Oh my! Cardone says we need $10m net worth

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Eric76
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Re: Oh my! Cardone says we need $10m net worth

Post by Eric76 » Sun Jun 17, 2018 4:17 am

When I typed Grant Cardone on google, he is noted as an "Actor." He wrote a book with a title used as a tagline in "Talladega Nights: The Ballad of Ricky Bobby." He is also the proprietor of something called "Cardone University."

I'll stick to taking investment advice from Jack Bogle. Then again, I don't like dealing with slick sales guys when buying a car or a mattress either.

gd
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Re: Oh my! Cardone says we need $10m net worth

Post by gd » Sun Jun 17, 2018 5:34 am

Quite a reaction to mediocre click-bait that says nothing particularly remarkable. He's good.

A decade ago I gave some specialized adult-toy training to a guy who had gotten 1.5M from the loss of a few fingers in a workplace injury. It was an unfathomable amount of money for him, and he had already bought a few cars, boat, and was working on an exotic airplane. He had no discipline and soon disappeared, owing my employer a few thousand. Someone got bored a year or two later and tried tracking him, reaching his now-ex-wife who gleefully passed on what info she had with a few choice comments. My employer had written him off, and it gave an afternoon's amusement. My impression is this is a pretty routine story among lottery winners.

IlliniDave
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Re: Oh my! Cardone says we need $10m net worth

Post by IlliniDave » Sun Jun 17, 2018 6:02 am

$10M is probably where one is getting into virtually bulletproof wealth territory, but strictly following that guidance means fully 99% of us would be wheeled out of our workplaces feet-first with a sheet over our faces.

Maybe he was overly traumatized by his upbringing, or maybe his (presumed) financial success has untethered him from the world the rest of us inhabit.

More power to those who can accumulate that sort of wealth in a reasonable timeframe. I intend retire early with an order of magnitude less, enjoy a content lifestyle, and have some left over. Assuming I succeed, it could be a case of confusing strategy with outcome. But outcome is what actually happened and strategy is an abstraction. And if I fail, well, $10M is just not in the cards for me without taking unacceptable risk, and I'll just have to accept that outcome.
Don't do something. Just stand there!

retiringwhen
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Re: Oh my! Cardone says we need $10m net worth

Post by retiringwhen » Sun Jun 17, 2018 6:52 am

In the early 1990s, I was in my late 20s making about $80K/year as a computer scientist. Our company switched to Vanguard as the 401(K) provider at the time from some high fee bank provider. The company provided a paper(!) worksheet for you to calculate your target retirement needs as a step towards calculating your monthly savings requirements.

The inputs I used are from memory, but I remember the shocking result very clearly!

My assumptions were roughly 90% of then current income, retire at 65 and assume a basic SS benefit. I used the then default inflation (3.5% if I remember) and market returns on an 80/20 (stock/bond) portfolio - roughly the portfolio I have held for most of the intervening years, with a lot of years at 85/15.

The worksheet told me I needed $4M to retire!!!!! I nearly started crying, thinking I would never retire (the company was phasing out their defined benefit pension at the time.)

After 25 years, I find that my salary/compensation did NOT keep up with inflation, but my estimate for a decent retirement is a lot closer to the $4M than I ever expected at the time and I am closer to meeting it than I thought possible at the time.

Time and Inflation make impossible / crazy numbers a lot more "reasonable" than most people can imagine.

I was clearly a high earner in my early days, so that must be taking in account, but if someone in their late 20s assumes a decent rise in their compensation over their work-life, I believe $10M is not unreasonable at all....

Of course, if you are in your mid-late 50s and your Cost of living and income basis sits at $100K/year, you will come out with very different requirements.

EddyB
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Re: Oh my! Cardone says we need $10m net worth

Post by EddyB » Sun Jun 17, 2018 7:00 am

If we assume made-up taxes, but have to accept bank-account returns, I don’t think $10 million is enough. In those conditions, even the inflation of the 1970s would be crippling, with high nominal interest income getting crushed by taxes while still losing buying power.

That makes me think that it’s the assumptions that are problematic. Sort of like thinking you’re living someplace with $50k annual housing costs, but relying on the public primary and secondary schools would be selfish.

WanderingDoc
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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Sun Jun 17, 2018 12:14 pm

JBTX wrote:
Sun Jun 17, 2018 1:30 am
Fairly silly article with lots of holes. I would agree to be considered truly wealthy $10 million is a logical threshold.

While I agree $1 million may not be enough, he ignores impact of social security. $40k swr+$30k SS = $70K is livable, although not at all extravagant. $5 million would give you safely $150k, add in ss and you are approaching $200k per year, which is pretty comfortable.

He talks about how is wealth doubled with high interest rates in early 80s but says nothing about the high inflation that drove high interest rates.

The only ways you get to $10 million are mainly

You have really high salary (MD or Csuite executive, Investment banker etc)
You own a successful business
You do a lot of real estate investing and go about it fairly aggressively.
Got lucky and cashed in on stock options of rapidly growing company
You gave a lot of choices there. Well said.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

sketchy9
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Re: Oh my! Cardone says we need $10m net worth

Post by sketchy9 » Sun Jun 17, 2018 2:18 pm

JBTX wrote:
Sun Jun 17, 2018 1:30 am
Fairly silly article with lots of holes. I would agree to be considered truly wealthy $10 million is a logical threshold.

