My first $100,000 seems impossible.

[FIREd]

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.

 

[Ronnieboy]

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.

 

[Westernskies]

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

 

[ESRwannabe]

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).

 

[Tadpole]

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.

 

[wolf]

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.

 

[FUEGO]

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.

 

[snowjob]

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!

 

[Bimmerbill]

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.

 

[Cassius King]

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!

 

[ESRwannabe]

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.

 

[snowjob]

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

 

[aida2003]

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.

 

[The Seeker]

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!

 

[kumquat]

Well,
you didn't ask me but I'll stick my opinion anyway.

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.

 

[knucklehead 61]

property managers typically get a % of gross, not profit. mine gets 6% of gross from my rental portfolio. 10% is w-a-y too much to pay!

 

[jacob]

The first $100k is the hardest mainly 1) if $100k is a lot compared to your salary (e.g. a few times that) and 2) if you're relying on compounding.

Another annoying problem with round target is that if you're investing and subjecting them to volatility, you can expect to pass these numbers a few times before it's solidly passed.

 

[brogan007]

To the original poster.....the investing world is not the same now, as it was when "experienced investor types" grew their portfolios.
You are in a marketplace that none of them have encountered, therefore none have any experience in how to deal with it. Myself included.
Telling stories about the past is fine, but it's pure folly to use these discussions as a road map for the future.
Many of the old, hard & fast rules are no longer valid.
Take great care in how you proceed.
These are particularly dangerous times in finance.

 

[REWahoo]

To the original poster.....the investing world is not the same now, as it was when "experienced investor types" grew their portfolios.
You are in a marketplace that none of them have encountered, therefore none have any experience in how to deal with it. Myself included.
Telling stories about the past is fine, but it's pure folly to use these discussions as a road map for the future.
Many of the old, hard & fast rules are no longer valid.
Take great care in how you proceed.
These are particularly dangerous times in finance.

To the original poster: The above comments, like most comments on this discussion board, are nothing more than opinion and conjecture.

No one knows what the future holds for any of us and Shakespeare's "What's past is prologue" may or may not be applicable - this time it might actually be different. Since no one knows for sure the best option may be to live below your means, save your money and diversify your investments.

Please note that my comments are nothing more than opinion and conjecture.

 

[Milton]

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

This isn't a bad approach. However, IMO stock picking is not so much about picking likely winners as it is avoiding the likely losers. E.g., no airlines, no restaurant chains, etc.

That means that I don't have the chance for the occasional 'ten-bagger', but so be it.

 

[ESRwannabe]

This isn't a bad approach. However, IMO stock picking is not so much about picking likely winners as it is avoiding the likely losers. E.g., no airlines, no restaurant chains, etc.

That means that I don't have the chance for the occasional 'ten-bagger', but so be it.

Good point. Right now I own shares in the following stocks: CVX, JNJ, PG, KO, MO, PM, T

 

[Milton]

These are particularly dangerous times in finance.

Reminds me of the old Mark Twain saying: "October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February."

 

[se012101]

I've enjoyed reading this thread and hearing how other folks reached this milestone. It took me a while. My 20's were pretty much a mess. My former wife was not very good with money, and I was stupid/weak enough to stand by and let it happen. By the time I was 31, I was freshly divorced, $40k in debt, and due to a major move, earning a lot less than I was. I remarried about a year later, and my wife and I had some good team work going on. We watched the pennies and were able to buy our first house in 2003, while chipping away at the debt. My income started increasing pretty rapidly, and the key thing - the best financial thing accomplishment we ever made - was that we did not let our cost of living grow with it. We just continued living the way we were since we were perfectly happy, and still do to this day. We got through the debt by 2005. We needed a new car, so we started saving for it. We were determined not to get in debt again, so we were going to buy it outright with cash. By summer 2006, we had the money we needed. However there was 0% financing available on the car we wanted, so we changed our plans and financed it afterall. We were a bit unsure about what to do with the chunk of cash we had lying around, so we slapped 20k on the mortgage. After running one of those online mortgage calculators we were amazed to find out that we had already blasted 8 years of the end of our mortgage by doing this. So, we immediately set a new goal of paying down the mortgage enough that it would be done before we had to pay for college for our son (2021). We kept going and achieved that with about another 6 months of sinking every free penny we had into the mortgage. By then we had some momentum going, and started dreaming of actually getting the entire thing off our backs. We buckled down and continued working very hard at it month in and month out. As a result, we weren't affected at all by the stock market in 2008. In January 2009, we made our last payment, and boy! was that a good feeling?! If we're counting house equity as net worth (I do), then we crossed the 100k milestone sometime early-mid 2008. Since then, we've been able to save very well due to having all the money we were putting on the mortgage, plus the money no longer needed for the regular mortgage payment, to put back. We're creeping up on the 250k milestone now - another few months, and in the process of purchasing our first rental property.

 

[mickeyd]

My first $100,000 seems impossible.

That's what Buffet and Gates once said also, I believe.

 

[jayc]

I was at 100K (investments not net worth) at 30 years old. I did it via keough/sep/ira (all CD) on the tax defered side and CD's and DRIP on the taxable side. The AA for all was approx 85% CD and 15% DRIP. You have time and compounding on you side, therefore I NEVER lost 1 dollar of the principle in the tax deferred accounts. I have tracked my CD tax deferred stash against all my stocks and mutual funds and the CD's win hands down.

Add up all of contributions to date, compound them by say 4% per year and see if they are greater than what you have now. Let the number do the talking.