>atleast 1M networth, and it seems like there's no way I'd ever have that much money, especially before retirement.
>For reference, I'm 23 and make 80k+ 10% bonus. I have about 18k in retirement accounts, 5k in a hysa, 3k in ETFs, and 2k in cash.
I'm 44 and have a net worth of $1M. At 44, I'm making what you're making at 23. When I was younger, I made much less. At 23, I was making **less** than minimum wage and had a negative net worth. I have not inherited anything. You will have a ***much*** easier time getting to millionaire status than I did.
Mostly saving.
I've never saved less than 10% of my income, even though that meant being homeless for a few month, twice. This year I will invest 35% - 40% of my after tax income. I could live off of 3% of my portfolio, which basically means I could retire now if I wanted to live a very frugal lifestyle. I'm planning to retire in 3-6 years and live lower middle class with lots of free time. I'm not buying the latest electronics. I drive a Honda Fit and I'm typing this on a PC that I bought in 2008, if that tells you anything.
Most of my investments have been s&p500 index. I have varied from that on a few occasions, won some, lost some, on average I have beaten the s&p, but not by much.
Invest. Spy. Roughly doubles evey 8 years. 28k right now for you. 40 years later when youre 63 it may have doubled 5 times. 28k - 56k - 112k - 224 - 448 - 898. Thats with 0 more contributions. Keep doing your best to max out tax adv accounts, roth 401k roth ira, hsa. Any extra into a brokerage. Youll be fine.
Keep in mind that the key is not just saving, but what you do with the money you save. Invest it all in a low cost ETF that tracks the S&P 500 and your money will roughly double every 7 years (following historical trends). You should have no trouble getting there if you do this.
I left a HCOL area, took a 12% pay cut and now my money goes significantly further. It's quite possible. I have far more to invest every month since leaving the coast, even with the small pay cut.
Did you notice a real QOL change? I’ve been contemplating moving to some super cheap city for a year or 2, but I worry that I’d miss the comforts of a city
I have a 14 room house that backs into 25 acres of protected woodland. I'm 25 minutes from downtown and 10 minutes from the airport. There's 4 grocery stores within 5 minute radius of my house. I didn't move to Mars I moved off the coasts. What "comforts of a city" are you concerned you're going to lose? Honest question, I'm not being a smartass, even though I'm on reddit.
My quality of life is a thousand times higher. I can eat a different cuisine every day for a month if I wanted to and it'll cost less than doing so for a week back in D.C. People are nicer, I don't have to wade through homeless encampments in front of stores or step on used needles.
I lived in Kabul for three years. I'd rather go back there than the either of the coasts again.
Yes. I’m 42 and have over $1MM net worth. It’s not like that is a lot anymore especially considering real estate is a large portion of those assets.
You are 23 years old? You will do just fine. Even just saving $10k per year will make you rich.
I already make more money from investments than my job.
Just to be clear, around 37 years to get to a million assuming 7 percent return and 500 per month contribution.
If you double the investment you can get there in 28 years. If you can find a way to stock away 5k a month you can get there in 11.
Seems like you are just underestimating the power of compound interest.
You’re actually relatively on track. With your current amount saved, you need to invest about 2k per month. Which is roughly 27% of gross which it sounds like you’re doing.
I would focus on getting as much as possible into tax advantaged accounts first before investing more in your taxable brokerage. I’d also make sure you have an adequate emergency fund of at least 3-6 months in cash or equivalents.
Want to clarify a few things. 1 mil net worth is NOT condos/penthouses/second house/lavish vacations. The lifestyle you are describing is 10s of millions of dollars.
A million dollars today will get you a “decent” retirement. And if your house is part of that 1 million it may be pretty lean. But a million dollars when you retire, in 20-40 years will not get you very far. I would Olán for between 2.3-3 million for a comfortable retirement by the time we are that age.
But yeah anything is possible with compound interest. But the sooner you act the faster it will compound
This. HCOL area. We have 1.2M in home equity. 500k in a 401k. ~400k in semi-liquid investments. There are no penthouse condos, we need to save for a single vacation a year, and shop and the discount grocery stores. In order to comfortably retire here you need 5M minimum and yea, that feels totally unattainable.
