How long did it take you to reach net worth milestones?

I would expect growth rates in net worth to be erratic and non-linear for most people. If I had to generalise:

1. after a few years in the work force, promotions/pay rises will allow for an increased level of savings (although other expenses like children will come along to offset this)

2. as your net worth grows, you start to get an increasing component of growth comes from return on investment rather than savings

3. with age comes experience - the ability to get better returns on your money

4. returns on investment will almost never be in line with the market average - get a few good years in a row and your net worth will take a big jump

5. when you buy your first property, you will have a mortgage. If the property appreciates your net worth will appreciate at a rate compounded by the leverage

In my own case, I can point to:

1998: promotion at work and stock markets recovering from the Asian crisis combining to give a significant boost to net worth

2000: major promotion - my income more than doubled and I saved most of the extra income

2004: buying HK property for investment using debt finance - significant appreciation in values in the years which followed

2009: change jobs - invest lump sum payouts and existing cash balances in emerging market equities and HK real estate - massive rise in net worth

In between there have been years when my investments have lost money and expenses (like our wedding) have been much higher than normal.
 
W2R said:
I usually participate in this type of thread, but I am too lazy to do that this afternoon.
Click to expand...
Spoken like a true retiree. You go girl. :cool:
I remember only the first $100K in my TSP 401(k), but I'll be darned if I can remember what year that happened.
And I am too lazy to go look it up. :LOL:
 
I finally got the law license and could potentially take a job paying 50-100% more than what I'm making now in engineering. But it would mean lots more stress, long hours, hard work, and some more work related expenses (clothes, maybe new-ish car, commute, dry cleaning, needing to hire some household tasks out etc).
Click to expand...

After 30 years in private law practice, I have to say that it sucks the life out of you. It is quite a siren song though. About midway through my years in practice I considered switching careers, actually went to school part time at night and became licensed in another more interesting, but low paid, field. I ended up not switching and decided to have more children (thereby wanting more income).

I contrast my work to that of DH. DH works for a megacorp in a job that on the surface pays much less than mine. But...he has wonderful benefits (it is his pension lump sum that will allow us to retire). And, he gets 7 weeks of time off every year. When he, say, gets sick, he takes the days off and when he goes back to work...well, he goes back to work. He doesn't have to make up the time. He might have a time sensitive project that he would have to put in extra time to get out but even that is rare.

On the other hand, in private practice, there is the constant pressure of billing enough hours. If I get sick, it is expected that I nonetheless bill the same amount as someone who wasn't sick. On paper I don't have a specific amount of vacation time that I can take during the year. I can take whatever I want. Some people here that and think that is wonderful. What they don't understand is that it really means that I don't get vacation...I just get to time shift. Whether I take 2 weeks of vacation or 0 weeks or 6 weeks -- I still have to bill the same amount.

DH and I figured out how many hours he is actually expected to work during the year. It works out to about 1500 hours. His employer is very happy with that level of work. If I billed 1500 hours that would be considered terrible.

I have considered asking to work less hours for less pay. However, we are so close to retirement that I probably won't. If I was going to continue working 3 or more years I probably would but I think we are closer to retirement than that.
 
I second what Katsmeow says about private practice law. It can be a very stressful career - very long hours, no control over your schedule (including weekends and evenings/nights), etc etc etc. There are people who thrive in this sort of environment and I used to be one of them - once we had children I found I did not have the flexibility to do everything I wanted without sacrificing something that was important to me. Sure the money is good - very good in fact - and it will enable me and my wife to retire in my mid-40s - but sometimes I really wonder if it is worth it. Ask me again as I walk out the door for the last time on 31/12/2013 and I will probably say yes. Right now I'm not so sure.

Working reduced hours is usually a bad deal for the individual - you get a reduction in pay which is proportionally much greater than the reduction in hours and are still expected to be available whenever the clients want you. If you are going to do it, go full time and re-evaluate after a few years.
 
I chart my nw on an excel spreadsheet, and since Ive only been doing it a few years, its very accurate, and goes all the way back to the paycheck to paycheck days.

Age 24: January 06-May06...Took me 5 months to go from 1k to 2k :blush: Random j*bs, unemployment, just trying to survive.