While I agree $1 million may not be enough, he ignores impact of social security. $40k swr+$30k SS = $70K is livable, although not at all extravagant. $5 million would give you safely $150k, add in ss and you are approaching $200k per year, which is pretty comfortable.

He talks about how is wealth doubled with high interest rates in early 80s but says nothing about the high inflation that drove high interest rates.

The only ways you get to $10 million are mainly

You have really high salary (MD or Csuite executive, Investment banker etc)
You own a successful business
You do a lot of real estate investing and go about it fairly aggressively.
Got lucky and cashed in on stock options of rapidly growing company
The vast majority of MDs can't be grouped with C level executives or ibankers. Certain interventional fields can get you there, but most docs are comfortably upper middle class and getting to $10M NW is a pipe dream for them.

gips
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Re: Oh my! Cardone says we need $10m net worth

Post by gips » Sun Jun 17, 2018 3:00 pm

I don't know anything about cardone but it seems to me his advice aligns pretty well to bogleheads:

- Trade your $1 million target in for a net worth target of $10 million.
for a 22 yo, assuming inflation, $6-$10mm seems like a pretty good target

- Avoid all showoff purchases until you hit $10 million target. That includes homes, fancy cars, watches, etc.
live below your means

- Get your income levels to where you can save 40 percent of your gross income before taxes.
ibid

- Invest surplus cash in illiquid assets that produce additional flows of income. Invest for cash flow with the potential of appreciation long term and never invest where you could lose your capital.
ok, this doesn't make sense and is effectively impossible.

WildcatTofu
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Re: Oh my! Cardone says we need $10m net worth

Post by WildcatTofu » Sun Jun 17, 2018 4:53 pm

It really depends on how many financial crisis you expect down the road and how much you care about the last two years of your life. A terminal illness can easily cost you two million dollars in your final years. (Note: I came from a country with nationalized healthcare, and all my deceased relatives spent 30 to 180 days in ICU before passing away).

If I retire at the age of 40, I would expect to have 10m net worth plus a home that has been paid off. I expect I will experience 4 more recessions in the next 40 years, in each recession, I will lose 20% of my asset.

And I would feel I am a very lucky man if none of my kids ever get into troubles.

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WestUniversity
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Re: Oh my! Cardone says we need $10m net worth

Post by WestUniversity » Tue Jun 19, 2018 8:12 pm

TravelGeek wrote:
Fri Jun 15, 2018 1:51 pm
Who is Cardone and why should I care what he is saying? :shock: :twisted:
Exactly! What a tool :annoyed

WanderingDoc
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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Tue Jun 19, 2018 9:16 pm

sketchy9 wrote:
Sun Jun 17, 2018 2:18 pm
JBTX wrote:
Sun Jun 17, 2018 1:30 am
Fairly silly article with lots of holes. I would agree to be considered truly wealthy $10 million is a logical threshold.

While I agree $1 million may not be enough, he ignores impact of social security. $40k swr+$30k SS = $70K is livable, although not at all extravagant. $5 million would give you safely $150k, add in ss and you are approaching $200k per year, which is pretty comfortable.

He talks about how is wealth doubled with high interest rates in early 80s but says nothing about the high inflation that drove high interest rates.

The only ways you get to $10 million are mainly

You have really high salary (MD or Csuite executive, Investment banker etc)
You own a successful business
You do a lot of real estate investing and go about it fairly aggressively.
Got lucky and cashed in on stock options of rapidly growing company
The vast majority of MDs can't be grouped with C level executives or ibankers. Certain interventional fields can get you there, but most docs are comfortably upper middle class and getting to $10M NW is a pipe dream for them.
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K, I currently live on less than 1/6th of that quite happily. With the real estate gains and tax benefits I am seeing, I won't need twenty years to reach $10M. However, having $10M in the bank has zero appeal to me. Freedom and mobility >> net worth by a mile in my book.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

TravelGeek
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Re: Oh my! Cardone says we need $10m net worth

Post by TravelGeek » Tue Jun 19, 2018 9:32 pm

WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary

WanderingDoc
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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Tue Jun 19, 2018 10:34 pm

TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm
WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.

Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

thx1138
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Re: Oh my! Cardone says we need $10m net worth

Post by thx1138 » Tue Jun 19, 2018 10:49 pm

WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm
WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.
I guess you are discovering your anecdotal personal experiences don’t actually match what is happening in reality across the profession. Maybe time to take a break from typing here and doing some basic research about things you thought you knew but turns out you didn’t.

I also like how you picked radiologist as your example. Pretty laughable, only about 3.4% of the doctors in the US and median salary that is 2.6x the overall median salary of all doctors. Mislead much?

sketchy9
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Re: Oh my! Cardone says we need $10m net worth

Post by sketchy9 » Tue Jun 19, 2018 10:51 pm

WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm
WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K. I currently live on less than 1/6th of that quite happily. With the real estate gains and tax benefits I am seeing, I won't need twenty years to reach $10M. However, having $10M in the bank has zero appeal to me. Freedom and mobility >> net worth by a mile in my book.
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.

Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
It obviously depends on specialty and location. Where are you getting your numbers for radiologists? Can you cite a source? And clearly interventionists (but usually not general surgeons) can do very well for themselves; however, most physicians are not interventionists. As cited above, the median salary for internists is <$200k. Do you have any data to refute that?

