Age 30 Am I on track? I want to escape the rat race.

[unknown245]

I am 30 years old single and recently got a decent job. Spent a large part of my 20s being lost. I graduated college with a useless biology degree, worked odd end jobs, pay down my debt and figuring out what path I wanted to take. I figured I didn't want to take on the enormous debt and years of schooling with going to grad school with like pharmacy, doctor, etc... It was a tough period as I saw my peers straight out of school making good money. Couple years I went back to college and got another degree. Now I am making over 6 figures. Only as of recent did I start thinking about my finances. I am wondering if I am on track.


My income is 115000 per year. Been working at the company for a year and a half now.

Roth Ira: 12600 (plan to max it every year till retirement age)
401k: 11300 (21% of my income)
Stocks: 53k
HSA: 1400 (My current plan is to put alot of money in my HSA account and buy safe investments from there index bonds etc... and let it grow)
Crypto: 23k (its what it is valued now I invested less initially)
Savings: 4425

Solid credit score in the 800s
No Debt other than credit card bills which is like 200 bucks atm.
My monthly overhead: Less than 1500 which includes rent, various bills, and groceries.
My car is paid off
I rent a cheap apartment (debating on where I want to live which is part of the reason why I haven't bought a house yet. Whether I want to live in this small town or move to a bigger city).
I am a healthy and active person. No health issues that I know of.

I really only worked at this job a year and a half so far and was able to increase my net worth pretty fast reaching 100k milestone through some investments. Before then I was making 20 or 30k gross per year at odd jobs and taking classes with maybe less than 15k savings. Curious on how quickly my networth can increase now that I have no debt and more financially focused.

So how am I doing? Couple of goals of mines would be:
1) reach millionaire status
2) optional retirement in my 40s or 50s. Not necessarily retire but cut back on my working hours and be more lifestyle friendly and focus on things I am passionate about.

 

[38Chevy454]

Welcome to the forum. Sounds like you are now on a good path to success. Keep LBYM, and saving what you can. The more you save now, the more compounding will benefit you in the long term. Since you are young age and have long time horizon for the moeny, I would be 90-100% equities for your investments. Except of course the rainy day fund savings. The rest should just keep investing and let it ride the market for 20-30 years. You will reach and likely surpass the $1M goal. I would not worry about retirement at this time, besides having it as longer term goal. Work hard, save what you can, have some fun along the way, and then in 15-25 years you can evaluate your financial position to decide when and how to retire. There is a good chance you will change jobs a few times over that time period, so what you are doing now may end up being much different than what you end with. Life has a way of upsetting our plans, the key is being able to adapt and stay on course for the end goals.

 

[OldShooter]

You're doing great.

Assigned reading:

"If You Can" by William Bernstein https://www.etf.com/docs/IfYouCan.pdf (free 16 page download)

"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bills first book; read it before reading his second one.)

"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

• Ditch the crypto. This kind of stuff is for speculators, not investors.
• Carry long-term disability insurance. It's cheap and not having it might be horrible.
• Carry term life insurance if anyone is dependent on your income.
• Recognize that "millionaire status" will not be nearly enough for retirement when you get there. At 3% inflation, a million will have about $300K in buying power after 30 years. IIRC long-term US inflation average is 4.11%

 

[pacergal]

You have way more than we did at that age. Congratulations on your savings.
Keep LBYM, maxing retirement and savings as much as you can, but still have some fun along the way!

 

[OldShooter]

... Life has a way of upsetting our plans ...

Men plan, God laughs.

 

[UnrealizedPotential]

As has been said, make sure you have a healthy dose of stock funds. Perhaps even putting a healthy percentage in the SP500. You are young, so you go for growth. Bonds can come later. Otherwise I think you are doing great!

Learn to ride the ups and downs of the market. As long as you keep socking money every month into stock funds, over time you should meet your goal.

 

[pacman1234]

Hi there. I am mid 30s so a few years older than you. I think you have positioned yourself for your 30s to be your best decade yet financially. You make solid income and you have a really good handle on your expenses which means you should be able to save a lot over the next few years.

Now that you will be able to put away more money, I would think more carefully about how you want it invested. I would probably avoid investing in individual stocks. I personally dump most of my investments in Vanguard's total stock market index fund.

Lastly, I would keep your finances and the desire for early retirement in perspective. You have many years to go and I would recommend trying to enjoy the journey a bit. Even if you do everything right financially, no one knows what market returns will look like and your personal circumstances could change in other ways (e.g. meeting a spouse).

