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.
Looking for a great personal finance plan that will make me wealthy in 30 years
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Sounds like you're off to a great start, but your post is missing way too much information to be able to make an informed guess about your likelihood of success.
How are we supposed to know if you'll have $10 million by age 60 if we don't know how old you are now? The answer to your question is obviously going to be different depending on whether you're currently 35 or 25.
You're contributing 10% to mutual funds and 6% to a 401(k), but 10% and 6% of what? What's your current income? The answer to your question is obviously going to be different depending on whether you earn minimum wage, or make 6 figures.
How are we supposed to know if you'll have $10 million by age 60 if we don't know how old you are now? The answer to your question is obviously going to be different depending on whether you're currently 35 or 25.
You're contributing 10% to mutual funds and 6% to a 401(k), but 10% and 6% of what? What's your current income? The answer to your question is obviously going to be different depending on whether you earn minimum wage, or make 6 figures.
What's your net worth now and how many years do you have left to invest?
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.
SecondCor521
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As others said, do the math. Learn Excel. Learn basic personal finance equations. Then you will know.
But just eyeballing your numbers, no, you won't be worth $10M at 60 going the rate you're going. Unless you assume a very (potentially ridiculously) high rate of increase in your salary and correspondingly large increase in your savings amounts.
2Cor521
But just eyeballing your numbers, no, you won't be worth $10M at 60 going the rate you're going. Unless you assume a very (potentially ridiculously) high rate of increase in your salary and correspondingly large increase in your savings amounts.
2Cor521
I don't think 10 million is doable unless you hit the lottery.
GoodSense
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Maybe you could try some of the retirement and investment calculators at Bankrate.
Calculators for mortgages, savings, small business, credit cards and auto loans by Bankrate
Fidelity ("my plan") and money.com also have calculators. You have to set your own assumptions on risk/return to get a good picture.
Calculators for mortgages, savings, small business, credit cards and auto loans by Bankrate
Fidelity ("my plan") and money.com also have calculators. You have to set your own assumptions on risk/return to get a good picture.
You should have no problem hitting that goal.
Milton
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This post is rather bizarre, and - as others have pointed out - lacks many necessary details.
Two questions for RLCMA:
(1) Where did the $10 million amount come from?
(2) Is the $10 million supposed to be in 2008 dollars, or 2031 dollars?
Oh I don't know. I was just wondering if 10 million is doable in 30 years or not. Maybe I'll have to wait until I'm 70 or 80. With people living longer maybe I'll be in good enough shape at 70 or 80 to enjoy my money. I don't see how my post is bizarre.
honobob
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Buy a $500,000 condo in San Francisco. At historical annual compounded appreciation rate you will have a paid off condo worth $11,446,148 minus realtors fees etc. you should net $10,000,000.
Milton
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Well, I'm not interested in an argument, but I'll try to explain:
(1) you said that you save X% of your income, but didn't provide that income;
(2) you wanted to know whether you would have a certain amount by age 60, but didn't provide your current age;
(3) you didn't indicate your net worth (i.e., how close or far you currently are from $10 million);
(4) you said that you invest in mutual funds, but provided no details of the type of funds or their current fees;
(5) you picked a retirement amount ("$10 million") out of the air; and
(6) you don't know whether your target figure is inflation-adjusted or not.
Saving money is better than not saving money, and it sounds like you are off to a reasonable start. Fine-tuning your investments will take time, but you have quite a few years to work on it. Good luck!
Where does the $500,000 come from?
Of course an earthquake could change things considerably.
Milton
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Oh, California mortgages don't require any down payments. Real estate [-]speculation[/-] investing is all free money, don't you know!
honobob
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You said you wanted $10,000,000 in 30 years. A $500,000 condo would get you closest to that figure although difficult but doable. It would be easier to find a $600,000 one bedroom condo but you'd probably have to put more down, etc. but then you'd be shooting at $13,735,378 in 30 years. Your choice. That's why they have earthquake insurance.
honobob
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Nothing wrong with a no money down mortgage. I'll take all you can supply!
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.
Might be worth subscribing to Financial Engines for a quarter (3 months):
https://www.financialengines.com/FeContent?act=welcome
You plug in your current savings and investments, how much you will contribute, and your goals. It tells you your "forecast" of meeting your goals, taking into consideration many possible future economic scenarios, and gives you specific financial advice on how to get there. It also computes everything in today's dollars for you. It is a very thorough Monte Carlo type analysis. I paid for a quarter when I was first starting to invest, and still use it now and then for free through Vanguard (min $100k balance). I recommend it.
https://www.financialengines.com/FeContent?act=welcome
You plug in your current savings and investments, how much you will contribute, and your goals. It tells you your "forecast" of meeting your goals, taking into consideration many possible future economic scenarios, and gives you specific financial advice on how to get there. It also computes everything in today's dollars for you. It is a very thorough Monte Carlo type analysis. I paid for a quarter when I was first starting to invest, and still use it now and then for free through Vanguard (min $100k balance). I recommend it.
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!
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.
honobob
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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.
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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.
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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