July of 07- Took 14 months to go from 2k to 10k. (Started LBYM somewhere in there)

April of 08- Took 9 months to go from 10k to 20k.

July of 09- Took 16 months to go from 20k to 50k.

December 09- current nw: 63k

I want to get that 100k by March of 2011. :greetings10:
 
I started at zero in 1984 after my divorce. I saved $3K that year. 1985 my dad gave me 13K plus I saved 2K and bought a house. After closing cost and everything my net worth was maybe 15K. I paid down the mortgage over the next few years and saved 2K a year in a IRA. So after about 1990 I had a house and tiny mortgage and about 12K saved. I managed to keep saving $2K a year and put myself through two more years of college in cash. I rented out my house and bought a new one in 1992 and sold the old paid off house for 90K in 1994 so perhaps had a net worth of 100K after closing cost from selling and the cost of buying the new one.

So about 100K in 10 years.

From 1994 to 2000 I twice had a 401K to put 15% in put after I started jobs so only a few thousand total. Still putting 2K in IRA.

When the ROTH IRA came out I converted 67K in
IRA money and was putting into the 401K so my net worth was probably 150K by 2000.

I lost my job, had two really bad years and the stock market crashed. The house was still appreciating but still took maybe 5 years to go from 67K invested to 100K.

2003 this started looking up ROTH was increased to 5K and we got a new 401K that you could put in 14K so I was saving the max in both or about 20-22K a year from 2003-2007.

My equity in my house was about 300K so I refinanced to take out money to invest.

I put that in the markets and in 2007 hit a net worth of over 600K, 400K invested and 200K equity.

Then the house went down and the market went down. My investments lost 170K and the house about 100K so my net worth was about half of the high.

This year I went from that bottom to investments up about 102K and the house holding it's own so net worth is about 500K.

The first 10K is the hardest, since it requires living below your means for a long time. Most young people start of with a negative net worth so even getting to zero is hard.
 
Certain types of "achievement levels" for us were set along the path over the past 30 years. For example: Goal of having most of mortgage paid off by the time we started a family and went to 1 income..rare but achieved. By the time 1st child in 1st grade have enough set aside in zero coupon bonds to pay for state univeristy 4 years....acheived. By the time we could get out from under large corp setting moving into small corp job with less benefits but more freedom...achieved. By the time we could jettison corp health benefits but still be healthy enough to be insured on our own apply and qualify for high deductible health plan with HSA to allow us to change location of residence and jobs at our will vs. being stuck in a job due to future health. Now...recent meltdown was a wake up call....make sure despite future inflation threats that not too much is in equities or in weaker bonds. Lost quite a bit in real estate fund sectors and with CIT group....zero bonds with gov't still look like great decision many years ago. Last tuition bill about to be paid....money in account left over. Cash is king....still north of pre retirement $$ levels but will stick with it a few more years to build a cushion on current nest egg. Don't need much in early retirement but recent market turmoil says build the number a bit higher before either job loss or health loss might hit. Anyway...setting goals and measurement used along the way....very active effort to save money and keep it locked away has allowed a feeling of being secure or at least partially secure. Now...how much is enough is the question never able to be answered?
 
I started investing in, as Dickens might put it, the best of times, the worst of times, times much like our own, the ‘70s. I never expected my PF to amount to a hill of beans but kept at it anyway. I tried to focus my mind elsewhere and I’m ashamed to say this, when I was fully involved with and enjoying w*rk, I remember feeling glad I didn’t have time to think of the bottom line. During the ‘80s to mid-'90s my PF bounced around a forgotten but nice number, it seemed normal to make little progress but by 2007 I was surprised that there was more than 25 times expenses.
 
traineeinvestor said:
I would expect growth rates in net worth to be erratic and non-linear for most people.
Click to expand...
Agree, and in some cases there are special circumstances, which may have been compounded by the economy of the time. Some started their own business, and rarely does that take a straight or even normal curved growth.

In my case I joined a company that gave stock options, and did very well especially during the dot.com bubble. Stock options are volatile and I had almost all of my eggs in one basket.
I remember it took about a year for those options to hit 100K because that's what the number of shares * strike price was, and the stock doubled. Then I got more options and it kept more or less doubling for a few years so $1M and above didn't take too long. I also hit some landmarks in reverse when the bubble burst and I didn't diversify well enough.

