My 2015 goal is to get to $100k NW. Is it attainable?

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Jetf
Posts: 4
Joined: Tue Sep 16, 2014 6:50 pm

My 2015 goal is to get to $100k NW. Is it attainable?

Post by Jetf »

My 2015 plan is to
1. Max out my 401k by frontloading contributions in the beginning of the year (by essentially taking 0 income for those months). I estimate that I'll be spending an average of $2,000/month on expenses.
2. Max out my RIRA on Jan 1.
3. Save at least $800 a month ($9,600 on the year) - this should go up once I get a raise. I am fortunate enough to be living with my brother who charges me almost nothing to live in his condo.

When all is said and done I expect to have close to $100k, but this is without taking market returns into account (I dont intend to go down that rabbit hole). I'm curious to hear other opinions on my strategy so if you see something that sticks out please don't be gentle :D

Total NW: $77,500
Salary: $56,000 - I expect it to increase to ~$70,000 in Feb of next year.
Emergency funds: $10k
Other Cash: $25k
Debt: 0
Tax Filing Status: single
Tax Rate: Tax Rate: 25% Federal, 6.45% State, 3.648% City
State of Residence: NY (NYC)
Age: 24

Current retirement assets: $42,500
Current Asset Allocation: 96% stocks, 4% bonds

Vanguard Roth IRA: $12,500 (30% VFINX, 70% VFFVX). I know this asset allocation doesnt make sense. I still havent decided if i want to go full VFFVX or just manage it myself.
401k: $20,000 (50% S&P index, 15% International, 9% bonds, 15% midcap, 11% smallcap). my 401k doesnt have great options so I chose the cheapest indexes with expense rations between .70% and .95%
Taxable Account: $10,000 (50% VTSMX, 50% VGSTX)
Lafder
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Re: My 2015 goal is to get to $100k NW. Is it attainable?

Post by Lafder »

Yes I think it is attainable especially if you save the increase in salary and live at your current expense rate. You only need $22,500 to reach your goal and you are planning to add more than that already, right?

However, the thing that jumps out of me is 96/4 stock bond ratio. You will have a significant decrease in networth if/when there is a market drop. Do you really think the increase in gains you get from 96/4 is worth the potential drop in networth ? I realize you also have your cash buffer.

Take a look at this http://www.bogleheads.org/wiki/Asset_allocation Especially look at historical gains with the different % stock/bond.

A 50% stock drop requires a 100% increase in value to get back to where you started. And remember drops feel a lot worse than gains feel good for most people.

Even in my 20's I was at 80/20.

If your big goal is 100k in networth, I would protect yourself a bit more from a drop in the market. If you have more bonds and the big drop happens, it gives you more space to rebalance and buy stocks at low prices.

Congrats on getting close to 100k and having no debt!

lafder
niceguy7376
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Location: Metro ATL

Re: My 2015 goal is to get to $100k NW. Is it attainable?

Post by niceguy7376 »

So your current NW is 77K. You plan on contributing 17.5K for 401k and 5.5K for IRA. That totals 100K. So if you are not considering the growth of funds, I assume you should not consider the market going down as well then. In that case, you will attain the 100K NW
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NightOwl
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Location: New York, NY

Re: My 2015 goal is to get to $100k NW. Is it attainable?

Post by NightOwl »

Hi Jetf,

I like your savings plan -- why not think in terms of "savings goals" rather than "net worth goals"? As you note, you have control over your savings, not over market returns -- whether you end 2015 below or above $100k net worth is too heavily dependent on the latter. As one who spent a few years setting and tracking net worth goals, I can tell you that it's a weird feeling to exceed ambitious savings targets but still feel like one has failed to reach a set goal due to returns. Alternately, when market returns are good, one can be tempted to think, "hey, I'm gonna reach that net worth goal without saving quite as much -- maybe I can spend this money on x, y, or z instead of saving it!"

I suppose I could say, in shorter form, that net worth goals seem to me to run the risk of behavioral mistakes more than savings goals do -- but YMMV. It's also worth noting that net worth plateaus are always subject to revision -- when someone here posts that they've crossed over into the "two comma club," a common jocular response is something like "me too -- several times!" Whenever I check my net worth (Yodlee), I always perform the mental exercise of chopping it in half just to steel myself for that possibility -- it's not a fun exercise, but it will help me stay the course if that does indeed happen.

My bottom line in your case is that anyone who can max retirement accounts at age 24 (not to mention saving in taxable and already possessing a substantial net worth relative to age) is going to be very well off in the future. Congratulations on your work so far.

NightOwl
"Volatility provokes the constant dread that some investors know more than we do, making us fearful of ignoring such powerful price movements." | Peter Bernstein, "The 60/40 Solution."
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NightOwl
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Location: New York, NY

Re: My 2015 goal is to get to $100k NW. Is it attainable?

Post by NightOwl »

niceguy7376 wrote:You plan on contributing 17.5K for 401k
$18,000 for 2015: IRS 2015 Limits

NightOwl
"Volatility provokes the constant dread that some investors know more than we do, making us fearful of ignoring such powerful price movements." | Peter Bernstein, "The 60/40 Solution."
Ostentatious
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Joined: Fri Aug 15, 2014 6:34 pm

Re: My 2015 goal is to get to $100k NW. Is it attainable?

Post by Ostentatious »

One thing to remember is that if you're getting a company match, contributing the maximum amount upfront may prevent you from getting the full company match in subsequent months.
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