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Old 05-27-2010, 07:34 AM   #21
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i graduated college in 2005. I flirted with 100k NW just before the end of 2007, when my company's stock was grabbing $100+. It quickly went down. Somewhere in 2009 we blew past the 100K mark. Of course, I married in 2008, so if you want to count property, my wife brought a nice chunck equity to the table, $100k+ (and she lived on less than $20k/yr when I met her). I attribute it mainly to my company's 401k match, which is 8%.

Meanwhile, we are slashing expenses, living on the cheap and enjoying the journey. Hopefully we get over $200k (ex property) sometime early 2011. But, it won't change a single thing i do if it is sometime later on down the road.

keep plugging away...
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Old 05-27-2010, 07:40 AM   #22
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Not including the value of my co-op apartment (see below), the total value of my savings [taxable accounts plus 401(k)] did not break $100k until early 1995 when I was 32 years old.

My salary at the time was only in the mid-50s. I did not max out my 401(k) contributions which were eligible for company match until 1989, after I bought the apartment (I needed 20% as a down payment).

Early 1995 was just after I had estimated I had recovered the closing costs on the refi of the mortgage I got in 1989. My monthly payment had dropped by $200 a month in 1992 so my savings rate increased a lot. I also spent about $8k on a used car that year.

The value of the apartment I bought took a nosedive along with the rest of the real estate market in the early 1990s, so it took many years (late 1990s, at least) until its value got back to what I paid for it. But I also paid off the mortgage a few years later, further increasing my savings rate as we headed into the stock market boom of the late 1990s. My monthly maintenance costs are about 50% of what I would pay for rent in the area, and more than half of it is tax-deductible.

Yes, that first $100k was the toughest. It took nearly 10 years of working and saving (and buying some big-ticket items) to get there. In contrast, I reached $200k in savings (excluding the apartment in late 1997, only 2 1/2 years after reaching $100k. Compound interest, the booming stock market, and an increased savings rate were the main reasons. After that, it took no more than 2 years to accumulate each additional $100k (through $900k) although the exploding value of my company stock holdings introduced in 1997 helped.

Then I retired in 2008 when I neared $1M.
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Old 05-27-2010, 09:05 AM   #23
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Originally Posted by Cassius King View Post
I finished school in 1997. From that date forward it seems that I have seen little if no gains in my portfolio. Strictly growing through contributions. As soon as I think I'm getting close, this past month in the market happens (again!) and crushes my energy for awhile. It's really disheartening.
What are others doing? I know I can't be the only person of this generation facing the same experience.
From those that are more experienced, how long did it take to get to $100k? Am I correct in understanding that the first $100k is the hardest?
Thanks for letting me vent!

/rant!

Cheers, TheDude!

I know exactly how you are feeling. The drop in 2008 caused me a huge amount of stress, but I was able to adjust and come up with an alternate strategy that works for me. I would suggest you might want to orient your portfolio towards income instead of total return. That is what I have done and is one of the main reasons why I haven't given up.

I changed my mentality from being an investor in financial instruments, to being an investor in companies and countries. My intention is to not sell shares. So, the fluctuation in share price is not such a discouragement. My focus is on my share of the profits as a co-owner of the business, i.e. the dividends.

I really don't know how long it took me to reach $100k. I started aggressively investing around 2005, but I didn't know anything about stocks and just put it all into a long term muni bond fund. It wasn't until around 2007 that I moved from basically 100% bonds to almost 100% stocks. So, I guess I got a proper initiation test. I'm still close to 100% stocks right now.

Before this latest crash I was up to around $200k. However, I don't really care about the current share price value, that much. I am actually pretty happy with the crash because I have improved my dividend income.

If you want to know my "method" in a nut shell for picking individual stocks. Go look at "good" dividend based funds like VIG the Div Appreciation Index and use that as your initial stock screen. From there go and look at the top 20 holdings. Look them up on Morningstar and look at their stats. Then think about the company. What do they do? Who do they sell to? How well will they do in a crap economy? From this you can make a wish list of stocks you want to buy. Now, just go and buy them, but never put more than 5% of your principal in any one stock. So, if you only owned individual stocks you would have at least 20 in total. The 5% limit is based on my portfolio's principal, i.e. how much I have invested, not whatever my current portfolio value is.

I believe that the stock market, in the large cap sector, is reasonably efficient. So, whatever the stock price happens to be, it is basically at a reasonable price. I do not try to determine if I am getting a good price. I just look at the dividend, and the past dividend growth. Then I just buy whatever looks best at the time. I do not read any financial documents. I don't know how to value stocks. So, I only put a max of 5% in any one stock. I follow the stocks daily on Morningstar. If something bad happens and is in the news, I can probably sell before I take a total loss on it, and my loss is capped right from the start anyway.