And you may live on 1/6 of $500k-$600k (let's call it $100k), but from the sounds of it you're making quite a bit more. If you're making the median internist salary, and even if you save 1/2 of that annually, you would need a ~14% annual return to get to $10M in 20 years. That's not realistic.

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peterinjapan
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Re: Oh my! Cardone says we need $10m net worth

Post by peterinjapan » Tue Jun 19, 2018 11:35 pm

While I wouldn't base my life on his work, I do like Grant Cardone's books in audiobook format, since he reads them himself and has a very energetic personality. I would _hate_ to work for the guy.

WanderingDoc
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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Tue Jun 19, 2018 11:36 pm

sketchy9 wrote:
Tue Jun 19, 2018 10:51 pm
WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm
WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K. I currently live on less than 1/6th of that quite happily. With the real estate gains and tax benefits I am seeing, I won't need twenty years to reach $10M. However, having $10M in the bank has zero appeal to me. Freedom and mobility >> net worth by a mile in my book.
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.

Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
It obviously depends on specialty and location. Where are you getting your numbers for radiologists? Can you cite a source? And clearly interventionists (but usually not general surgeons) can do very well for themselves; however, most physicians are not interventionists. As cited above, the median salary for internists is <$200k. Do you have any data to refute that?

And you may live on 1/6 of $500k-$600k (let's call it $100k), but from the sounds of it you're making quite a bit more. If you're making the median internist salary, and even if you save 1/2 of that annually, you would need a ~14% annual return to get to $10M in 20 years. That's not realistic.
I am reading the 2018 MedScape physician compensation report now. Average salary among ALL U.S. trained physicians surveyed is $305K, not the $200K the other fellow quoted which I am unsure where that came from.

A 14% annual return with leveraged real estate is disappointing. Even a mediocre deal will return >25%. Let me give you a generic example:

Buy a property at $100K, $20K down. Monthly rents of $900-$950. I personally buy in markets with 6-8% long term appreciation, but lets be very conservative and use the general longer-term real estate appreciation value across the entire U.S. - 4% annualized. Even though nobody buys every single house in the U.S.

Returns:
Appreciation of 4%: 5:1 Leveraged return of 20%.
Cash flow: 8%
Principal paydown by tenants: 4% (typically closer to 5%, but again I'll be worst case scenario)
Depreciation/net tax benefit: Depreciate $80K over 27.5 years = $3K per year, at a 25% tax rate this is $750, 3.75% return ($750 of $20K down payment is a 3.75% return annualized)
Inflation hedging/profiting: You pay the lender the same Principal and Interest over 30 years, in dollars that are worth less every single year, conservatively: 3% return

20% + 8% + 4% + 3.75% + 3% = 38.75% annualized return on your $20K down payment. The kicker here is that rental real estate returns very typically grow every year because if your expenses increase at the same level as rents, the way the math works, the difference becomes greater every year (kind of complex to explain here, so we can forget it and assume the 38% return).

Let me emphasize that this is a typical deal found all over the U.S. and accessible to everyone.

So yea, I would laugh at the idea of a 14% return on a leveraged real estate deal.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

TravelGeek
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Re: Oh my! Cardone says we need $10m net worth

Post by TravelGeek » Tue Jun 19, 2018 11:46 pm

WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.
Maybe look beyond specialists. The avg salary for a primary care physician in 2015 was $195,000

https://www.aafp.org/news/practice-prof ... eport.html
Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
Well, let's just agree to disagree here. I happen to know quite a few part time physicians and am married to one, too. On the other hand, I don't know a single software engineer who is part time unless they are doing contract work (think locums in your world). My work really is not suitable for part time work because it doesn't fit in a regular schedule. It's not shift-based. I have conference calls every day, often early in the morning or late in the evening. When there is crunch time, I work through the weekend. "Sorry, I can't meet on Thursday because I only work Monday-Wednesday" wouldn't fly.

protagonist
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Re: Oh my! Cardone says we need $10m net worth

Post by protagonist » Wed Jun 20, 2018 12:04 am

Snowjob wrote:
Fri Jun 15, 2018 4:21 pm
Well, below would be the 4% rule, and no social security.

Pretty sure if your going to be accumulating these sorts of assets, even under reduced SS payouts you can bank on at least another 20k on top of this. With a paid off house, I find it hard to believe I'd need 10 million. Anywhere above 2M frankly is appealing to me, and I'd strongly have to consider if giving up another 5-10 years of my youth would be worth it to stack another million on top...

1,500,000 --- [4% Rule] --- 60,000
2,000,000 --- [4% Rule] --- 80,000
2,500,000 --- [4% Rule] --- 100,000
3,000,000 --- [4% Rule] --- 120,000
3,500,000 --- [4% Rule] --- 140,000
4,000,000 --- [4% Rule] --- 160,000
Factor in Social Security , appreciation of portfolio, any other sources of income.
Also consider how much you have in home equity if you need to tap into it late in retirement or if you decide to downsize.
The figures would then be considerably lower than above. And retirees can live very comfortably on 60K/yr. Until you retire you have no idea how much less you need to spend than when working.

