What to do after you reach 1 million?

Harm

Dryer sheet wannabe
Joined
May 12, 2006
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So I have almost $1 million dollars in net worth, with my house being about $280,000 (principal) of that. I am 32 years old. I got here by having no debt other than a mortgage (which is properly substracted out of net worth), good income (over $150,000/yr) and doing it the stocks, bonds, 401K, IRA way. I earn about 11% annualized on my investments.

Is there anyone out there that has advice on how to take $1 million to the next level?

What now? I mean I could continue on this path. But this is the slow path to real wealth, IMO. I know I could start a business, real estate, etc, but since I never did that to "acquire" my wealth, I have very little knowledge in this.

My question is, once you have some wealth, do you have to alter your thinking and investing style? After all, I got here from a "poorer" state. So now I'm "wealthier", are there more options available for accelerating this wealth? For example, I've heard that people with 1 million in net worth reach accrediation status (but I don't know how to take advantage of that). I used to think that $10 was alot, then $100, now I think about $1000 purchases and above. So my though process about savings has changed. So shouldn't my thought process about making money start changing too?

Has anyone out there thought about this? Is anyone taking action or have experience in this?
 
Harm said:
What now? I mean I could continue on this path. But this is the slow path to real wealth, IMO. I know I could start a business, real estate, etc, but since I never did that to "acquire" my wealth, I have very little knowledge in this.

The first million is the most difficult to get...and the easiest to lose. Better dance with who brung you. ;)
 
Harm said:
...Is there anyone out there that has advice on how to take $1 million to the next level?

...What now?

...Has anyone out there thought about this? Is anyone taking action or have experience in this?

First, congratulations and welcome to the millionaire club.
Second, the next step is to continue what you have been doing.

1 million is not what is used to be.

It takes money to make money so use what you have to continue to make more up to the point where you want to get off the fast track and sock away your profits in a "saver" place while you run off and play in ER.

You are doing the right things; you make more than 95% of all other Americans so you are in a good place financially. Keep saving and keep your money working for you. Take profits when you see trends and diversify to keep your (nest) eggs in different baskets.

Finally, enjoy your success and give yourself a big pat on the back. It is not easy to get there and you should be proud of what you have done.

The next million will come easier.
 
The biggest change may be that you need to think more about taxes. Things like muni bonds and tax managed funds may provide better returns. Other than that IMHO the principals are the same, think & hold long term, keep costs low, diversify. And, if you have a great source of income, develop & protect that, especialy if you enjoy it.

Yakers who is not worth $1m unless you add in the pension value....
 
Harm said:
What now? I mean I could continue on this path. But this is the slow path to real wealth, IMO. I know I could start a business, real estate, etc, but since I never did that to "acquire" my wealth, I have very little knowledge in this.

What's your ultimate goal? The million buys you some freedom. You can keep on the same track if that's what floats your boat. You can go back to school for an advanced degree. You can take a break and travel. You can bootstrap your own business.

Take your pick. :)
 
Is one of these a picture of you ?
 

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I guess are there other investment vehicles available for 1 million net worth individuals?
 
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.
 
Yes, joining the millionaire club makes you an "accredited investor."

You can make private placement investments, hedge funds, etc. Basically, the SEC assumes you are now rich enough to lose real money. :)

There's no harm in checking some of this stuff out, but I would stick with what you understand in depth. There's no magic door that opens up and guarantees greater wealth -- just more risk, and sometimes more reward.

Personally, I like the idea of starting a business since that's the only way to have direct control over your investment returns, but it's definitely not the best route for everybody.
 
Harm said:
I guess are there other investment vehicles available for 1 million net worth individuals?
Not really. When you get up beyond a few million, then maybe some things make sense like limited partnerships in timberland. But for us common folks with just a couple million, then mutual funds, ETFs, and real estate are all you really need IMHO.

You may attract leeches who want to use other people's (i.e. your) money, but that does not mean you should let them.
 
wab said:
What's your ultimate goal? The million buys you some freedom.

Don't use chewing tobacco and spit on the sidewalk. Womanfolk draw the line there. An old pickup with rusty fender, Dickies coveralls and a good old dog can make you eck -cen -tric(in contrast to weird) but don't push it.

No white fisherman's boots either. At least up North.

heh heh heh - oh yeah - don't forget Flagship status at Vanguard - they can't see you over the phone/internet.
 
unclemick2 said:
Don't use chewing tobacco and spit on the sidewalk. Womanfolk draw the line there.

If you expect to rate - with the ladies...

then don't expectorate in front of the ladies ! ;)
 
REWahoo! said:
The first million is the most difficult to get...and the easiest to lose. Better dance with who brung you. ;)

I agree. You have reached $1m at 32 - excellent. Depending on your goal, you
should be FI within a few years, and able to retire not too long after that. You
are already earning a good salary, are comfortable investing in stocks, and are
in sight of almost any reasonable goal. Changing techniques at this time would
make no sense unless you are unhappy with work or investing, which does not
seem to be the case.