For my method on investing in mutual funds, read through my past posts and I outline it pretty well. Basically I never buy into a stock fund that doesn't have at least a 2% div yield based on the share price and last year's payouts.
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Old 05-27-2010, 09:26 AM   #24
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Cassius, I am a bit older than you (41) and also have mental goals. My goals from 3 years ago are not going to get hit because of the market, but I keep saving and investing, hoping that one day the market will again have a growth spurt and the upward trend will start again. I figure for the last 2 years I've been buying low, and hopefully someday will be rewarded for it.

I think it took about 8 years from when I left college to have my first $100K. If it makes you feel any better, the 10 years after that, which brings us to now, saw that $100K go up to about $500K, even with the market being what it is.
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Old 05-27-2010, 09:56 AM   #25
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As I posted here before, I just practiced LBYM and didn't even think of retiring early or compute out what it would take to ER when I was still working. Only when my wife and I were tired of work, it occurred to me that we might not have to.


You must be a good trader. You wrote that after 21 months you got $100K, and then another $100K at the 21+12 month mark. But in terms of percentage gains, you have been trailing off in recent years, else you would get more than $100K for the next 12 months, and the next 12 months after that.

Maybe your gains are more lumpy than you thought. But no matter... You ARE a good trader. I would have many $M if I could compound my portfolio the same way in the last decade.
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That is a heck of a run - how'd you do it? Your NW goes up by as much as your salary every year, and you're just getting started?
I'd say I'm pretty average as an investor. Here's the annual returns:
2005: 11%
2006: 16%
2007: 9%
2008: -37%
2009: 37%
1Q 2010: 6%
2Q 2010: as of today, a few percent negative roughly.

Back in 2005, I wasn't up to my target allocations. Now I am fairly close to where I want to be. I have a heavy allocation to volatile asset classes - REITs, international REITs, small cap, value, small value, international small cap, emerging markets. 100% equities. The FUEGO portfolio, because it can catch fire easily, or lead to FIRE quickly. I had a couple of smart* moves in 2008-2009, by rebalancing into emerging markets, REITs, international small, etc - stuff that had been simply smashed by Mr Market, and I rebalanced into that stuff by selling large cap stuff and grubbing for spare change from the couch cushions. Otherwise, plain Jane vanilla investing in passive indexes in a tax efficient manner.

But some things that helped me build wealth quickly? Tax efficiency - I have paid hardly any federal taxes during my 6 year working career (not sure how much, probably $5000ish total).

Keep expenses low. Focus on value-for-dollar more than being ultra LBYM for the sake of saving pennies.

And my net worth figures where I upped the NW by 100k a year are net worth, not portfolio balance increases. When I look back, there was only one year where I increased the portfolio by $100k+ in a year, and it was $94,500 from new contributions, and 21,500 from investment returns. I was landlording but then sold my non-bubble area condo and reinvested the proceeds into the market (in 2005).

Since Jan 1 2005 when I have good records, it looks like I have made a total of roughly $67,000 from investment returns (part of which was probably lost in the last 2 months). Increases in net worth and portfolio value have been primarily due to debt reduction and savings/contributions to investment accounts.

I guess another tip I would have would be to focus on growing net worth in the right areas and not strictly growing your portfolio value. Don't shy away from good cheap debt while you are young (like mortgages today). But do shy away from expensive debt, and minimize your expenditures on depreciating assets (including a house).


* smart = lucky
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Old 05-27-2010, 10:16 AM   #26
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Yes the first $100K is probably the hardest. This is how our portfolio changed since 2001:



Note the quasi- exponential shape (it started slow but the rate of increase is accelerating). I would like to say that the exponential trend was driven mostly by stock market returns, but the truth is that increasing our savings rate over the years proved to be equally important to keep our portfolio value growing. Our income has increased substantially since 2001 but our expenses have not. So we have been able to contribute more and more to our portfolio.
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Old 05-27-2010, 10:24 AM   #27
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Originally Posted by ESRwannabe View Post

If you want to know my "method" in a nut shell for picking individual stocks. Go look at "good" dividend based funds like VIG the Div Appreciation Index and use that as your initial stock screen. From there go and look at the top 20 holdings. Look them up on Morningstar and look at their stats. Then think about the company. What do they do? Who do they sell to? How well will they do in a crap economy? From this you can make a wish list of stocks you want to buy. Now, just go and buy them, but never put more than 5% of your principal in any one stock. So, if you only owned individual stocks you would have at least 20 in total. The 5% limit is based on my portfolio's principal, i.e. how much I have invested, not whatever my current portfolio value is.