TravelGeek
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Re: Oh my! Cardone says we need $10m net worth

Post by TravelGeek » Wed Jun 20, 2018 12:06 am

WanderingDoc wrote:
Tue Jun 19, 2018 11:36 pm
I am reading the 2018 MedScape physician compensation report now. Average salary among ALL U.S. trained physicians surveyed is $305K, not the $200K the other fellow quoted which I am unsure where that came from.
US New and World Report, as my link showed. And it cited BLS as a source.

I would agree however, that the data shown by US News is likely wrong. At the top of the page they state:

“In 2016, a general internist made a median salary of $196,380, according to the BLS. “

Further down it changes to “Most doctors are paid well. In fact, a physician's average salary was $201,840 in 2016”.

That I don’t believe. And the graph below that sentence then shows physicians making the $196k, not $201k. The average for all physicians should be higher than $201k, considering the higher pay for specialties.

But the Internist number seems to be reasonably compatible with the AAFP number for 2015 I cited above.

And to get back to the actual topic - $10 mil - I actually agree with you that $10 mil would be achievable for us (tech + med), but it isn’t our goal (nor needed).

sketchy9
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Re: Oh my! Cardone says we need $10m net worth

Post by sketchy9 » Wed Jun 20, 2018 12:47 am

WanderingDoc wrote:
Tue Jun 19, 2018 11:36 pm
sketchy9 wrote:
Tue Jun 19, 2018 10:51 pm
WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm
WanderingDoc wrote:
Tue Jun 19, 2018 9:16 pm
Hmm.. you sure about that? The average diagnostic radiologist I know pulls in $500-600K. I currently live on less than 1/6th of that quite happily. With the real estate gains and tax benefits I am seeing, I won't need twenty years to reach $10M. However, having $10M in the bank has zero appeal to me. Freedom and mobility >> net worth by a mile in my book.
The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.

Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
It obviously depends on specialty and location. Where are you getting your numbers for radiologists? Can you cite a source? And clearly interventionists (but usually not general surgeons) can do very well for themselves; however, most physicians are not interventionists. As cited above, the median salary for internists is <$200k. Do you have any data to refute that?

And you may live on 1/6 of $500k-$600k (let's call it $100k), but from the sounds of it you're making quite a bit more. If you're making the median internist salary, and even if you save 1/2 of that annually, you would need a ~14% annual return to get to $10M in 20 years. That's not realistic.
I am reading the 2018 MedScape physician compensation report now. Average salary among ALL U.S. trained physicians surveyed is $305K, not the $200K the other fellow quoted which I am unsure where that came from.

A 14% annual return with leveraged real estate is disappointing. Even a mediocre deal will return >25%. Let me give you a generic example:

Buy a property at $100K, $20K down. Monthly rents of $900-$950. I personally buy in markets with 6-8% long term appreciation, but lets be very conservative and use the general longer-term real estate appreciation value across the entire U.S. - 4% annualized. Even though nobody buys every single house in the U.S.

Returns:
Appreciation of 4%: 5:1 Leveraged return of 20%.
Cash flow: 8%
Principal paydown by tenants: 4% (typically closer to 5%, but again I'll be worst case scenario)
Depreciation/net tax benefit: Depreciate $80K over 27.5 years = $3K per year, at a 25% tax rate this is $750, 3.75% return ($750 of $20K down payment is a 3.75% return annualized)
Inflation hedging/profiting: You pay the lender the same Principal and Interest over 30 years, in dollars that are worth less every single year, conservatively: 3% return

20% + 8% + 4% + 3.75% + 3% = 38.75% annualized return on your $20K down payment. The kicker here is that rental real estate returns very typically grow every year because if your expenses increase at the same level as rents, the way the math works, the difference becomes greater every year (kind of complex to explain here, so we can forget it and assume the 38% return).

Let me emphasize that this is a typical deal found all over the U.S. and accessible to everyone.

So yea, I would laugh at the idea of a 14% return on a leveraged real estate deal.
Well, one stat is the median and the other is the average. The median listed is for internists, the average you cited is for all specialties. The very Medscape survey you referred to indicates that the primary care specialties of internal medicine, FP, pediatrics make up 39% of respondents. They're not making $300k/yr.

If you think you can get 40%/year annual returns on a leveraged real estate investment for years on end...well, ok. Maybe you already have, in which case congrats. I for one have my doubts. If it were as dead simple as you describe, then in fact Cardone is right that everyone should be aiming for $10M. Start with a $20k leveraged RE investment and let the good times roll at 40% return. Like I said, if you've done it, that's great but I think you're discounting how uncommon it actually is.

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Re: Oh my! Cardone says we need $10m net worth

Post by Always passive » Wed Jun 20, 2018 12:48 am

TravelGeek wrote:
Fri Jun 15, 2018 1:51 pm
Who is Cardone and why should I care what he is saying? :shock: :twisted:
Forgive me for criticizing your comments, but I read this type of statements too often.
My view is this approach is wrong and maybe dangerous. It is not important who the person is, Cardone or someone else, what is important is the content of the comment. I read, as I suggest you do too, as much as I can from many sources, and then I use my own judgement to make decisions. Often I do not agree with Swedroe, Shiller, Sharpe, Bogle, etc., but I read them carefully and do as I feel right. That is the only way to build knowledge and experience.

