Race to 1 Million Help

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Race to 1 Million Help

Postby thinkgreen » Thu Jan 03, 2013 5:51 pm

I am 23 years old and I am a graduate student graduating this Spring. For this year resolution, my friend and I decided to challenge each other and see who gets to a million dollar first. Here's what I've done so far..

I have maxed out my 2010, 2011 and 2012 contributions to my Roth IRA.
I have 2k in betterment with a 9% return.
I have 2.5k in lending club with a 13% return.
I have 5k in a 1 yr money market certificate at 1.15% apy and will receiving the funds back in February.
I have 40k in a savings account at .95% apy.

My current situation...
I am graduating this Spring with no student debts.
I still live with my parents and therefore have no household expenses.
I work part time. My annual income last year was 10k.
I receive 2k grants monthly from my internship until May.
I purchased a car last year and do not hold any car debts.

What should I attempt next?
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Re: Race to 1 Million Help

Postby yb » Thu Jan 03, 2013 6:35 pm

Get a job that pays well.
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Re: Race to 1 Million Help

Postby mhc » Thu Jan 03, 2013 6:39 pm

yb wrote:Get a job that pays well.


and live far below your means so that you can save as much as possible. More than likely, it will be your savings that get you to $1000000 unless you can start your own business and be successful at it.
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Re: Race to 1 Million Help

Postby Liquid » Thu Jan 03, 2013 6:40 pm

You are young and way ahead of the curve, congrats! If you want to make a mill, ASAP, you would likely benefit from a much more equity heavy portfolio. You should know that the real returns from Lending Tree and the like have been studied and are poor, I would run not walk from these investments. It sounds like you would benefit most from further study at this point. I can recommend "the Four Pillars of Investing" as a good place to start (no disclosures necessary).
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Re: Race to 1 Million Help

Postby stratton » Thu Jan 03, 2013 7:02 pm

Somewhat of a specific order.
    -If you move out first and last month rent plus deposits.
    -An emergency fund of 6 months expenses. Increase as your expenses go up.
    -Roth IRA.
    -Max out 401K.
    -Ibonds. You can only buy $10K a year. Start accumulating them at some point for in the future.
    -Car fund to pay cash for your future vehicle. The ever popular "make payments to yourself" monthly.
    -Home down payment fund.
That ought to keep you busy for a year or two. :wink:

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Re: Race to 1 Million Help

Postby thinkgreen » Thu Jan 03, 2013 7:08 pm

mhc wrote:
yb wrote:Get a job that pays well.


and live far below your means so that you can save as much as possible. More than likely, it will be your savings that get you to $1000000 unless you can start your own business and be successful at it.


Yep, I plan on starting my own business soon and being successful. ^^

Liquid wrote:You are young and way ahead of the curve, congrats! If you want to make a mill, ASAP, you would likely benefit from a much more equity heavy portfolio. You should know that the real returns from Lending Tree and the like have been studied and are poor, I would run not walk from these investments. It sounds like you would benefit most from further study at this point. I can recommend "the Four Pillars of Investing" as a good place to start (no disclosures necessary).


Thanks, I am checking out the book now! (:

stratton wrote:Somewhat of a specific order.
    -If you move out first and last month rent plus deposits.
    -An emergency fund of 6 months expenses. Increase as your expenses go up.
    -Roth IRA.
    -Max out 401K.
    -Ibonds. You can only buy $10K a year. Start accumulating them at some point for in the future.
    -Car fund to pay cash for your future vehicle. The ever popular "make payments to yourself" monthly.
    -Home down payment fund.
That ought to keep you busy for a year or two. :wink:

Paul


What are Ibonds? Where can you purchase it? Thanks for sharing! I've never heard of Ibonds.
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Re: Race to 1 Million Help

Postby runner9 » Thu Jan 03, 2013 7:40 pm

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Re: Race to 1 Million Help

Postby pkcrafter » Thu Jan 03, 2013 9:20 pm

I am 23 years old and I am a graduate student graduating this Spring. For this year resolution, my friend and I decided to challenge each other and see who gets to a million dollar first.