I’m 36 and my net worth is worth way over 1m, and I have a decent amount of similar aged friends who are doing better than me. It’s possible for anyone.
Professional investors, (ie funds), publish their investment activities 45 days after the end of every quarter. Just google “(fund name) 13F”.
For instance, Baron Capital took a large position in INTA. I’m not suggesting you to buy the stock. But it’s worth asking the question What does this large fund see that we don’t?
Berkshire Hathaway has been buying Occidental Petroleum for the past several years. In the past, Warren Buffet has commented that oil was his favorite inflation hedge. He also likes to buy companies he can hold forever. What can we infer as to his opinion?
AI is going to be huge. The effort will require hardware upgrades, data centers, and energy. Pay attention, and you’ll find some gems.
At 23 I had a negative net worth, didn't start coming out of the hole till 28 and now at 34 I just passed 100k. Your retirement snowballs fast and compounding works in your favor the more time you have. If you did absoluteley nothing to your 18k for 40 years and let it sit in an etf that netted 10%/year you'd have $814,666. If you managed to also contribute $500 a month to that 18k every month @10% per year you will have $3,589,840. You are well on your way to becoming a millionaire and then some. You will make more money as you get older and be able to contribute more and possibly retire earlier. Being able to retire right at 60 or before is a blessing dude, you will thankful when 99% of the people your age will be working till they die with nothing to their name.
I made $40K at 23. Saved 10% + 4% match. I saved half of every raise. If I got a 4% raise, I bumped up retirement 2%. It keeps your lifestyle in check while still allowing expenses to grow.
Through working hard, going for a graduate degree at night, and figuring out how to make my company more money, I steadily advanced my career. Now I save 40% of a much larger salary.
Compound interest over 15 years plus an ever increasing savings rate got me to a million in investments before 40.
I like graphs like this one that show how much harder the first $100K are than the subsequent $100ks. This math doesn’t include how impactful an increasing savings rate % with increasing income is.
https://fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/
$1m won't get you a penthouse condo in a major city. But good news: by the time you have the money you probably won't want that anymore. Sooner or later the ideal becomes a nice suburban house in a good school district, which is definitely attainable on your trajectory.
7 figures before retirement?!? no way it’s very very very simple. You could have 7 figures in 10-15 years with out anything risky if you just saved money like crazy, put it in the right places to build wealth, & have a spouse who can also help you build along side you.
If someone in America maxed out a Roth IRA at $7000/year and invested a typical company matching 401k ($60,000 salary where 6% is matched at $.50/dollar) for $5400/year including the company match for 40 years (age 25-age 65), averaging 8% returns annually, they could retire with over $3.5 million.
Not at all. I thought the same thing when I was in my early twenties.
Save as much as you can afford and try to max out your 401k. The pay yourself first recommendation is so true.
If you find a dollar amount you are comfortable with, set up auto transfers and buy stock monthly. Mine hit in the 15th and I look forward to making the trades. When that money goes in, it shouldn’t come out of your brokerage account. I have a lot of VOO as my main fund.
As the years pass that money will grow and grow, and you will make more and more and what do you know, you’re a millionaire.
I’m not yet, but I’m late 30’s and it won’t be long.
I’m sure that is a great fund, but I live in the US and understand the reporting requirements of US companies much better than the rest of the world so I put the bulk of my money in VOO
Plus I just did a quick search comparing the two and true one site I looked at gave VOO the edge in most categories.
Based on your age and income level already, with proper discipline, $1M should be attainable by the time you hit 40 years old.
Keep it simple. Don't keep up with the Joneses. And just follow https://moneyguy.com/article/foo/
Well your prime earning years are still ahead of you. You’re saving now. The compound return will be great by the time you retire.
To “super charge” things you’ll want to find ways to exchange your labor for sizable portions of early stage growth companies. Think things like Facebook in the early oughts or Google, Netflix … well any FANG company (including Nvidia where I made my first million in the early oughts). You can/should also create a real-estate portfolio. This is a great way to write off depreciation on an appreciating asset and generate passive income.
But real-estate and early stage equity are the true paths to multi millions by the time you turn 40.
It’s completely doable. You will figure it out. Learn how to invest. Investing 5% of your income over a lifetime in a tax free IRA virtually guarantees it. Be ambitious, be creative, stay positive, study business. study rich people. Read “Think and grow rich”. by Napoleon Hill. Oldie, but a goodie. Be fearless. Go got this!