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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Wed Jun 20, 2018 1:09 am

sketchy9 wrote:
Wed Jun 20, 2018 12:47 am
WanderingDoc wrote:
Tue Jun 19, 2018 11:36 pm
sketchy9 wrote:
Tue Jun 19, 2018 10:51 pm
WanderingDoc wrote:
Tue Jun 19, 2018 10:34 pm
TravelGeek wrote:
Tue Jun 19, 2018 9:32 pm


The average physician salary, in 2016, apparently was $201,840. The median internist salary was $196,380. If the data on this site is accurate, that is. And I don't know if/how they factor in part-time positions, which in my experience are much more common in the medical field (by choice) than in my profession (software engineering/high tech).

https://money.usnews.com/careers/best-j ... ian/salary
I actually don't know any physician that makes that low. If you think people will endure 13+ years of training (and hundreds of $Ks in debt) to earn $200K, that is a bad deal even for a truck driver. Even military docs earn more than that, working 35 hours per week, and not all of that income is taxed! Average salary among radiologists is around $450K and rising. Spine, ortho, interventional rads/cardio earn 7 figures routinely.

Part time positions are quite rare in the medical field among doctors below the age of 55. Many people don't start earning actual money until their 40s, since you have your student loans to worry about paying down. A few dual physician marriages, the lady sometimes goes part time after having children. Besides that, its not common in medicine relative to other fields.

I think the trend to quit or go part time is prevalent among high tech software engineers, from what I hear. Too much pride (and student loans) for a physician who spent the majority of their 20s and 30s training for that.
It obviously depends on specialty and location. Where are you getting your numbers for radiologists? Can you cite a source? And clearly interventionists (but usually not general surgeons) can do very well for themselves; however, most physicians are not interventionists. As cited above, the median salary for internists is <$200k. Do you have any data to refute that?

And you may live on 1/6 of $500k-$600k (let's call it $100k), but from the sounds of it you're making quite a bit more. If you're making the median internist salary, and even if you save 1/2 of that annually, you would need a ~14% annual return to get to $10M in 20 years. That's not realistic.
I am reading the 2018 MedScape physician compensation report now. Average salary among ALL U.S. trained physicians surveyed is $305K, not the $200K the other fellow quoted which I am unsure where that came from.

A 14% annual return with leveraged real estate is disappointing. Even a mediocre deal will return >25%. Let me give you a generic example:

Buy a property at $100K, $20K down. Monthly rents of $900-$950. I personally buy in markets with 6-8% long term appreciation, but lets be very conservative and use the general longer-term real estate appreciation value across the entire U.S. - 4% annualized. Even though nobody buys every single house in the U.S.

Returns:
Appreciation of 4%: 5:1 Leveraged return of 20%.
Cash flow: 8%
Principal paydown by tenants: 4% (typically closer to 5%, but again I'll be worst case scenario)
Depreciation/net tax benefit: Depreciate $80K over 27.5 years = $3K per year, at a 25% tax rate this is $750, 3.75% return ($750 of $20K down payment is a 3.75% return annualized)
Inflation hedging/profiting: You pay the lender the same Principal and Interest over 30 years, in dollars that are worth less every single year, conservatively: 3% return

20% + 8% + 4% + 3.75% + 3% = 38.75% annualized return on your $20K down payment. The kicker here is that rental real estate returns very typically grow every year because if your expenses increase at the same level as rents, the way the math works, the difference becomes greater every year (kind of complex to explain here, so we can forget it and assume the 38% return).

Let me emphasize that this is a typical deal found all over the U.S. and accessible to everyone.

So yea, I would laugh at the idea of a 14% return on a leveraged real estate deal.
Well, one stat is the median and the other is the average. The median listed is for internists, the average you cited is for all specialties. The very Medscape survey you referred to indicates that the primary care specialties of internal medicine, FP, pediatrics make up 39% of respondents. They're not making $300k/yr.

If you think you can get 40%/year annual returns on a leveraged real estate investment for years on end...well, ok. Maybe you already have, in which case congrats. I for one have my doubts. If it were as dead simple as you describe, then in fact Cardone is right that everyone should be aiming for $10M. Start with a $20k leveraged RE investment and let the good times roll at 40% return. Like I said, if you've done it, that's great but I think you're discounting how uncommon it actually is.
Yes, I have done it. I've done much better. That was illustrating a simple deal which anyone can buy today, without finding a killer deal. I've layed the math out in simple terms.
Sure these returns take work, but it's definitely worth it. It's pretty simple actually once the basic concepts click with you.
Bank of America will lend you 80% to buy a real estate deal, all day long. They won't lend you 80% to buy their own stock! They'd laugh you out of the bank haha. Think about this.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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Re: Oh my! Cardone says we need $10m net worth

Post by TravelGeek » Wed Jun 20, 2018 1:35 am

Always passive wrote:
Wed Jun 20, 2018 12:48 am
TravelGeek wrote:
Fri Jun 15, 2018 1:51 pm
Who is Cardone and why should I care what he is saying? :shock: :twisted:
Forgive me for criticizing your comments, but I read this type of statements too often.
My view is this approach is wrong and maybe dangerous. It is not important who the person is, Cardone or someone else, what is important is the content of the comment. I read, as I suggest you do too, as much as I can from many sources, and then I use my own judgement to make decisions. Often I do not agree with Swedroe, Shiller, Sharpe, Bogle, etc., but I read them carefully and do as I feel right. That is the only way to build knowledge and experience.
No need to ask for forgiveness. You are generally right and I generally don’t dismiss people’s opinions just because I have never heard of them (let me admit right here that I had never read a Bernstein book or a Swedroe book until I saw them mentioned and cited here on BH).

