What to do after you reach 1 million?

[maddythebeagle]

I will take an entirely different point of view and say that OP is completely full of **** ...........why on earth would a new poster be fishing for ideas on what to do next if he didnt already have most of the answers (from accumuling so much at that age).....what ever happened to the guy that wanted to FIRE at age 16...at least that guy was funny....

 

[Jarhead*]

Am I paranoid? Someone please tell me.

Yeah, probably a little bit. (But nobody's perfect).

32 years old, $1,000,000.00 net worth.

Buy your parents a new car of their choice, then continue on.

 

[Harm]

I'm not a new poster. I just haven't posted alot!

If you have any questions, I'll be happy to answer them. I read once that if you want to learn to be a multi-millionaire, then ask one. So I'm hoping to learn from the people who have $1-$5 million to help me get there.

If you don't have 1/2 million yet, ask away. Maybe I can help you.

Every level should have a different mentality, IMO.

My parents saved alot from being frugal. But after saving, they still are frugal. But what is saving 5 dollars on gas going to do for you when you have a million or so dollars? I KNOW that is how they got there, but, well, shouldn't your context change after making the money? Same with making money.

Either way, thank you all for your postings. It does seem that to achieve great wealth, one needs to be in direct investments and run businesses. But with that said, the poster who said that making the first millionaire the hardest might be correct. Maybe I'll get that "feeling" that things are good with just investing in stocks/bonds/REITS as always.

 

[LOL!]

I think he just wants to play with the big boys now. He has almost a million, so he believes that some better investments are now available to him. But the reality is that a million ain't what it used to be with inflation and what-not. He may fall into the mindset that he deserves a wealth advisor or financial advisor ... he can afford it after all he's a millionaire dammit.

But the big boys have moved away from next door. He barely meets the private client criteria for WellsFargo banking. Also the idea of "managed account" is a crock to generate fees. Other things like hedge funds, private equity, managed futures, also generate huge fees that come from your pocket.

Oh, I am a multimillionaire and I am not in "direct investments" and I do not run a business. I do not invest in real estate. I just invest in mutual funds, ETFs and stocks.

 

[unclemick]

I hate to be a weeny - but I can't resist:

The last little dip de do - the 2000-03 market limbo - it dawned on me my down leg per Mr Market was more loss on paper than I ER'd with Jan 1993.

Interesting little 'pucker test'. Having survived that without breaking and running - I repeat Bogleism's a lot.

Now I are an 'old curmudgeon' - BUY Target Retirement! When you get to ten million post from your villa in the Bahamas!

heh heh heh

 

[DRiP Guy]

But what is saving 5 dollars on gas going to do for you when you have a million or so dollars? I KNOW that is how they got there, but, well, shouldn't your context change after making the money?

Sorry, dude. I was trying to suspend disbelief, but you just blew any credibility for me.

Now, it may be that somehow someway you have $1MM NW in your name, but I can guaran-dang-tee you that you did not EARN it , having an attitude like that.

Nor, would you be likely to keep it, BTW, which is far more important!

Take it for what it's worth.

 

[Leonidas]

My parents saved alot from being frugal. But after saving, they still are frugal. But what is saving 5 dollars on gas going to do for you when you have a million or so dollars? I KNOW that is how they got there, but, well, shouldn't your context change after making the money? Same with making money.

Some of my co-workers knew I had been FIed long before I ERed (a mistake I wish I could take back- the telling part, not the ERed part). There were times when I would complain about the cost of something, or talk about ways to save money, that someone would pop off with "Man, if I had your kind of money I wouldn't worry about piddly crap like that!"

Trying to explain that a million is not that much money to someone whose net worth is $75,000 was wasted breath. So, I developed this saying "Dude, rich people don't get rich by giving their **** away to other people, and they damn sure don't stay rich by doing it either."

 

[DRiP Guy]

"Dude, rich people don't get rich by giving their **** away to other people, and they damn sure don't stay rich by doing it either."