You don't get rich by working MORE hours. You get rich by getting paid MORE for each hour. What is the next step in your career, so that you can make more money? Never be satisfied with where you are at. Always be doing something to increase your skills. I went from a position making $60K to one making about $180K in about 14 years by increasing my skills, learning more, and getting jobs using those new skills.
From Motley Fool: "As of the most recent data from the Federal Reserve, about 18% of households were millionaires. That's approximately 23.7 million households in the United States. And with the strong stock market returns and appreciation in home prices since the end of 2022, it's a good bet there are even more in 2024." Hard NOT to become a millionaire these days.
I know many people with networth in the tens of millions. Precisely 0 of them have penthouse condos, latest and greatest electronics, and they don’t shop at expensive stores.
The reason is for most people building that wealth takes time and sacrifice. Valuing expensive items and saving as much as possible to become wealthy are typically mutually exclusive unless you have very high income.
I was making less than you're making at 31 and had virtually nothing saved for retirement. Two years later I have almost $200k invested and a net worth that'll hit $500k in a few months.
I'm semi-seriously in talks of buying a business for my wife to run while she raises the little ones. If that falls through, I plan to buy an investment property in 1.5-2 years. If it hits, it may be closer to a 3 year plan.
Between my salary, the business, and properties, I'm hoping to be a net worth millionaire by 40. Honestly, with 6 more years of friendly markets, I might hit it regardless on my current trajectory.
You're really young and have a great salary for your age. Keep growing as a professional and job hop when you've hit a ceiling.
"a salary is t scalable" exactly.
I can feel the hate coming already for this. I'm not a big fan of market investments. Once you have more money than one can use or lose it makes sense but not to early. If you put away like 10k a year in the market that's great. But that means you can't scale, as you said. It out of you hands for the most part.
Investing in a business or real estate type things gives you tangible control. With a proper down payment and that 10k a year you can safely buy a rental property. Interest rates are rough ATM but not out of reach when disciplined. Area dependent. Then those things can be leveraged and grown. I have a friend that just quick their job, a good one for 15 years, to sell freeze dried candy. They are working to scale it more. Similar things can be done. Finding partners to buy a small apartment complex in places where owners right are stronger than squatters.
I look at it like this. You can put you money in a big corporation where the CEO makes millions or you can build your own. You have no effect on the scale of your stocks. You can scale your own efforts. Even things like mowing lawns or pressure washing on the weekend can generate a few extra thousand a month with minimal investment. Programing apps and website creation/management don't take lots of time if you already have those skills.
You're doing great for your age especially since you're thinking of when you will hit the $1M milestone. Just buy S&P 500 index (VOO) and/or total US market (VTI) and chill. Always buy no matter what every month. Then also do the following:
Every five years allow some lifestyle inflation. Other years put raises to maxing 401K, HSA, and Roth IRA. Once those are maxed then start on your taxable brokerage account.
Obviously if you have a career where you can move up having a higher salary makes things easier. Someday marry someone with a similar mindset for saving and investing. Even better if they make a similar salary as you or have the potential. Here are some milestones for us if it helps.
NW $1M (March 2021)
$1M investments crossed (June 2023)
NW $2M (February 2024)
It starts to snowball. Assumes paid off primary home is worth $500K after selling fees. $1.6M investments (June 2024).
45M/38F/5F
HHI $340K about evenly split in MCOL. Invest over $200K a year across all accounts.
You would need to invest approximately $22,600 per year to accumulate a million dollars in 17 years, assuming an average annual return of 7.5% in the stock market. This calculation assumes you make the investment at the end of each year.
It’s not improbable or impossible.
You’re doing great.
At you age, I would invest every spare dime I earned in a low cost S&P fund. Think fxaix or fskax. Don't mess around trying to out think the market. Stick with index funds.
My financial planner told me there are two paths to a comfortable retirement. Earn more or spend less. I spent less because, while I loved my work, I didn't make a lot of money. I bought the least expensive house in the best school district in the state and I maintained the house so it didn't fall apart. I rarely ate in restaurants and rarely took expensive vacations. Mostly I went camping and hiking - both free once you have the equipment. I drove my cars for at least 10 years. I bought 90% of my clothes at thrift stores and I learned how to cook inexpensive cuts of meat so they were delicious. It's a lifestyle thing.