I believe that the stock market, in the large cap sector, is reasonably efficient. So, whatever the stock price happens to be, it is basically at a reasonable price. I do not try to determine if I am getting a good price. I just look at the dividend, and the past dividend growth. Then I just buy whatever looks best at the time. I do not read any financial documents. I don't know how to value stocks. So, I only put a max of 5% in any one stock. I follow the stocks daily on Morningstar. If something bad happens and is in the news, I can probably sell before I take a total loss on it, and my loss is capped right from the start anyway.

For my method on investing in mutual funds, read through my past posts and I outline it pretty well. Basically I never buy into a stock fund that doesn't have at least a 2% div yield based on the share price and last year's payouts.

I really like your method, thanks for sharing.
At what $$ amount do you expect/need to reach to retire?
Do you anticipate dividend increases to cover inflation?

To keep on topic, it took about 8 years to hit $100k. It was all 401k contributions, company match and market performance.
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Old 05-27-2010, 10:27 AM   #28
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Just recognizing the need to set financial goals, and then striving to achieve them is a big step; many folks lament their lot in life without any real objectives to measure themselves against.

Keep focused on the goals, and keep them realistic. When I finally got serious (in my early 30's) about saving and growing my NW, I set a goal of 100K, then when I achieved that, I focused on 250 K, then 500K, then 1M, 2M etc... I'm still saving, and still have a goal-but now I've replaced numbers with letters-F I R E.

All the best,
WS
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Old 05-27-2010, 01:09 PM   #29
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I really like your method, thanks for sharing.
At what $$ amount do you expect/need to reach to retire?
Do you anticipate dividend increases to cover inflation?

To keep on topic, it took about 8 years to hit $100k. It was all 401k contributions, company match and market performance.
Thanks.

One other thing I do is I keep my taxable, 401k, and roth ira accounts separate, i.e. I don't try to manage them as a whole. I guess I break all the boglehead rules.

In my 401k and roth ira I use only funds. My taxable account is the only place where I take an active role. So, for early semi-retirement, what I am basing my progress on is my income in my taxable account. My living expenses are about $30k a year including everything, even taxes. So, to reach a state where I believe I will be able to shift to part-time work, I am aiming for $15k a year from my stock dividends. Right now I estimate that I will bring in $4,293.92 a year based on last year's payouts and my cost basis.

My dividends from my individual stocks I definitely believe will outpace inflation. My average dividend growth rate was around 5% during this horrible period 2008-2010. My lowest single div increase during this time was roughly 2.50%. I had no cuts. During better times it will probably be around 10% a year or more. With the stock funds it is almost random. You really can't rely on consistency from funds. I am fine with this. I just make sure I always buy at a reasonable price (i.e. at least 2% div yield for funds).
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Old 05-27-2010, 05:45 PM   #30
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Be glad you are young and pray for a low market price during your youth and a high one when approaching retirement. If I were younger and knew what I know now, I'd be betting the bank but I can't advise anyone else to do so.

The reason so many near retirees are in trouble now is because they started to save late and bought like crazy into bubbles and then got a retirement burst.

While you pray for those low prices, I'll have to do the opposite but I'd love to me now but 40 years ago.
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Old 05-27-2010, 06:32 PM   #31
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CK:

One thing I noticed. No one mentions rental real estate.

It takes work. Buy in a good location. Do all the repairs yourself. When you are young you should have tons of "energy". Cannot do the repair, read and ask a lot of questions.

Depreciation write offs, allow you more "take home money", you can use for other investments.

Investing in Stocks, is to easy. If you are lucky, and avoid the "bad cycles", you may be OK.

Any other retire's out there who made it in real estate. I do not consider "flippers", real estate investors by the way.

Buy in a good location, good schools, jobs, etc. Be sure you have cash flow. If you are lucky, you will get price appreciation. This was the way I accumulated 100K+.

But again, You have to be willing to work. Be a landlord. My experience, most wannabe's are to lazy to do the work.

Just my 2 cents again.
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Old 05-27-2010, 08:26 PM   #32
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Any other retire's out there who made it in real estate.
I made my first $40k-$50k by buying a condo, fixing it up cheaply and DIY, then trying but failing to sell it, and renting it out instead for a few years. Eventually sold it at a small profit plus all the equity I had built up since I had a 15 year loan.

Every once in a while I get the real estate/landlord bug. It is a good way to make a lot of money if you are willing to put in the work and time. I am personally too lazy and have resisted the urge.
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Old 05-28-2010, 11:42 AM   #33
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Thanks.

One other thing I do is I keep my taxable, 401k, and roth ira accounts separate, i.e. I don't try to manage them as a whole. I guess I break all the boglehead rules.

In my 401k and roth ira I use only funds. My taxable account is the only place where I take an active role. So, for early semi-retirement, what I am basing my progress on is my income in my taxable account. My living expenses are about $30k a year including everything, even taxes. So, to reach a state where I believe I will be able to shift to part-time work,

WTF is this a parralel universe? Who are you !!!