 

[Rich_by_the_Bay]

It does seem that to achieve great wealth, one needs to be in direct investments and run businesses.

Where'd you get that from? Seems to me most here are/were employees, military or gov't with pensions, professionals, and just hardworking folks in average paying jobs, all of whom mostly seem to use mutual funds and live beneath their means. No magic and not too many silver spoons.

No doubt plenty of entrepreneurs and direct stock investors here too, but your characterization that "one needs to be in direct investments and run businesses" doesn't really ring true in my experience.

 

[Corporateburnout]

Let's see......having a $1 million net worth at 32 and asking for advice........ Sounds fishy to me : : :

 

[Harm]

Some of you people think it's not possible to have 1 miillion net worth by 32. I don't understand.

Let's see, I had no debt (parent's paid for my college)

I was a TA in graduate school... earned some money there.
Married someone who earned my same salary.
Sold stock in 1999 to buy a house.
Rode the 2000-2002 market because lots of money went to the house downpayment.
All the while, extra money went to buy stocks at depressed levels.
Maxed out 401K, Roth (when we could), IRA.
Added to taxable accoutns stocks/bonds.
Rode 5 good years of market
Live in the northwest and rode housing boom last 2-3 years.

Not possible?

 

[Harm]

And kept expenses at $60000/year.
And got a 15 year mortgage at 5.25%

 

[Leonidas]

Let's see......having a $1 million net worth at 32 and asking for advice........ Sounds fishy to me : : :

I'm not ready to jump and call Harm a fraud. Thanks to luck, the bull market of all times, and some good advice I had that kind of net worth before I was his age. I've got 16 years on him now and am worth a lot more, but there are plenty of people here with less $ than me that know a heck of a lot more about some of this stuff.

There was a time that I thought I was the smartest SOB around, right up until October 1987. On Black Monday I watched about a million of my dollars go *poof* and I knew I was not anywhere near as smart as I thought I was. The next day I talked with my broker and she offhandedly said that she had been talking to some of her clients "who have real money" and I knew a million bucks wasn't as big as I thought.

Modified to add:

I just can't believe some people not thinking it is possible!

I don't have a problem believing it possible at all. In 1987 I was 28 years old and I lost nearly your net worth in a day.

 

[Harm]

I just can't believe some people not thinking it is possible!

 

[bssc]

I don't think that there are any great secrets, just LBYM and don't invest in anything that you don't understand or that you have a bad vibe about.

No one is going to say, well, now come invest in my hedge fund and you can start making 28% a year risk free if that is what you are looking for.

I still save more money clipping coupons than I do on having fees waived on my brokerage account since I am now a "high net worth individual"

 

[Peaceful_Warrior]

Building of wealth is HIGHLY psychological. Where you are at mentally will help drive where your finances go.

Right now you're saying that you are a bit afraid. This fear will hurt you considerably.

$1 million doesn't buy you a lot of freedom today, that much is true. However, what it does buy you is the piece of mind that you've done it.

AND, it did not take you 32 years. Look at how long you've been actively working since you decided to build wealth, and that's more likely accurate.

Anyway, the point I'm really trying to get to is this: If you're always fearful, then you are limiting your potential for success. Many many people have gone broke (several times) before finding their niche and becoming incredibly wealthy.

Others have done it the slow but sure way, like yourself. And others have done it somewhere in the middle.

Really what you have to ask yourself is: "Am I ready to educate myself for wealth building?"

If you are willing to educate yourself, then you have a lot of potential. Especially if you lose the fear and learn to start leveraging other peoples' money so you don't put yourself at risk.

If you really want to accelerate your wealth, learn about corporate structures first. Then decide what kind of business you want -- real estate provides a lot of tax advantaged ways to build wealth. When you combine business with real estate you get:

- Wealth building while your personal assets are protected (i.e. very unlikely to lose them).

Also, make sure you are insured well to protect yourself.