It’s very easy to make a million dollars over 40 years. Your retirements accounts will likely exceed a million by retirement age.
The key is to start early. Maximize IRA and 401k because this lets you keep more of your money and give less to taxes. 401k in particular grows with pre-tax money.
I forgot about 20k in a 401k in 2008. I contributed nothing since then. It’s now worth 130k.
That doesn’t include my other 401k and brokerage. Although I didn’t get serious until saving until later, I’ll cross 1million in my retirement by 45.
You are making a lot more than I was at that age, so bank it and invest. In 10 and 20 years you’ll see how much freaking cash you have. Your salary will also grow over time if you build your skills.
"I think I'll retire fine, but even with compound interest I see no way I'd ever be able to buy a crazy condo, or be able to rich in my 40s. Not to mention that most of my money is in retirement accounts, so it's not like I can enjoy that money for another 40 something years."
You are only making 80k$ a year, that is not that much, this is why right now you aren't going to be rich. Don't try to do rich things with that income, you will screw yourself.
You are right that getting another job is pointless, you will just get a burnout. If you really want to become rich, become more valuable as a person. Increase your knowledge to a level where every time you speak, people are wowed. Once more knowledgeable and more valuable, you will go up in rank in your career. People will want you in their meetings. Do so by reading a lot of books, and listening to audiobooks (be careful of "influencers", they may seem cool but most of them just want to sell you a course).
If at any point of your career you seem like you are not moving, switch jobs, increase your opportunities. Also aim for jobs that offer stocks to you. I didn't get rich from stocks but getting 36k$ or 15k$ from stocks does help. And you might get lucky.
I think it is too early for you to think about retirement. Saving yes, retirement no.
Focus on your career. Save. Invest. Don't worry about an event that will happen in half a century.
How much extra are you able to invest every year if you only contribute to your 401k, what your employer will match?
To have spendable cash in your 40s you need to be buying stocks in a taxable account. This means not maxing the 401k, and putting what's left in the taxable account. You also need to live frugally until then. Buy older cars and pay cash. Pay off and stay out of debt. Have a spouse or roommate to pay half of expenses. Ideally, buy a house so you can take advantage of property value increases.
I mean yeah thats true with any amount of money. I’m not looking for enough to where I don’t have to be responsible, just enough to where I’m not counting every dollar every single time I buy something.
You have to consider property-tax/interest/maintenance. For instance, he would’ve already paid $69k in interest if he put 20% down ($256k balance for 30 years @ 4.5%). Add $3k/yr in tax. Add $2 sqft/yr in maintenance.
It’s worked out well for him. But maybe less so at today’s rates (and inflated prices).
Compounding returns is a powerful thing if you start early. With your income and a reasonable savings rate (15%) and investment in broad based index tracking funds (e.g. S&P 500 tracking index fund), you should easily be worth well over $1 million by retirement age.
If you start with $18k, invest $12k a year for the next 40 years, and have a 5% return rate, you end up with around $1.6 million. Make that 9% and you are at $4.6 million. Your actual purchasing power in 40 years will be much less, so returns factoring inflation are more important. And this is assuming you get no additional raises and just keep investing $12k a year.
If you invest more (e.g. 20% or more) and keep investing more as you get raises, the amount you can save goes up. And the age at which you can retire with $1+ million goes down. Saving a $1 million nest egg with your income is easy as long as you are in a position to save at least 15%.
7 figures is a nice goal but when you honestly break down what you're comfortable with, its a lot less than what you think. Im on track to hit 2.5 million when i retire but im comfortable with today's dollar at 2.5k /mo. i have options. just sayn'
>atleast 1M networth, and it seems like there's no way I'd ever have that much money, especially before retirement. >For reference, I'm 23 and make 80k+ 10% bonus. I have about 18k in retirement accounts, 5k in a hysa, 3k in ETFs, and 2k in cash. I'm 44 and have a net worth of $1M. At 44, I'm making what you're making at 23. When I was younger, I made much less. At 23, I was making **less** than minimum wage and had a negative net worth. I have not inherited anything. You will have a ***much*** easier time getting to millionaire status than I did.