This is a reeealy bad way to start-off. Good investing uses the plow horse, not the race horse. Being competitive will cause you lose site of the long term job and cause you to make mistakes. You may beat your friend, but it's likely you'll both lose to the smart investor.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Race to 1 Million Help

Postby thinkgreen » Thu Jan 03, 2013 10:37 pm



Thanks, I found it very informative. ^^

pkcrafter wrote:
I am 23 years old and I am a graduate student graduating this Spring. For this year resolution, my friend and I decided to challenge each other and see who gets to a million dollar first.

This is a reeealy bad way to start-off. Good investing uses the plow horse, not the race horse. Being competitive will cause you lose site of the long term job and cause you to make mistakes. You may beat your friend, but it's likely you'll both lose to the smart investor.

Paul


Thanks for your concern!
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Re: Race to 1 Million Help

Postby RenoJay » Thu Jan 03, 2013 11:02 pm

Liquid wrote:You should know that the real returns from Lending Tree and the like have been studied and are poor, I would run not walk from these investments.


Could the person who made this quote please provide some links to the study(ies) referenced? My experience with LendingClub has been quite good, but I'm curious to see whatever stats were used to come to this conclusion. Thanks.
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Re: Race to 1 Million Help

Postby Grt2bOutdoors » Thu Jan 03, 2013 11:39 pm

Enjoy your youth, it goes by quickly. The money will come, you can never recoup time, though.
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Re: Race to 1 Million Help

Postby DTSC » Fri Jan 04, 2013 12:29 am

Find wealthier parents!
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Re: Race to 1 Million Help

Postby zaboomafoozarg » Fri Jan 04, 2013 12:33 am

Grt2bOutdoors wrote:Enjoy your youth, it goes by quickly. The money will come, you can never recoup time, though.


This times 1000.
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Re: Race to 1 Million Help

Postby EmergDoc » Fri Jan 04, 2013 12:41 am

yb wrote:Get a job that pays well.


Amen. Increase income. When you are saving $100-200K a year it's a lot easier to get to a million.

I'm not sure what kind of returns you're talking about from Lending Tree, but lots of people are making double digits returns from Lending Club. The average return is around 6%. I've only been doing it for 15 months but I'm at 13.15% annualized. I expect 8-12% returns long term.
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Re: Race to 1 Million Help

Postby 555 » Fri Jan 04, 2013 2:35 am

This is a bad idea. Racing someone from A to B is not the best way to get from A to B.
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Re: Race to 1 Million Help

Postby staythecourse » Fri Jan 04, 2013 9:51 am

I hate to break it to the youngsters on here, but there are no quick ways to riches. If you want to be serious about getting to a million I would say don't waste your time on this site instead go out and get the highst paid job you can get AND LBYM. Studies have shown the age at which you start (you already did that), and how much you save is MORE important then everything else including asset allocation.

Good luck.
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Re: Race to 1 Million Help

Postby The Wizard » Fri Jan 04, 2013 10:00 am

555 wrote:This is a bad idea. Racing someone from A to B is not the best way to get from A to B.

No, I think it's doable if there was a real reason for it.
But there really isn't.
As others have said, it's better to have BALANCE in your life.
Save 30% of your gross income and you'll be fine. Sacrificing numerous life experiences to get to 40% or 50% savings doesn't appeal to me...
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Re: Race to 1 Million Help

Postby Grt2bOutdoors » Fri Jan 04, 2013 10:10 am

staythecourse wrote:I hate to break it to the youngsters on here, but there are no quick ways to riches. If you want to be serious about getting to a million I would say don't waste your time on this site instead go out and get the highst paid job you can get AND LBYM. Studies have shown the age at which you start (you already did that), and how much you save is MORE important then everything else including asset allocation.

Good luck.