 

[unknown245]

Welcome to the forum. Sounds like you are now on a good path to success. Keep LBYM, and saving what you can. The more you save now, the more compounding will benefit you in the long term. Since you are young age and have long time horizon for the moeny, I would be 90-100% equities for your investments. Except of course the rainy day fund savings. The rest should just keep investing and let it ride the market for 20-30 years. You will reach and likely surpass the $1M goal. I would not worry about retirement at this time, besides having it as longer term goal. Work hard, save what you can, have some fun along the way, and then in 15-25 years you can evaluate your financial position to decide when and how to retire. There is a good chance you will change jobs a few times over that time period, so what you are doing now may end up being much different than what you end with. Life has a way of upsetting our plans, the key is being able to adapt and stay on course for the end goals.

Can you educate me on what you mean by 90-100 percent equities on my investment? does that mean buying something like a house?

 

[unknown245]

Hi there. I am mid 30s so a few years older than you. I think you have positioned yourself for your 30s to be your best decade yet financially. You make solid income and you have a really good handle on your expenses which means you should be able to save a lot over the next few years.

Now that you will be able to put away more money, I would think more carefully about how you want it invested. I would probably avoid investing in individual stocks. I personally dump most of my investments in Vanguard's total stock market index fund.

Lastly, I would keep your finances and the desire for early retirement in perspective. You have many years to go and I would recommend trying to enjoy the journey a bit. Even if you do everything right financially, no one knows what market returns will look like and your personal circumstances could change in other ways (e.g. meeting a spouse).

yeah one of my plans is to dump it in total stock market index funds for fidelity which is what I currently use. Just set it and forget it. I think if my individual stocks take off then I will sell an dump it in total stock market index funds. Now should I do that through my HSA due to the tax advantages? I currently have it in my roth ira but only being able to invest 6k per year aint going to cut it for me.

Do you recommend buying a house? i was thinking about getting a multi family unit but my concern is doing that forces me to live in small town that im currently in and I am eh about the small town atm. Not much options as far as dating life goes and activity, but who knows not like I got much attention from women to begin with anyways.

 

[Out-to-Lunch]

Can you educate me on what you mean by 90-100 percent equities on my investment? does that mean buying something like a house?

In this context, "equities" = "stock mutual funds (or stocks)."

 

[latexman]

My income is 115000 per year.

Roth Ira: 12600 (plan to max it every year till retirement age)
401k: 11300 (21% of my income)
Stocks: 53k
HSA: 1400 (My current plan is to put alot of money in my HSA account and buy safe investments from there index bonds etc... and let it grow)
Crypto: 23k (its what it is valued now I invested less initially)
Savings: 4425

(12.6+11.3+53+1.4+23+4.4)/115 = 0.92

Take a look at Fidelity's guidelines on your journey to retirement. 0.92 < 1. You are close, and with your recent new degree and new job, I think you have the chance to catch up and surpass the guidelines!

 

[OldShooter]

... i was thinking about getting a multi family unit but my concern is doing that forces me to live in small town that im currently in and I am eh about the small town atm. ...

I was a landlord for 25 years or so. We started by buying a duplex, living downstairs with a tenant upstairs. I'd suggest that approach rather than jumping immediately into a multi-building and not living there. IMO is a good way to dip a toe in the water and see if landlording is for you. I.e., being on call 24x7, doing the bookkeeping, chasing slow pays, clearing clogged toilets, etc. Pick a town you would like to live in though.

 

[REWahoo]

I was a landlord for 256 years or so.

Probably seemed that long...

 

[unknown245]

(12.6+11.3+53+1.4+23+4.4)/115 = 0.92

Take a look at Fidelity's guidelines on your journey to retirement. 0.92 < 1. You are close, and with your recent new degree and new job, I think you have the chance to catch up and surpass the guidelines!

I just paid off my student debt which is why its little low atm. I still got 3 more months to play catch up at the end of the year.

 

[latexman]

I just paid off my student debt which is why its little low atm. I still got 3 more months to play catch up at the end of the year.

Pedal to the metal!

 

[pacman1234]

yeah one of my plans is to dump it in total stock market index funds for fidelity which is what I currently use. Just set it and forget it. I think if my individual stocks take off then I will sell an dump it in total stock market index funds. Now should I do that through my HSA due to the tax advantages? I currently have it in my roth ira but only being able to invest 6k per year aint going to cut it for me.

Do you recommend buying a house? i was thinking about getting a multi family unit but my concern is doing that forces me to live in small town that im currently in and I am eh about the small town atm. Not much options as far as dating life goes and activity, but who knows not like I got much attention from women to begin with anyways.