Was it just saving that got you there? Or did you go a different route?
Mostly saving. I've never saved less than 10% of my income, even though that meant being homeless for a few month, twice. This year I will invest 35% - 40% of my after tax income. I could live off of 3% of my portfolio, which basically means I could retire now if I wanted to live a very frugal lifestyle. I'm planning to retire in 3-6 years and live lower middle class with lots of free time. I'm not buying the latest electronics. I drive a Honda Fit and I'm typing this on a PC that I bought in 2008, if that tells you anything. Most of my investments have been s&p500 index. I have varied from that on a few occasions, won some, lost some, on average I have beaten the s&p, but not by much.
This is the way
Invest. Spy. Roughly doubles evey 8 years. 28k right now for you. 40 years later when youre 63 it may have doubled 5 times. 28k - 56k - 112k - 224 - 448 - 898. Thats with 0 more contributions. Keep doing your best to max out tax adv accounts, roth 401k roth ira, hsa. Any extra into a brokerage. Youll be fine.
Live below your means. Don't give in to lifestyle creep.
Keep in mind that the key is not just saving, but what you do with the money you save. Invest it all in a low cost ETF that tracks the S&P 500 and your money will roughly double every 7 years (following historical trends). You should have no trouble getting there if you do this.
I left a HCOL area, took a 12% pay cut and now my money goes significantly further. It's quite possible. I have far more to invest every month since leaving the coast, even with the small pay cut.
Did you notice a real QOL change? I’ve been contemplating moving to some super cheap city for a year or 2, but I worry that I’d miss the comforts of a city
I have a 14 room house that backs into 25 acres of protected woodland. I'm 25 minutes from downtown and 10 minutes from the airport. There's 4 grocery stores within 5 minute radius of my house. I didn't move to Mars I moved off the coasts. What "comforts of a city" are you concerned you're going to lose? Honest question, I'm not being a smartass, even though I'm on reddit. My quality of life is a thousand times higher. I can eat a different cuisine every day for a month if I wanted to and it'll cost less than doing so for a week back in D.C. People are nicer, I don't have to wade through homeless encampments in front of stores or step on used needles. I lived in Kabul for three years. I'd rather go back there than the either of the coasts again.
Yes. I’m 42 and have over $1MM net worth. It’s not like that is a lot anymore especially considering real estate is a large portion of those assets. You are 23 years old? You will do just fine. Even just saving $10k per year will make you rich. I already make more money from investments than my job.
No, with time and growth it takes a pretty small amount of money to get to $1M. It's like $500 a month which is less than a car payment.
Just to be clear, around 37 years to get to a million assuming 7 percent return and 500 per month contribution. If you double the investment you can get there in 28 years. If you can find a way to stock away 5k a month you can get there in 11.
Exactly start at 25 with 500 bucks and you get to a million at 62.
Seems like you are just underestimating the power of compound interest. You’re actually relatively on track. With your current amount saved, you need to invest about 2k per month. Which is roughly 27% of gross which it sounds like you’re doing. I would focus on getting as much as possible into tax advantaged accounts first before investing more in your taxable brokerage. I’d also make sure you have an adequate emergency fund of at least 3-6 months in cash or equivalents.
Want to clarify a few things. 1 mil net worth is NOT condos/penthouses/second house/lavish vacations. The lifestyle you are describing is 10s of millions of dollars. A million dollars today will get you a “decent” retirement. And if your house is part of that 1 million it may be pretty lean. But a million dollars when you retire, in 20-40 years will not get you very far. I would Olán for between 2.3-3 million for a comfortable retirement by the time we are that age. But yeah anything is possible with compound interest. But the sooner you act the faster it will compound
This. HCOL area. We have 1.2M in home equity. 500k in a 401k. ~400k in semi-liquid investments. There are no penthouse condos, we need to save for a single vacation a year, and shop and the discount grocery stores. In order to comfortably retire here you need 5M minimum and yea, that feels totally unattainable.
I’m 36 and my net worth is worth way over 1m, and I have a decent amount of similar aged friends who are doing better than me. It’s possible for anyone.
How’d you get there? Was it just saving into ETFs?
