like, and stick it out. You'll have evenings and weekends to play/invest/moonlight. If your employer goes broke or their industry gets killed slowly, so what. Find a new job. If your business you spent a decade building goes broke, you have to start from scratch. There are a LOT of risks in starting a new business. The successful business owners who comment on the advantages of starting a new business are a self-selected bunch. The broke and bankrupt entrepreneurs aren't on here telling you about their experiences.

That being said, if you've got a solid business plan in market you know, you can make a lot more than what you are now, especially if you can hire people to work for you.

 

[Martha]

If I had to do it all over again, instead of being entrepreneurial, I would have worked in a government job with a good pension.

A friend of mine does bankruptcy litigation for the IRS. Lots of time off, and she is now eligible to retire. And no keeping billable hour records. Nice job, if you like the IRS.

 

[Andre1969]

My grandmother's cousin keeps trying to tell me to get into the government. Only problem there is, my grandma's cousin retired way back in 1980, as a GS-13, and she's under that old system where you didn't pay social security, and you'd get a good retirement.

Nowadays, I don't know if it would really benefit me much to go into the gov't. And my Mom, who's been gov't like forever, occasionally mentions that she wishes she'd gone contractor, so she could make more money. I guess the grass is always greener on the other side of the fence. Well, and over the septic tank!

 

[shiny]

Yes Martha, I had a friend who went that route to (DOJ not IRS) and she has always seemed to like her job better than I did. She'll keep working another decade or so, but she likes it and will be set after that.