If you're interested then I just finished reading a book a few days ago I think would be good for you:

"Loopholes of the Rich - How the Rich Legally Make More Money and Pay Less IN Taxes"

I've never run a business before or bought "real estate", other than my house. So I'm a bit afraid. Should I be? I feel $1 million doesn't buy me much freedom. For some reason, I'm more afraid of losing it because it took me 32 years to get it. The more I get up, the more paranoid I get.

 

[unclemick]

*poof*[/i] and I knew I was not anywhere near as smart as I thought I was. The next day I talked with my broker and she offhandedly said that she had been talking to some of her clients "who have real money" and I knew a million bucks wasn't as big as I thought.

Aha - there's the answer!

What to do after you reach 1 million? Wait for the 'pucker test' and get back to us with your grade.

Then you shall become truly worthy - wear the FIRE merit badge - maybe get a certificate from sgeeee if he's in the mood - give advice on talk shows - yadda,yadda.

heh heh heh

 

[unclemick]

I'm not ready to jump and call Harm a fraud. Thanks to luck, the bull market of all times, and some good advice I had that kind of net worth before I was his age. I've got 16 years on him now and am worth a lot more, but there are plenty of people here with less $ than me that know a heck of a lot more about some of this stuff.

There was a time that I thought I was the smartest SOB around, right up until October 1987. On Black Monday I watched about a million of my dollars go *poof* and I knew I was not anywhere near as smart as I thought I was. The next day I talked with my broker and she offhandedly said that she had been talking to some of her clients "who have real money" and I knew a million bucks wasn't as big as I thought.

Modified to add:

I don't have a problem believing it possible at all. In 1987 I was 28 years old and I lost your net worth in a day.

 

[dmpi]

I think the OP's story is missing a few details on how he generated the first million.
If he can generate & save money so fast, he should be giving us advice, not the other way around.

Never the less, here are my suggestions for the 2nd million.

1. You’re a "rich" guy. You can afford to take more risk. Look into getting rid of all insurance except for liability insurance. You might want to spring for an umbrella policy though.

2. Look for non or low performing assets. Look around the house, sell stuff that you don't need or use. Add that money to your investments.

3. After the first Million, your income adds less and less into your net worth. You need all your investments to really perform. Don't be the day trader guy who touts 25% returns in a 25K account. You’re playing with big bucks now. Go for 10% in a 1M, and be happy when you get it.

4. As others mentioned, study the tax code. There is "gold" in those words.

 

[Harm]

Peaceful_warrior,

I read a book Wealth Cycle investing that talks about the same thing, LLC's and such. But have you ever done this yourself? It's the doing and how that is always hard.

You see, the book says you need a team to be rich. But getting to my first million, I didn't have a team! I do things myself, do my own taxes, don't have a finanacial advistor, a bookkeeper, a housekeeper. I mean, the book is saying I need all these to be rich. I just get lost because I didn't get my first million this way.

 

[Caroline]

What now?

The name of this site spells it out for you. Retire Early.

Fergawdsakes man. You're in an enviable position, having that much money at your age. But that is NO guarantee that you couldn't be hit by a truck tomorrow. Unless you cannot WAIT to get to work because you love your job so much, get out and carpe diem.

 

[Harm]

I should be giving advice?

My advice to get to 1 million. Save alot and save early. Don't go out when you are young and say, oh, I'll wait and save next year, their is so much to buy, so much I've ever wanted. It doesn't work that way. Second, I would tell you to watch who you marry. Marry someone who sees the same mountain as you and even better yet, will work and match your salary.

After you have kids, forget about saving. You will have to live off what you have saved and HOPEFULLY, it will get you to 1 million. It did for me. With $700,000 in investable assets, my portfolio can go up OR DOWN $8000/day. With an average about $2500 up and down on average. That is powerful stuff.

 

[Sam]

I agree with the doubters here. I read everything written by Harm, and I think he full of it.

 

[cute fuzzy bunny]

Dont doubt him. He's a lawyer AND a fighter pilot, fer chrissakes.

 

[bbbamI]