Professional investors, (ie funds), publish their investment activities 45 days after the end of every quarter. Just google “(fund name) 13F”. For instance, Baron Capital took a large position in INTA. I’m not suggesting you to buy the stock. But it’s worth asking the question What does this large fund see that we don’t? Berkshire Hathaway has been buying Occidental Petroleum for the past several years. In the past, Warren Buffet has commented that oil was his favorite inflation hedge. He also likes to buy companies he can hold forever. What can we infer as to his opinion? AI is going to be huge. The effort will require hardware upgrades, data centers, and energy. Pay attention, and you’ll find some gems.
Everybody I know personally who are millionaires own their businesses.
At 23 I had a negative net worth, didn't start coming out of the hole till 28 and now at 34 I just passed 100k. Your retirement snowballs fast and compounding works in your favor the more time you have. If you did absoluteley nothing to your 18k for 40 years and let it sit in an etf that netted 10%/year you'd have $814,666. If you managed to also contribute $500 a month to that 18k every month @10% per year you will have $3,589,840. You are well on your way to becoming a millionaire and then some. You will make more money as you get older and be able to contribute more and possibly retire earlier. Being able to retire right at 60 or before is a blessing dude, you will thankful when 99% of the people your age will be working till they die with nothing to their name.
I made $40K at 23. Saved 10% + 4% match. I saved half of every raise. If I got a 4% raise, I bumped up retirement 2%. It keeps your lifestyle in check while still allowing expenses to grow. Through working hard, going for a graduate degree at night, and figuring out how to make my company more money, I steadily advanced my career. Now I save 40% of a much larger salary. Compound interest over 15 years plus an ever increasing savings rate got me to a million in investments before 40. I like graphs like this one that show how much harder the first $100K are than the subsequent $100ks. This math doesn’t include how impactful an increasing savings rate % with increasing income is. https://fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/
It’s not that hard at all if you save and invest over thirty years.
$1m won't get you a penthouse condo in a major city. But good news: by the time you have the money you probably won't want that anymore. Sooner or later the ideal becomes a nice suburban house in a good school district, which is definitely attainable on your trajectory.
7 figures before retirement?!? no way it’s very very very simple. You could have 7 figures in 10-15 years with out anything risky if you just saved money like crazy, put it in the right places to build wealth, & have a spouse who can also help you build along side you.
If someone in America maxed out a Roth IRA at $7000/year and invested a typical company matching 401k ($60,000 salary where 6% is matched at $.50/dollar) for $5400/year including the company match for 40 years (age 25-age 65), averaging 8% returns annually, they could retire with over $3.5 million.
Not at all. I thought the same thing when I was in my early twenties. Save as much as you can afford and try to max out your 401k. The pay yourself first recommendation is so true. If you find a dollar amount you are comfortable with, set up auto transfers and buy stock monthly. Mine hit in the 15th and I look forward to making the trades. When that money goes in, it shouldn’t come out of your brokerage account. I have a lot of VOO as my main fund. As the years pass that money will grow and grow, and you will make more and more and what do you know, you’re a millionaire. I’m not yet, but I’m late 30’s and it won’t be long.
Why VOO and not something like VWCE?
I’m sure that is a great fund, but I live in the US and understand the reporting requirements of US companies much better than the rest of the world so I put the bulk of my money in VOO Plus I just did a quick search comparing the two and true one site I looked at gave VOO the edge in most categories.
Yep
Based on your age and income level already, with proper discipline, $1M should be attainable by the time you hit 40 years old. Keep it simple. Don't keep up with the Joneses. And just follow https://moneyguy.com/article/foo/
Well your prime earning years are still ahead of you. You’re saving now. The compound return will be great by the time you retire. To “super charge” things you’ll want to find ways to exchange your labor for sizable portions of early stage growth companies. Think things like Facebook in the early oughts or Google, Netflix … well any FANG company (including Nvidia where I made my first million in the early oughts). You can/should also create a real-estate portfolio. This is a great way to write off depreciation on an appreciating asset and generate passive income. But real-estate and early stage equity are the true paths to multi millions by the time you turn 40.
It’s completely doable. You will figure it out. Learn how to invest. Investing 5% of your income over a lifetime in a tax free IRA virtually guarantees it. Be ambitious, be creative, stay positive, study business. study rich people. Read “Think and grow rich”. by Napoleon Hill. Oldie, but a goodie. Be fearless. Go got this!