What triggered my comment with its twisted evil emoticon was that the title to me implied that everyone here should apparently know this person, Cardone. A quick search revealed that I hadn’t just read the wrong threads; he doesn’t seem to be an often cited authority here. There is actually a thread titled “401k's are for sheeple! According to some guy.” that deals with another one of this CNBC pearls of wisdom (sorry, can’t resist... and I once wrote a blog that used that self-deprecating tag line).

Oh, and I actually skimmed over the article that is the basis for this thread and found it, well, not particularly useful. I basically stopped after this paragraph:

“If you retire today at 65 with $1 million in cash (after taxes) and no new income from any source, you would have to live off of $40,000 a year ($3,250 per month) for the next 25 years before you ran out of money.”

That is an interesting version of the 4% rule. Why assume no growth? If we can make random assumptions, hey, I’ll assume 40% growth (WanderingDoc will support me). :twisted:

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Re: Oh my! Cardone says we need $10m net worth

Post by Snowjob » Wed Jun 20, 2018 6:24 am

protagonist wrote:
Wed Jun 20, 2018 12:04 am
Snowjob wrote:
Fri Jun 15, 2018 4:21 pm
Well, below would be the 4% rule, and no social security.

Pretty sure if your going to be accumulating these sorts of assets, even under reduced SS payouts you can bank on at least another 20k on top of this. With a paid off house, I find it hard to believe I'd need 10 million. Anywhere above 2M frankly is appealing to me, and I'd strongly have to consider if giving up another 5-10 years of my youth would be worth it to stack another million on top...

1,500,000 --- [4% Rule] --- 60,000
2,000,000 --- [4% Rule] --- 80,000
2,500,000 --- [4% Rule] --- 100,000
3,000,000 --- [4% Rule] --- 120,000
3,500,000 --- [4% Rule] --- 140,000
4,000,000 --- [4% Rule] --- 160,000
Factor in Social Security , appreciation of portfolio, any other sources of income.
Also consider how much you have in home equity if you need to tap into it late in retirement or if you decide to downsize.
The figures would then be considerably lower than above. And retirees can live very comfortably on 60K/yr. Until you retire you have no idea how much less you need to spend than when working.
I think the biggest question for me is that last bit "not knowing how much you really need till you get there". That said I am on target, its more of a when / how do I shift from fulltime where the goal is to make money to some where between full and part time and/or in a field I really enjoy or derive meaning from my work.

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Re: Oh my! Cardone says we need $10m net worth

Post by Theoretical » Wed Jun 20, 2018 6:35 am

Always passive wrote:
Wed Jun 20, 2018 12:48 am
TravelGeek wrote:
Fri Jun 15, 2018 1:51 pm
Who is Cardone and why should I care what he is saying? :shock: :twisted:
Forgive me for criticizing your comments, but I read this type of statements too often.
My view is this approach is wrong and maybe dangerous. It is not important who the person is, Cardone or someone else, what is important is the content of the comment. I read, as I suggest you do too, as much as I can from many sources, and then I use my own judgement to make decisions. Often I do not agree with Swedroe, Shiller, Sharpe, Bogle, etc., but I read them carefully and do as I feel right. That is the only way to build knowledge and experience.
This. I think his article is on target for the kind of financial independence that truly doesn’t care about markets or overall financial health off the economy. However, I think the weakness is assuming 0 nominal returns or illiquid investments with good return are the only options. That is not the case.

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Re: Oh my! Cardone says we need $10m net worth

Post by Cycle » Wed Jun 20, 2018 7:14 am

WanderingDoc wrote:
Sun Jun 17, 2018 12:14 pm
JBTX wrote:
Sun Jun 17, 2018 1:30 am

The only ways you get to $10 million are mainly

You have really high salary (MD or Csuite executive, Investment banker etc)
You own a successful business
You do a lot of real estate investing and go about it fairly aggressively.
Got lucky and cashed in on stock options of rapidly growing company
You gave a lot of choices there. Well said.
High earnings are very important, but one doesn't need to make 500k/yr to become a decamillionaire. Compounding interest is the most powerful force in the universe.

Assuming 4% real returns (unlikely) we will hit 10MM in today's dollars at 60, if we don't FIRE. Neither wife or I make over 150k, but started working at megacorp with STEM degrees at age 22.

What gave us success? Target funds.

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Re: Oh my! Cardone says we need $10m net worth

Post by Psyayeayeduck » Wed Jun 20, 2018 7:20 am

Who?

For a majority of people, $1M to $4M is perfectly reasonable range. Just make sure that the money you received from your withdraw rate is higher than your expenses, the principal money can be recovered again over time through investments/distributions/whatever other methods you choose, and your withdraw rate is flexible when the economy or some unexpected event demands it. That's it. Don't make this complicated people. The K.I.S.S. (Keep It Simple, Stupid) method works well here. :beer

Leesbro63
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Re: Oh my! Cardone says we need $10m net worth

Post by Leesbro63 » Wed Jun 20, 2018 7:26 am

Psyayeayeduck wrote:
Wed Jun 20, 2018 7:20 am
Who?

