Poll:How You Got to $1 million NW

[Perryinva]

Does a mil in mostly tax deferred accounts count? Realistically after taxes it is only $800k.

Also, do you subtract house liability? Just curious, as I could sell the house next month and rent, and have 1.5M. Instead, we plan on selling in a year, and taking out a 30year with 20% down and investing the rest.

 

[Kwirk]

DW and I are physicians. I worked for the federal government with some part-time private practice. DW worked for the state. We each have pensions and SS. While we were not especially frugal we always maximized TSP, SEP, etc contributions. For many years, we didn't give much thought to how our money was invested.

When we retired early in 2008 our NW was a bit less than 1M. Within a couple of years we hit the first $M and we've enjoyed watching the pot continue to grow.

(It's unlikely that we'll ever need more than our pensions/SS so I guess we're just growing a nest egg for our kids and grandkids.)

 

[DrRoy]

Does a mil in mostly tax deferred accounts count? Realistically after taxes it is only $800k.

Also, do you subtract house liability? Just curious, as I could sell the house next month and rent, and have 1.5M. Instead, we plan on selling in a year, and taking out a 30year with 20% down and investing the rest.

I count the full value of tax deferred accounts and then consider the taxes as an expense. You should deduct your loan amounts to calculate NW. When I am just considering retirement assets though, I ignore home equity.

 

[iloveyoga]

I also voted saving and investing, but it was a long, slow road that we did not really know we were on. We literally started with nothing (similar to many I am sure), both from very modest families. I worked in the retirement biz, so I always did what we told our clients to do, from a very early age. And always, even now, LBYM.

We did get lucky, or have good timing, and all three of the houses we have owned and lived in have always appreciated and now our last house has been paid off for seven years.

Very interesting thread, thank you.

P.S. When I think of all the mornings I got up, got kids off, and went to work, no it was not luck. We worked for all of it.

 

[Andre1969]

Overall, it was a combination of inheritance, real estate, and saving/investing from employment income that got me to $1M, but the bulk of it was from saving/investing.

 

[rayinpenn]

I have to say having started out as poor as a church mouse. I am grateful that we live in a country where working smart and hard can pay off.


1. Saving first
2. A decent income - it would difficult to build a pile if you made the minimum wage.
3. Frugality
4. Investing in the market - index and dividend funds.
5. A spouse of like mindset.

#5 is likely the most important for both wealth building and contentment.

 

[mrfeh]

Having an above-average household income (although not way above) and saving a large percentage of it.

 

[bclover]

combination.

Late dh owned his own business. when he died, I sold his portion of the business to his partner.

But we saved. mainly we were both lucky to be his high wage earning fields (engineering and science) with megacorps that we were able to save with.

 

[NgineER]

#1 - Getting a professional degree in Engineering (Despite being a Poor Hungry Doctor degree, not a Money Doctor)
#2 - Saving and investing
#3 - Meeting my frugal wife who taught me to save again
#4 - Recent real estate investing

 

[jerryo]

I checked "saving," but I expect like most people in that category, the answer is actually a bit mixed.

I've cleared $500-600,000 in profits from three primary residences and currently have about $1.1 million in real estate equity (primary and secondary homes).

I invested about $350,000 that I inherited from my parents about 20 years ago, currently worth about $1 million.

I collected $500,000 in life insurance when my wife died (far too early) more than 15 years ago, but that nearly all went for college and grad school for my kids (now fully independent and successful)

And, I have saved and invested about $3 million in retirement accounts and another $500,000 in after tax investments.

It's mostly been about slow and steady. Always making a reasonably good living (but never more than $150k each a year); always living (a little) below our means; always maxing out our retirement contributions; and saving and investing maybe another 5%. Since we were also covered by pensions and social security, that seemed like enough; and with the power of compounding and some reasonably good stock picks, it looks like it was!

 

[Amethyst]

LBYM, saving and index fund/401K investing. We messed up a lot at first with investing, didn't know what we were doing.

Definitely not real estate! We lost every time.

No inheritance to speak of.

Mostly it was a matter of not eating out, not going on vacations, buying good clothes and taking care of them (and not gaining weight), and driving vehicles till they were not roadworthy any more. Also, buying less house than we could afford.

 

[pj.mask]

If you want to break down by % my ballpark guess would be:

10% inherited
10% real estate appreciation
50% earned income
30% investment returns

I'm not at a mil yet but 95% of the way. I suspect investment returns will increase as a % as time goes on - still very early on (8 years of work)

 

[kypix]

Real estate. But my wife socking away the max in her 401K with a generous company match certainly played a big part as well.

 

[Gumby]

I have been a lawyer for 25 years, but the key to my current net worth has been LBYM, saving and investing, just like anyone else with a job.

 

[racy]

Nothing special. Between learning about compounding and fear of being poor, started saving early and have kept long term perspective in market downturns...and marrying somehow who bought into approach has also helped.

What he said.

 

[Danmar]

I have been a lawyer for 25 years, but the key to my current net worth has been LBYM, saving and investing, just like anyone else with a job.

Right, by definition if you dont win the lottery, get an inheritance, or are self employed, the only way to become FI is LBYM, save and invest. Even being self employed you will need to LBYM. Not surprisingly over 80% said they did it this way. Maybe if the cutoff was higher the results would be more interesting?

 

[traineeinvestor]

Couldn't tick more than one box.

Saving and investing
Profession
Real estate
Having the right spouse

Were all factors and it would be misleading to single out just one.

 

[DrRoy]

Couldn't tick more than one box.

Saving and investing
Profession
Real estate
Having the right spouse

Were all factors and it would be misleading to single out just one.

I was asking that people vote for the one that had the greatest impact. Perhaps I should also have included an option for "combination".

 

[PatrickA5]

I can't tell you how many books/articles I've read over the years that stated that most millionaires got there through owning a business or through real estate. Yet, our poll shows less than 10% went that route.

We've never owned a business and our houses have probably lost money over the years if I were to track every penny spent on them. We also didn't have really high paying jobs compared to a lot of people that post here. So, I guess we are in the 100% savings/investing camp.

 

[audreyh1]

IPO

Technically I guess this meant I owned a business, even though it was a very small percent of the business and I didn't really "feel" like an owner. I didn't answer the poll yet, but I guess I should.

 

[NW-Bound]

I owned shares of two start-ups as I was one of the founding members, but they went belly up and took my substantial invested labor with them. Glad I did not put any of my own money into them.

But I was always a stock investor, hence partial owner of hundreds of companies. Yep, I have always been a "businessman". In contrast, bond and CD holders are lenders.

 

[RobLJ]

85% of net worth is income savings, 401k/403b match, and investment gains; 15% of the rest is real estate (house).

I looked at Quicken and 53% of total portfolio is investment gains; 27% is 401k/403b personal withholding, and 20% the employer match.

It helped to have stayed in our Houston home for 25 years (paid it off in 19 years), for both of us almost to be continually employed, and for DW to receive bonuses that paid off most of the sons' college. After repairs, we didn't make much on the sale of the house, but after 10-15 years, the mortgage/taxes were so small in comparison to the rent equivalent that the savings allowed more investment. Also, we weren't too savaged by the 2002 and 2008 busts (diversifying into small/mid value in 1999-2001 helped immensely in the former).

 

[limeyx]

Startup company stock options

 

[brucethebroker]

Interesting post, OP.
But a survey geared towards FI instead of 1 mil. in investable assets might get a higher number of respondents.....
It is possible, you know.

 

[Rdub]

Doing well in my career, living below my means and investing early and often.