You don't get rich by working MORE hours. You get rich by getting paid MORE for each hour. What is the next step in your career, so that you can make more money? Never be satisfied with where you are at. Always be doing something to increase your skills. I went from a position making $60K to one making about $180K in about 14 years by increasing my skills, learning more, and getting jobs using those new skills.
It is or you make it a goal have a solid plan. Slow and steady worked well for me.
From Motley Fool: "As of the most recent data from the Federal Reserve, about 18% of households were millionaires. That's approximately 23.7 million households in the United States. And with the strong stock market returns and appreciation in home prices since the end of 2022, it's a good bet there are even more in 2024." Hard NOT to become a millionaire these days.
I know many people with networth in the tens of millions. Precisely 0 of them have penthouse condos, latest and greatest electronics, and they don’t shop at expensive stores. The reason is for most people building that wealth takes time and sacrifice. Valuing expensive items and saving as much as possible to become wealthy are typically mutually exclusive unless you have very high income.
I was making less than you're making at 31 and had virtually nothing saved for retirement. Two years later I have almost $200k invested and a net worth that'll hit $500k in a few months. I'm semi-seriously in talks of buying a business for my wife to run while she raises the little ones. If that falls through, I plan to buy an investment property in 1.5-2 years. If it hits, it may be closer to a 3 year plan. Between my salary, the business, and properties, I'm hoping to be a net worth millionaire by 40. Honestly, with 6 more years of friendly markets, I might hit it regardless on my current trajectory. You're really young and have a great salary for your age. Keep growing as a professional and job hop when you've hit a ceiling.
"a salary is t scalable" exactly. I can feel the hate coming already for this. I'm not a big fan of market investments. Once you have more money than one can use or lose it makes sense but not to early. If you put away like 10k a year in the market that's great. But that means you can't scale, as you said. It out of you hands for the most part. Investing in a business or real estate type things gives you tangible control. With a proper down payment and that 10k a year you can safely buy a rental property. Interest rates are rough ATM but not out of reach when disciplined. Area dependent. Then those things can be leveraged and grown. I have a friend that just quick their job, a good one for 15 years, to sell freeze dried candy. They are working to scale it more. Similar things can be done. Finding partners to buy a small apartment complex in places where owners right are stronger than squatters. I look at it like this. You can put you money in a big corporation where the CEO makes millions or you can build your own. You have no effect on the scale of your stocks. You can scale your own efforts. Even things like mowing lawns or pressure washing on the weekend can generate a few extra thousand a month with minimal investment. Programing apps and website creation/management don't take lots of time if you already have those skills.
It depends on how much money you make
You're doing great for your age especially since you're thinking of when you will hit the $1M milestone. Just buy S&P 500 index (VOO) and/or total US market (VTI) and chill. Always buy no matter what every month. Then also do the following: Every five years allow some lifestyle inflation. Other years put raises to maxing 401K, HSA, and Roth IRA. Once those are maxed then start on your taxable brokerage account. Obviously if you have a career where you can move up having a higher salary makes things easier. Someday marry someone with a similar mindset for saving and investing. Even better if they make a similar salary as you or have the potential. Here are some milestones for us if it helps. NW $1M (March 2021) $1M investments crossed (June 2023) NW $2M (February 2024) It starts to snowball. Assumes paid off primary home is worth $500K after selling fees. $1.6M investments (June 2024). 45M/38F/5F HHI $340K about evenly split in MCOL. Invest over $200K a year across all accounts.
You would need to invest approximately $22,600 per year to accumulate a million dollars in 17 years, assuming an average annual return of 7.5% in the stock market. This calculation assumes you make the investment at the end of each year. It’s not improbable or impossible. You’re doing great.
At you age, I would invest every spare dime I earned in a low cost S&P fund. Think fxaix or fskax. Don't mess around trying to out think the market. Stick with index funds.
If you want to be rich, don't have kids.
My financial planner told me there are two paths to a comfortable retirement. Earn more or spend less. I spent less because, while I loved my work, I didn't make a lot of money. I bought the least expensive house in the best school district in the state and I maintained the house so it didn't fall apart. I rarely ate in restaurants and rarely took expensive vacations. Mostly I went camping and hiking - both free once you have the equipment. I drove my cars for at least 10 years. I bought 90% of my clothes at thrift stores and I learned how to cook inexpensive cuts of meat so they were delicious. It's a lifestyle thing.