I followed the same path as you, but was about a decade older. Decent salary
programming, investing in stocks (and my house), then 5 years after hitting
$1m, work started sucking and I got out. I am still doing exactly the same thing,
minus the work.

I suspect most investment vehicles which claim much higher returns than stocks
also involve a considerably higher risk (assuming they are not just rip-off
huckster schemes to begin with). Certainly the hedge / commodity / private
equity deals I have seen were. I did look at some in the past few years, but
none passed my 'sniff' test.
 
Thanks for all the replies. I was even thinking about paying off my 5.25% 15 year mortgage this year because I was afraid the market will tank. Go figure! (probably not paying will come back and haunt me).

I have also thought about taking all $700,000 or so and putting it into treasuries and use my savings + interest and buy one LEAP / month. JUST so I can save the principal in case the market tanks.

I don't understand. I GOT here by investing. Now that I am about to hit this vaporous 1 million mark, I'm getting cold feet!

Am I paranoid? Someone please tell me.

Oh, by the way, I need to FI with 2.5 million. But I would prefer to FI by 50. I don't know if I can do it with the Treasury option. I don't know if I could do it period with stocks/bonds by 50 either. I think so though.
 
No reason to be afraid - you got yourself to $1 million! Do what you have always done from now forward - make no changes other than to consider the tax implications of some things.

It is amazing to watch how much you make once you get to $1mil - after all, if you get a 10% return on your money, you just made $100,000. When we go to that magic mark in liquid investments, I now marvel at the monthly growth from the base. Last year we made more from our investments then we did from work! Only the defined benefit pension and the medical keeps me there!
 
What to do after you reach 1 million?

Cheer? Run around in circles and howl with glee? Whatever you decide to do,
CONGRATULATIONS!!!!
 
What Rewahoo said. The odd part is...YES...investing is different when you have a million. You get to pay lower fees and a lot of your investing can be cheaper or free by using the higher investor level services many brokerages only offer to those with $1M+.

Other than that, do the same thing and pay less for it.
 
Want2retire said:
Run around in circles and howl with glee?

I remember spending a couple days saying "I am Elmer J. Fudd, millionaire. I own a mansion and a yacht."
 
Doesn't vanguard have a special class for people who invest 1m or more, which can save you a few basis points? That's about all you can expect. Hedge funds and the like are mostly loser bets. Stay invested in a diversified, asset-allocated portfolio with low costs and enjoy.
 
CYCLINGINVESTOR, how did you ever make you income back from quiting work. 1 million can't offset your salary there.
 
Harm said:
CYCLINGINVESTOR, how did you ever make you income back from quiting work. 1 million can't offset your salary there.

My investments did well in the 5 years from mid-2001 when I hit $1m to Oct
2006 when I retired due to a very heavy REIT allocation for most of that
time. The 72(t) payout from my big IRA (funded almost exactly from dividends)
plus the dividends from my regular stocks (minus taxes) roughly matches my
pre-retirement spending. I did not need to replace the part of my salary used
for saving / SS / SDI etc. I also 'celebrated' reaching FI in 2002 by paying off
my mortgage, so my cash flow is actually much higher now than it was for most
of my career.
 
Not sure exactly where your restlessness is coming from having achieved $800K or so in liquid assets (for planning purposes, many don't include home equity as a variable in their FIRE plans unless a specific sale or downsizing is scheduled). You have done very well.

Stay with the plan, meaning steady as she goes with good diversification, disciplined savings, avoiding overspending, etc. etc.

If you're looking for some mental payback for having gotten to be a millionaire, consider this: whatever your anticipated annual expenses might be in retirement, your investments might now -- or soon -- generate that much in returns every year without your doing a thing. OR maybe you haven't gotten there yet, but that milestone will keep you on track so you don't do something crazy and lose your first million in 5 years.
 
The 1990's was a weird decade.

Circa 1990 - my engineering graph paper and no. 2 pencil said I would have 1.3 mil by 2007 at age 63 if I worked, max contributed my 401k and made 10%/yr on average.

Layed off at the end of 1992 - no further contributions I am within 150k by doing nothing. If you could add back the 130k(2005,& 06) to replace Katrina losses - so close it's scary.

Life is often stranger than fiction. But I'll take it.

heh heh heh - a shill for the Boglesque: stay the course, hurry up and just stand there, balanced index - AND lest we forget a little pssst Wellesley for special cases.
 
You say you are 32 and have been saving 32 years...? Now that's starting early!

:)

[edited to remove comment about NW and home valuation.]
 
Harm said:
Is there anyone out there that has advice on how to take $1 million to the next level?
You could consider a divorce to keep you in a familiar zone?

Ha
 
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