I've thought about trying to figure out where I'd be without those options, since I did work hard at saving during the same time, but when I tried to think about how I'd do it, it didn't seem worth the effort. I figure my time is better spent focusing on where I'm at now, and the only reason to look at the past is to avoid making some mistakes.
 
Mine would look like the story of the tortoise just slow and steady .I started as newly divorced single mother socking away $25 a paycheck than as I got raises I added some more . I never made more than $60,000 a year but I continued to save . My last years of full time work I was saving a $1,000 a paycheck and paying for college tuition . I never really had a set amount I thought I needed to retire to me it was more a mental rediness . When I finally decided enough was enough I had a net worth of two million . So in answer to how long it took me . It took me thirty years .
 
I've found mint.com to be bad for net worth obsession.

Previously it was somewhat laborious to determine net worth so I'd very rarely do it, but now I can get a pretty close idea with the click of a mouse so I find myself checking it after big market moves to see if I've crossed over or back under threshholds.
 
Contrary to the laws of compounding but consistent with the laws of the street, I put away almost nothing until I had my last educational loan paid off around age 40, then a few more years as we finally acquired some of the basic possessions which my friends had had for years.

Fortunately, if a little belatedly, we knew what faced us financially. We went on an accelerated savings plan (detoured by kids' 13 years of college). By the time I got my current job 7 years ago we were saving 25% of income, about half of which was qualified. The curve steepened and now at age 60 we are near our goal.

The deferred income stream, serious though appropriate debt associated with my chosen profession (especially in my nonsurgical specialty) can be ER killers. I feel very fortunate that we were able to salvage it in the nick of time.

When your portfolio earnings exceeds your max'd out annual contributions, it's a good feeling.
 
bank5 said:
I've also heard people say how the first $100k is the toughest. Was this the case for you and if so, why? Compound interest, paying off debt, becoming established in your career, buying a house?
Click to expand...

I think for us, given the crappy returns in the market this past decade, the biggest influence has been the increase in the amount we could contribute to our 401ks. For years the amount for IRAsand 401k contributions wasn't indexed to inflation. Plus they added the catch up for age 50 and above.

Our goal is to pay for a house (done) and save enough for retirement in 21 years. We got a late start saving and I made some mistakes during the dot com bubble, so we aren't getting a lot of help via compounding.

LBOMs and having decent paying jobs is what will get us there. And yes, the first $100k was the hardest.
 
Interesting... a quick glance through the posted numbers suggests that on average a lot of folks here doubled their NW every 4 years or so. (FIREdreamer is a notable exception planning to double it in next 2.)
 
If we use the rule of 56 (years x interest to double an investment) then doubling NW in 4 years would approximate to a 14% annual increase. This should be achievable during accumulation years with aggressive contributions to the portfolio and a single digit positive return on investment.
 
smjsl said:
FIREdreamer is a notable exception planning to double it in next 2
Click to expand...

I have a good reason for that, i.e. a large number of stock options vesting rapidly over the next 3 years.
 
Meadbh said:
If we use the rule of 56 (years x interest to double an investment) then doubling NW in 4 years would approximate to a 14% annual increase. This should be achievable during accumulation years with aggressive contributions to the portfolio and a single digit positive return on investment.
Click to expand...
This is new to me. I know the rule of 72 (72/interest rate in % = years to double). This gives 5 and change years at 14%.

Can you point me to something describing the 56 rule? Google can't.

Thanks
 
Katsmeow said:
After 30 years in private law practice, I have to say that it sucks the life out of you. It is quite a siren song though. About midway through my years in practice I considered switching careers, actually went to school part time at night and became licensed in another more interesting, but low paid, field. I ended up not switching and decided to have more children (thereby wanting more income).

I contrast my work to that of DH. DH works for a megacorp in a job that on the surface pays much less than mine. But...he has wonderful benefits (it is his pension lump sum that will allow us to retire). And, he gets 7 weeks of time off every year. When he, say, gets sick, he takes the days off and when he goes back to work...well, he goes back to work. He doesn't have to make up the time. He might have a time sensitive project that he would have to put in extra time to get out but even that is rare.