Of course there are, didn't you listen to your college professor and teachers before them? Don't be so pessimistic, the kid is 23. OP will be successful in life if he/she follows a couple of simple rules: 1)be honest and have integrity (if you don't know the meaning of those two words, look it up), 2)what ever career you choose - excel at it, even if it takes ten years to become that good because once you have those skills you can differentiate yourself from the rest of the crowd, 3)be humble, no one likes a braggard or show-off, 4)live beneath your means - forget the save 10% rule, if you want to be FIRE - financially independent, retire early you have to be willing to sacrifice. What does that mean? - it means forget leasing a suped up hotrod/making car payments that include exhorbinant car insurance (kids your age are favorites of the car insurance industry for obvious reasons), don't buy what you can not afford to pay for in cash - no credit card balances. Be an owner, not a loaner - invest your money wisely, if you must speculate do so with no more than 5% of your overall savings, far easier to recover from a 5% decline as opposed to 50-100% of it. 5)exercise and take care of your health, if you don't have your health you have zero. Avoid drugs and risky behaviors - the local cemetary is proof positive and littered with folks who thought the quick way was the best way. 6)If you decide to take on a life partner, take the time to ensure it is the right one - don't be in a rush. The fastest way to financially sink yourself is to enter the "divorce game". 7)Avoid commissioned sales folk - they are solely interested in moving money from your wallet to theirs. Be humble - don't talk about what you have/don't have to anyone including your date, as honey attracts flies, so will the talk about your money.

Life is a marathon, not a sprint.

viewtopic.php?f=2&t=51655&p=683796#p683796
Read this post by Gekko on Steps To Building Wealth - it really should be turned into a "sticky" on the wiki.
Last edited by Grt2bOutdoors on Fri Jan 04, 2013 10:24 am, edited 1 time in total.
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Re: Race to 1 Million Help

Postby RadAudit » Fri Jan 04, 2013 10:12 am

yb wrote:Get a job that pays well.


Live below your means (LBYM) and / or be ready to increase your target to at least ~$3.0+ from $1.0 million if you expect to retire at an early age and a reasonable standard of living. The last part is, of course, based on how far below your means is a standard of living you'd like to maintain and how early is early - and a few more variables.

Good luck.
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Re: Race to 1 Million Help

Postby 22twain » Fri Jan 04, 2013 10:47 am

Remember that the goalposts keep moving because of inflation. $1,000,000 today buys what $250,000 bought when my father retired 35 years ago.
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Re: Race to 1 Million Help

Postby Aptenodytes » Fri Jan 04, 2013 11:09 am

Read Liar's Poker by Michael Lewis if you want to get one sense of how this can be done. Lewis wanted to get as rich as possible very quickly. It required making almost all other life goals subservient to that one goal, especially choice of career. If you were really serious about the goal (which I'm guessing you aren't) the first thing you would probably do is switch careers.

In the long run it worked out OK for Lewis, but the book will open your eyes to the kind of single-minded pursuit necessary to make your goal come true. Because of the changes to the economy you wouldn't make the same exact choices as Lewis did, obviously, but the the way you made the choices would be the same -- make an astute, well-researched choice about which career offers the fastest path to riches and go all-in along that path.

A second choice would be to delay having children until after you win the race. Are you that heartless?

Deep down I suspect you don't really want to do this.
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Re: Race to 1 Million Help

Postby thinkgreen » Fri Jan 04, 2013 4:15 pm

555 wrote:This is a bad idea. Racing someone from A to B is not the best way to get from A to B.

Let's not put too much attention on the "race" here but rather ways I can explore my options.

Grt2bOutdoors wrote:Of course there are, didn't you listen to your college professor and teachers before them? Don't be so pessimistic, the kid is 23. OP will be successful in life if he/she follows a couple of simple rules: 1)be honest and have integrity (if you don't know the meaning of those two words, look it up), 2)what ever career you choose - excel at it, even if it takes ten years to become that good because once you have those skills you can differentiate yourself from the rest of the crowd, 3)be humble, no one likes a braggard or show-off, 4)live beneath your means - forget the save 10% rule, if you want to be FIRE - financially independent, retire early you have to be willing to sacrifice. What does that mean? - it means forget leasing a suped up hotrod/making car payments that include exhorbinant car insurance (kids your age are favorites of the car insurance industry for obvious reasons), don't buy what you can not afford to pay for in cash - no credit card balances. Be an owner, not a loaner - invest your money wisely, if you must speculate do so with no more than 5% of your overall savings, far easier to recover from a 5% decline as opposed to 50-100% of it. 5)exercise and take care of your health, if you don't have your health you have zero. Avoid drugs and risky behaviors - the local cemetary is proof positive and littered with folks who thought the quick way was the best way. 6)If you decide to take on a life partner, take the time to ensure it is the right one - don't be in a rush. The fastest way to financially sink yourself is to enter the "divorce game". 7)Avoid commissioned sales folk - they are solely interested in moving money from your wallet to theirs. Be humble - don't talk about what you have/don't have to anyone including your date, as honey attracts flies, so will the talk about your money.