For a majority of people, $1M to $4M is perfectly reasonable range. Just make sure that the money you received from your withdraw rate is higher than your expenses, the principal money can be recovered again over time through investments/distributions/whatever other methods you choose, and your withdraw rate is flexible when the economy or some unexpected event demands it. That's it. Don't make this complicated people. The K.I.S.S. (Keep It Simple, Stupid) method works well here. :beer
"The majority of people" (retirement age) live on their SS check and not much else.

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Re: Oh my! Cardone says we need $10m net worth

Post by Psyayeayeduck » Wed Jun 20, 2018 7:39 am

Leesbro63 wrote:
Wed Jun 20, 2018 7:26 am
Psyayeayeduck wrote:
Wed Jun 20, 2018 7:20 am
Who?

For a majority of people, $1M to $4M is perfectly reasonable range. Just make sure that the money you received from your withdraw rate is higher than your expenses, the principal money can be recovered again over time through investments/distributions/whatever other methods you choose, and your withdraw rate is flexible when the economy or some unexpected event demands it. That's it. Don't make this complicated people. The K.I.S.S. (Keep It Simple, Stupid) method works well here. :beer
"The majority of people" (retirement age) live on their SS check and not much else.

In this context, I'm talking about the folks who do invest, save, and keep their expenses below what they earn.

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Re: Oh my! Cardone says we need $10m net worth

Post by knpstr » Wed Jun 20, 2018 7:50 am

Psyayeayeduck wrote:
Wed Jun 20, 2018 7:39 am
Leesbro63 wrote:
Wed Jun 20, 2018 7:26 am
Psyayeayeduck wrote:
Wed Jun 20, 2018 7:20 am
Who?

For a majority of people, $1M to $4M is perfectly reasonable range. Just make sure that the money you received from your withdraw rate is higher than your expenses, the principal money can be recovered again over time through investments/distributions/whatever other methods you choose, and your withdraw rate is flexible when the economy or some unexpected event demands it. That's it. Don't make this complicated people. The K.I.S.S. (Keep It Simple, Stupid) method works well here. :beer
"The majority of people" (retirement age) live on their SS check and not much else.

In this context, I'm talking about the folks who do invest, save, and keep their expenses below what they earn.
I'm in my 30s and if you do the S.S. quick calculator it says my benefit will be $5,618/month in inflated dollars vs $1,954 today. So that is a differential of 2.8x according to the SSA. So if one says $1M is a good amount today, for me, that means $2.8M (using the same inflation rate).

This is the difference of these numbers. For those of us that still have a relatively long run, we need a lot more nominal dollars.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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1210sda
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Re: Oh my! Cardone says we need $10m net worth

Post by 1210sda » Wed Jun 20, 2018 8:00 am

Where did this Cardone guy come from? Prior to the OP's post, I had never heard of him.

Surely not one of the "giants" in the industry.

1210

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Psyayeayeduck
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Re: Oh my! Cardone says we need $10m net worth

Post by Psyayeayeduck » Wed Jun 20, 2018 8:02 am

knpstr wrote:
Wed Jun 20, 2018 7:50 am
Psyayeayeduck wrote:
Wed Jun 20, 2018 7:39 am
Leesbro63 wrote:
Wed Jun 20, 2018 7:26 am
Psyayeayeduck wrote:
Wed Jun 20, 2018 7:20 am
Who?

For a majority of people, $1M to $4M is perfectly reasonable range. Just make sure that the money you received from your withdraw rate is higher than your expenses, the principal money can be recovered again over time through investments/distributions/whatever other methods you choose, and your withdraw rate is flexible when the economy or some unexpected event demands it. That's it. Don't make this complicated people. The K.I.S.S. (Keep It Simple, Stupid) method works well here. :beer
"The majority of people" (retirement age) live on their SS check and not much else.

In this context, I'm talking about the folks who do invest, save, and keep their expenses below what they earn.
I'm in my 30s and if you do the S.S. quick calculator it says my benefit will be $5,618/month in inflated dollars vs $1,954 today. So that is a differential of 2.8x according to the SSA. So if one says $1M is a good amount today, for me, that means $2.8M (using the same inflation rate).

This is the difference of these numbers. For those of us that still have a relatively long run, we need a lot more nominal dollars.

Good lord, I'm talking about today's dollars. Any more questions that I need to be clear about? Sometimes I hate posting here.

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Re: Oh my! Cardone says we need $10m net worth

Post by Leesbro63 » Wed Jun 20, 2018 8:06 am

This article dovetails with THIS article, that says the "average" retiree couple will spend $244,000 in healthcare costs, out of pocket. C'mon. The "average" retiree couple lives on a SS check and in no way will ever even have $244,000, let alone spend it on healthcare, out of pocket.

"The average 65-year-old couple will pay $240,000 in out-of-pocket costs for health care during retirement, according to Fidelity Investments. And that does not include potential long-term-care costs."


https://www.kiplinger.com/article/retir ... ement.html

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Re: Oh my! Cardone says we need $10m net worth

Post by knpstr » Wed Jun 20, 2018 8:34 am

Leesbro63 wrote:
Wed Jun 20, 2018 8:06 am
This article dovetails with THIS article, that says the "average" retiree couple will spend $244,000 in healthcare costs, out of pocket. C'mon. The "average" retiree couple lives on a SS check and in no way will ever even have $244,000, let alone spend it on healthcare, out of pocket.