It’s very easy to make a million dollars over 40 years. Your retirements accounts will likely exceed a million by retirement age. The key is to start early. Maximize IRA and 401k because this lets you keep more of your money and give less to taxes. 401k in particular grows with pre-tax money. I forgot about 20k in a 401k in 2008. I contributed nothing since then. It’s now worth 130k. That doesn’t include my other 401k and brokerage. Although I didn’t get serious until saving until later, I’ll cross 1million in my retirement by 45. You are making a lot more than I was at that age, so bank it and invest. In 10 and 20 years you’ll see how much freaking cash you have. Your salary will also grow over time if you build your skills.
"I think I'll retire fine, but even with compound interest I see no way I'd ever be able to buy a crazy condo, or be able to rich in my 40s. Not to mention that most of my money is in retirement accounts, so it's not like I can enjoy that money for another 40 something years." You are only making 80k$ a year, that is not that much, this is why right now you aren't going to be rich. Don't try to do rich things with that income, you will screw yourself. You are right that getting another job is pointless, you will just get a burnout. If you really want to become rich, become more valuable as a person. Increase your knowledge to a level where every time you speak, people are wowed. Once more knowledgeable and more valuable, you will go up in rank in your career. People will want you in their meetings. Do so by reading a lot of books, and listening to audiobooks (be careful of "influencers", they may seem cool but most of them just want to sell you a course). If at any point of your career you seem like you are not moving, switch jobs, increase your opportunities. Also aim for jobs that offer stocks to you. I didn't get rich from stocks but getting 36k$ or 15k$ from stocks does help. And you might get lucky.
No. Check out r/Fire
I think it is too early for you to think about retirement. Saving yes, retirement no. Focus on your career. Save. Invest. Don't worry about an event that will happen in half a century.
It's never too early to start thinking about retirement. OP is doing great!
No it is too early. He just finished high school a few years ago.
I disagree completely. I would like to invite OP to join the FIRE community in Reddit
How much extra are you able to invest every year if you only contribute to your 401k, what your employer will match? To have spendable cash in your 40s you need to be buying stocks in a taxable account. This means not maxing the 401k, and putting what's left in the taxable account. You also need to live frugally until then. Buy older cars and pay cash. Pay off and stay out of debt. Have a spouse or roommate to pay half of expenses. Ideally, buy a house so you can take advantage of property value increases.
You can easily spend $1,000,000 if your mindset is you can go shopping without worrying about price.
I mean yeah thats true with any amount of money. I’m not looking for enough to where I don’t have to be responsible, just enough to where I’m not counting every dollar every single time I buy something.
You changed the narrative from 'by retirement' to 'by 40'. If your job has a glass ceiling then get one that doesn't.
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You have to consider property-tax/interest/maintenance. For instance, he would’ve already paid $69k in interest if he put 20% down ($256k balance for 30 years @ 4.5%). Add $3k/yr in tax. Add $2 sqft/yr in maintenance. It’s worked out well for him. But maybe less so at today’s rates (and inflated prices).
Compounding returns is a powerful thing if you start early. With your income and a reasonable savings rate (15%) and investment in broad based index tracking funds (e.g. S&P 500 tracking index fund), you should easily be worth well over $1 million by retirement age. If you start with $18k, invest $12k a year for the next 40 years, and have a 5% return rate, you end up with around $1.6 million. Make that 9% and you are at $4.6 million. Your actual purchasing power in 40 years will be much less, so returns factoring inflation are more important. And this is assuming you get no additional raises and just keep investing $12k a year. If you invest more (e.g. 20% or more) and keep investing more as you get raises, the amount you can save goes up. And the age at which you can retire with $1+ million goes down. Saving a $1 million nest egg with your income is easy as long as you are in a position to save at least 15%.
7 figures is a nice goal but when you honestly break down what you're comfortable with, its a lot less than what you think. Im on track to hit 2.5 million when i retire but im comfortable with today's dollar at 2.5k /mo. i have options. just sayn'
Just imagine all the things you will be able to buy with $1,000,000 in 40 years. Epic.