Life is a marathon, not a sprint.

viewtopic.php?f=2&t=51655&p=683796#p683796
Read this post by Gekko on Steps To Building Wealth - it really should be turned into a "sticky" on the wiki.


Thank you, great piece of advice.
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Re: Race to 1 Million Help

Postby Aptenodytes » Fri Jan 04, 2013 4:23 pm

thinkgreen wrote:
555 wrote:This is a bad idea. Racing someone from A to B is not the best way to get from A to B.

Let's not put too much attention on the "race" here but rather ways I can explore my options.

So if you now take the race off the table (thank goodness) then you are just doing what all of us are doing, and all the general advice applies. The Wiki summarizes it extremely well.
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Re: Race to 1 Million Help

Postby 555 » Fri Jan 04, 2013 4:39 pm

thinkgreen wrote:
555 wrote:This is a bad idea. Racing someone from A to B is not the best way to get from A to B.

"Let's not put too much attention on the "race" here but rather ways I can explore my options."

But the race is the whole purpose of the thread. It is the race aspect of it that is specifically a bad idea, because maximizing your chances of crossing the finish line first involves risk that decreases your chances of crossing the finish line at all. If you got that point (which others have also made in various ways), then good.
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Re: Race to 1 Million Help

Postby Default User BR » Fri Jan 04, 2013 4:54 pm

thinkgreen wrote:Yep, I plan on starting my own business soon and being successful.

Have you invested the typical failure rate of start-up businesses? What field are you planning on getting into?


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Re: Race to 1 Million Help

Postby scubadiver » Sat Jan 05, 2013 12:41 pm

The easiest way to win this race is to avoid having children while simultaneously doing everything you can to encourage your friend to have children. Then just give it time.
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Re: Race to 1 Million Help

Postby Liquid » Sat Jan 05, 2013 1:35 pm

RenoJay wrote:Could the person who made this quote please provide some links to the study(ies) referenced? My experience with LendingClub has been quite good, but I'm curious to see whatever stats were used to come to this conclusion. Thanks.


There have been several studies, eg:

Risk and Return of Investments in Online Peer-to-Peer Lending
Harpreet Singh, Ram Gopal, Xinxin Li
School of Management, University of Texas at Dallas
School of Business, University of Connecticut

"We find that on average, loans through Prosper provide negative return compared to risk freealternatives such as Treasury Bills."
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Re: Race to 1 Million Help

Postby Liquid » Sat Jan 05, 2013 1:53 pm

EmergDoc wrote:I'm not sure what kind of returns you're talking about from Lending Tree, but lots of people are making double digits returns from Lending Club. The average return is around 6%. I've only been doing it for 15 months but I'm at 13.15% annualized. I expect 8-12% returns long term.


These are the junkiest of junk bonds, I find that when things sound too good to be true they often are. Nevertheless, good luck with your investments.
Last edited by Liquid on Sat Jan 05, 2013 1:58 pm, edited 1 time in total.
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Re: Race to 1 Million Help

Postby celia » Sat Jan 05, 2013 1:57 pm

I'm another one who questions the goal. Think of the things you'll have to sacrifice to meet this goal. Maybe a more enjoyable job isn't the highest paying. Maybe a future spouse who doesn't share this goal will be more important. kids?? travel?? staying healthy?? hobbies??

As said earlier, the factor that contributes the most to your future wealth is how much you save early on, rather than what it is invested in. So put away as much as you can for a few years, then back off and enjoy life, meaning spend on the things that really matter.

Besides, what if one of you inherits a significant amount or is lucky in a seldom-bought lottery ticket. It wouldn't matter how much you save or what you do with your money if your friend wins the lottery (and the contest) next year. And assuming you are both about to graduate and may go separate ways, you could possibly lose track of each other. If you hit $1M in x years, but can't find your friend, will you regret the other things you gave up along the way?
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