If you're thinking about moving in the near future, I would hold up on buying real estate. The transaction costs can be significant. Also, you don't want to be tied down by real estate in a place with limited career opportunities. I think you want to stay flexible since you are beginning your true career journey now in case it makes sense to pursue career growth in another city. Re-assess the decision in a few years once you have had a few solid years of putting away savings.

 

[Dtail]

You are off to a good start. Work hard and smart and hopefully your income will continue to grow. Practice LBYM and get rid of that cryto.

 

[street]

You are doing great! Keep saving and set some goals to where you want to be. If yo are thinking of your financials at your age, you will be success in what you wan to achieve.

 

[pb4uski]

You are off to a good start. Work hard and smart and hopefully your income will continue to grow. Practice LBYM and get rid of that cryto.

+1 Check out FIRECalc. While it is designed more for retirement planning, it can also be used to look at portfolio growth.

I input the following parameters: Start Here tab... Spending $1, Portfolio $105,000, Years 25; Not Retired tab... retire in 2046 (2021+25 years), add $25,000 each year (inflation adjusted): Your Portfolio tab... changed 75% equities to 100% equities... then hit Submit.

Because you indicated a future retirement date (2046), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 25 years of preretirement plus 0 years of retirement, or 25 years.

FIRECalc looked at the 126 possible 25 year periods in the available data, starting with a portfolio of $105,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 126 cycles. The lowest and highest portfolio balance at the end of your retirement was $105,000 to $5,499,775, with an average at the end of $2,264,943. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

I'm not sure why it indicates a minimum of $105,000 after 25 years since the graph doesn't show that so that's probably a glitch.... I'd focus on the average... which is more that $1 million in 2021 $$$. So you're in reach.

Another great tool that I highly recommend is Quicken Lifetime Planner which is included in Quicken Deluxe and higher... use it to create your plan and then use Quicken to monitor your progress.... Lifetime Planner automatically updates itself using the assumption that you provided and that you can change whenever you want to.

 

[RobbieB]

You'll do fine! Keep up the saving and investing, dollar cost averaging is the best way to do the market.

 

[Golden sunsets]

Your second biggest asset is crypto. That's a big red flag in my book. Divest of that asset and reinvest in a broad basket of equities, such as VTI.

 

[HI Bill]

Welcome! Glad you were able to get a second degree, and a better paying job! At 30, inflation-adjusted, your savings are where mine were then. But I wasn't making $115K....more like $40K (about $80K in today's $). I FIRED at 55, so if you keep increasing the contributions, and invest in a well-diversified mostly equities portfolio, and retain your current job/get raises, I see no reason that you couldn't fire by 45 or so, depending on your then-situation (marriage, kids, debt, etc., your desire for toys, homes, travel, etc. You're doing great! I love that you have both ROTH and 401(k) investments....you can tap the ROTH principal before 59.5 if you RE. I agree with others, I'd downsize the crypto allocation, although there are a few on this board that FIRED solely because of crypto.

 

[Dtail]

+1 Check out FIRECalc. While it is designed more for retirement planning, it can also be used to look at portfolio growth.

I input the following parameters: Start Here tab... Spending $1, Portfolio $105,000, Years 25; Not Retired tab... retire in 2046 (2021+25 years), add $25,000 each year (inflation adjusted): Your Portfolio tab... changed 75% equities to 100% equities... then hit Submit.



I'm not sure why it indicates a minimum of $105,000 after 25 years since the graph doesn't show that so that's probably a glitch.... I'd focus on the average... which is more that $1 million in 2021 $$$. So you're in reach.

Another great tool that I highly recommend is Quicken Lifetime Planner which is included in Quicken Deluxe and higher... use it to create your plan and then use Quicken to monitor your progress.... Lifetime Planner automatically updates itself using the assumption that you provided and that you can change whenever you want to.

Bolded by me - I think that the minimum result equal to the starting portfolio when the results are very successful has always been a glitch, when for example for retirement purposes, when the results are well into the 100% success rate, the minimum ending portfolio is never more than the starting portfolio.

 

[latexman]

I think that the minimum result equal to the starting portfolio when the results are very successful has always been a glitch, when for example for retirement purposes, when the results are well into the 100% success rate, the minimum ending portfolio is never more than the starting portfolio.

We've discussed this glitch before. https://www.early-retirement.org/forums/f36/question-on-minimum-ending-balance-starting-balance-90442.html

 

[Markola]

^^^^^A reason not to rely on a single calculator but, rather, the preponderance of the evidence from a few. Ultimately, there’s no predicting the future, of course, just loading the dice in one’s favor.