I think we look at the things the same way. Good luck!
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Old 05-28-2010, 12:49 PM   #34
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I really don't know. I was kind of underemployed for quite a few years after I graduated. But the grocery store where I worked had profit sharing and I got a check when I left and put it in an IRA. Worked 3 jobs for a long time, 2 jobs for 22 years and finally started making decent $ in 2000.

I had several IRAs and 401Ks that I eventually rolled into my TSP program. Rolled my severence and vested retirement from my LU days into the TSP also.

Now I'm flirting with $200K.

So, keep contributing and don't cash any of it out.
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Old 05-28-2010, 03:34 PM   #35
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Thanks for sharing your thoughts and personal stories.

I'm going to use my disappointment as fuel to up my savings rate, cut expenses and possibly find a way to increase/create more income.
This community is great thus far. I've nobody personally that I can talk to about this.

Cheers!
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Old 05-28-2010, 06:44 PM   #36
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WTF is this a parralel universe? Who are you !!!

I think we look at the things the same way. Good luck!
I do post on boggleheads and recognize your user name. I've got over 1k posts on there. I use a different user name though. I will leave it as a mystery who I am on there.
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Old 05-29-2010, 04:13 PM   #37
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Alright mystery man/woman, I will look for clues but I doubt I'll be able to to identify you...

So far I've come up with
1.) you are relatively young based on your refrences to your stock allocation in a few other threads here and your use of emotes/smileys.

2.) you're a boglhead that holds individual stocks, which really should narrow down the search, but I've not yet rounded up my suspects.

That is all for now
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Old 06-01-2010, 03:10 PM   #38
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I'm glad to see that I'm not the only one who gets shaky legs when the stock market goes on sale.
When strawberries are on sale, I just keep going back to buy more and keep eating. When favorite foods are on sale (e.g. last week Jacksonville Stadium brats were $2.50/package + I had coupons of $0.55 that doubled), we stacked 5 of them up in the freezer. But darn when Mr. Market is put on sale, I must kick myself to send a bigger investment. It's so mental and so hard to invest cheaper and I'm scared to do it, but I do it. This is all in hopes that SP 500 will go back up sometime in the future and that we're still sort of young .
Oh, I stopped perusing our plans. I used to stare at our spreadsheets almost every week. Now I do twice a year to update numbers and it's good enough.

We didn't have the magic number in mind, so I don't know when we crossed $100K. I'm just happy we have no debts, so if our allocation is a bit aggressive (80%) for us, I'm OK at the moment, though I keep in mind that maybe I should increase bonds a teeny bit.
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Old 06-03-2010, 12:30 PM   #39
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CK:

One thing I noticed. No one mentions rental real estate.

It takes work. Buy in a good location. Do all the repairs yourself. When you are young you should have tons of "energy". Cannot do the repair, read and ask a lot of questions.

Depreciation write offs, allow you more "take home money", you can use for other investments.

Investing in Stocks, is to easy. If you are lucky, and avoid the "bad cycles", you may be OK.

Any other retire's out there who made it in real estate. I do not consider "flippers", real estate investors by the way.

Buy in a good location, good schools, jobs, etc. Be sure you have cash flow. If you are lucky, you will get price appreciation. This was the way I accumulated 100K+.

But again, You have to be willing to work. Be a landlord. My experience, most wannabe's are to lazy to do the work.

Just my 2 cents again.
Hi, Wolf
Just joined this website the other day and was looking into just this very subject you brought up! I've written something of myself in the "Hi, My Name is.." forum..
Anyway, I am looking into doing just what you said for earning my retirement money. Rental properties seem like the way to go. I am a newbie when it comes to this so when I ask a stupid question, have a good laugh and then tell me what you can.
I've saved about 17 grand thus far. Want to buy a duplex in a good neighborhood, good schools, etc.. The thing is, I want to buy it with cash. I think I can manage this in a four years or so from saving 250 to 300 grand. I am currently reading Property Managment Kit for Dummies and am learning the basics. Here's the thing. My work is seasonal and requires I move around a lot. What is your experience with property managment companies? I know they can ask for 10% of your profit but are they worth it? I know the old saw about, "No one cares more about your home/money than you do" but have you used them and found them to be fair and worth the money spent? Thanks for listening!
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Old 06-03-2010, 07:54 PM   #40
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Well,
you didn't ask me but I'll stick my opinion anyway.
Quote:
What is your experience with property management companies? I know they can ask for 10% of your profit but are they worth it? I know the old saw about, "No one cares more about your home/money than you do" but have you used them and found them to be fair and worth the money spent? Thanks for listening!
Are you expecting more than a 10% profit? If so, why? How will that happen if you don't do the repairs?

Edit to add:
Not 10% of profit, 10% of gross. Me bad, someone else also.
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