On the other hand, in private practice, there is the constant pressure of billing enough hours. If I get sick, it is expected that I nonetheless bill the same amount as someone who wasn't sick. On paper I don't have a specific amount of vacation time that I can take during the year. I can take whatever I want. Some people here that and think that is wonderful. What they don't understand is that it really means that I don't get vacation...I just get to time shift. Whether I take 2 weeks of vacation or 0 weeks or 6 weeks -- I still have to bill the same amount.

DH and I figured out how many hours he is actually expected to work during the year. It works out to about 1500 hours. His employer is very happy with that level of work. If I billed 1500 hours that would be considered terrible.

I have considered asking to work less hours for less pay. However, we are so close to retirement that I probably won't. If I was going to continue working 3 or more years I probably would but I think we are closer to retirement than that.
Click to expand...

Your DH's schedule is a lot like mine. I get 21 days of paid time off a year, plus a large number of holidays. In my company, people respect the fact that you're on PTO. As long as you have some sort of coverage for your projects, people won't bother you until you get back. My pay is probably half of what I could make in private practice, but as you point out, I would definitely "earn" the extra money. Fortunately, my wife earns as much (and sometimes more) than I do. Her schedule is transaction-based, not hours-based. As a result, we both generally have the time to do the things we want (e.g., go to the gym 4-5 days a week), and we both still get to spend time with our daughter in the evenings and on weekends (daycare while we both work). This is why I am reluctant to chase the money. Children are young only once.

I read the following on another message board a few years ago: "You can bill your time, but you can never buy it back."
 
kumquat said:
This is new to me. I know the rule of 72 (72/interest rate in % = years to double). This gives 5 and change years at 14%.

Can you point me to something describing the 56 rule? Google can't.

Thanks
Click to expand...

My error, apologies! :blush: You are correct, the rule is of 72. So going back to the original problem, which was the rate of increase generating a doubling of NW within 4 years, that would be 18%. Still achievable early in a career with aggressive savings.
 
Our NW doubling rate (includes our house):

$100 to $200 in about 3 yrs
$200 to $400 in about 2 yrs
$400 to $800 in about 4 yrs

Various factors I think make it difficult to truly predict how long it will take to reach a milestone - not the least of which is a major market downturn...
 
simple girl said:
Our NW doubling rate (includes our house):

$100 to $200 in about 3 yrs
$200 to $400 in about 2 yrs
$400 to $800 in about 4 yrs

Various factors I think make it difficult to truly predict how long it will take to reach a milestone - not the least of which is a major market downturn...
Click to expand...

Glad to see you're doing so well.....can you tell me where I can buy a house for less than $800?

:LOL:
 
traineeinvestor said:
I second what Katsmeow says about private practice law. It can be a very stressful career - very long hours, no control over your schedule (including weekends and evenings/nights), etc etc etc. There are people who thrive in this sort of environment and I used to be one of them - once we had children I found I did not have the flexibility to do everything I wanted without sacrificing something that was important to me. Sure the money is good - very good in fact - and it will enable me and my wife to retire in my mid-40s - but sometimes I really wonder if it is worth it. Ask me again as I walk out the door for the last time on 31/12/2013 and I will probably say yes. Right now I'm not so sure.
Click to expand...

I guess I am lucky that I have gotten myself into a position that we can achieve FIRE by age 40 in my current non-law field, or 37 if I switch to a significantly higher paying legal position. Either way it is very early and I really question if it is worth sacrificing so much for the next 7 years just to exit the workforce a little earlier. Maybe I will end up trying the high paying firm position for a while to cut my teeth and then work my way into something less stressful (in house/govt).

Or maybe I can just retire on what I have now and persuade the young DW to relocate our family to Mexico/Thailand! :D
 
You must log in or register to reply here.

Similar threads

Chuckanut
Cruising - How did you start doing it?
2 3 4
Replies
87
Views
3K
Chuckanut
Chuckanut
S
Do you want to manage it?
2
Replies
31
Views
2K
djsander
D
Tranquility Base
When to Sell Positions With Unrealized Gains
2
Replies
38
Views
2K
TheWizard
T
Y
How did you decide on your investment strategy?
2 3
Replies
50
Views
5K
Crabbyjerry
C
T
Retired 10 years today!
Replies
18
Views
1K
Koolau
Koolau

Latest posts

Back
Top Bottom