"The average 65-year-old couple will pay $240,000 in out-of-pocket costs for health care during retirement, according to Fidelity Investments. And that does not include potential long-term-care costs."


https://www.kiplinger.com/article/retir ... ement.html
"Just Medicare premiums alone for 25 years -- for standard Part B (which pays for outpatient care), a Part D prescription-drug policy and a Medigap supplemental insurance policy -- will set a couple back close to $200,000."

If those numbers are accurate (I don't know if they are) it isn't a stretch to think a couple would spend $40,000 over 25 years on things other than premiums.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Re: Oh my! Cardone says we need $10m net worth

Post by LiterallyIronic » Wed Jun 20, 2018 9:07 am

FTA: "If you retire today at 65 with $1 million in cash (after taxes) and no new income from any source, you would have to live off of $40,000 a year"

Good thing that's almost twice as much as I need. My target is far below $1 million.

Cycle wrote:
Wed Jun 20, 2018 7:14 am
High earnings are very important, but one doesn't need to make 500k/yr to become a decamillionaire. Compounding interest is the most powerful force in the universe.

Assuming 4% real returns (unlikely) we will hit 10MM in today's dollars at 60, if we don't FIRE. Neither wife or I make over 150k, but started working at megacorp with STEM degrees at age 22.

What gave us success? Target funds.
I read this as "You don't have to make $500k, $300k will be enough!" Humble brag if I've ever seen one.
retiringwhen wrote:
Sun Jun 17, 2018 6:52 am
but if someone in their late 20s assumes a decent rise in their compensation over their work-life, I believe $10M is not unreasonable at all....
I don't believe in assuming that at all. I operate under the assumption that my current compensation (I'm in my mid-30s) will be the highest compensation of my career.
Last edited by LiterallyIronic on Wed Jun 20, 2018 9:26 am, edited 2 times in total.

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telemark
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Re: Oh my! Cardone says we need $10m net worth

Post by telemark » Wed Jun 20, 2018 9:24 am

TravelGeek wrote:
Tue Jun 19, 2018 11:46 pm
On the other hand, I don't know a single software engineer who is part time unless they are doing contract work (think locums in your world).
The part time software engineers are the ones only working 60-70 hours a week.

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Re: Oh my! Cardone says we need $10m net worth

Post by HomerJ » Wed Jun 20, 2018 9:44 am

WanderingDoc wrote:
Sat Jun 16, 2018 11:51 pm
Median income is not my definition of "living well" or "not having to worry about money". Most Americans DO worry about money all the time, so they fail what we are talking about by a mile. The median income earner in NYC isn't even close to fulfilling what we are proposing here. 68% of Americans still live paycheck to paycheck. Most couldn't come up with $1000 in cash for a family emergency without borrowing the money. Average sucks. Middle class sucks. That is the idea here.
Think it through WanderingDoc.

Having $1.8 million in investments generating $60k a year (3%) is completely different from what you describe above. There is no worry about losing your job. Of course you can come up with $1000 in cash for a family emergency.

Think it through.
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Re: Oh my! Cardone says we need $10m net worth

Post by HomerJ » Wed Jun 20, 2018 9:51 am

WildcatTofu wrote:
Sun Jun 17, 2018 4:53 pm
A terminal illness can easily cost you two million dollars in your final years.
Citation?
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Re: Oh my! Cardone says we need $10m net worth

Post by CnC » Wed Jun 20, 2018 9:56 am

WanderingDoc wrote:
Sat Jun 16, 2018 8:19 pm
thx1138 wrote:
Sat Jun 16, 2018 7:56 pm
WanderingDoc wrote:
Sat Jun 16, 2018 4:00 pm
If getting really wealthy is your goal, perhaps listening to someone with a $150MM net worth is better idea than someone who thinks $10MM is a lot. Grant Cardone had a crippling drug addiction and $0 to his name at age 25.

Here is a powerful interview, very well done by London Real. If you want to get to know the real GC, beyond the outspoken showy one you often see him as:
https://www.youtube.com/watch?v=PujltB4VZlI
By that logic we should listen to lottery winners too! Hey they have a lot of money, worked out for them, let’s do what they did! How could it not possibly work out for me too?

Never confuse idiosyncratic results for a sound and robust strategy.
That statement makes no sense. He outworked his competitors, and still works harder than the vast majority of humans. He didn't get lucky. He became the BEST in the world at what he does (corporate sales training) through hard work, careful planning, and a lot of sacrifice. I suppose being envious and cynical is the better strategy? :oops:
Plenty of people more rich than this clown. He makes money off people eating up his lies.

By your logic we should blindly believe any billionaire because they outworked their competitors, and still works harder than the vast majority of humans.

Just because someone is very good at selling snake oil doesn't mean they need looked up to.

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Re: Oh my! Cardone says we need $10m net worth

Post by HomerJ » Wed Jun 20, 2018 10:01 am

sketchy9 wrote:
Wed Jun 20, 2018 12:47 am
If you think you can get 40%/year annual returns on a leveraged real estate investment for years on end...well, ok. Maybe you already have, in which case congrats. I for one have my doubts. If it were as dead simple as you describe, then in fact Cardone is right that everyone should be aiming for $10M. Start with a $20k leveraged RE investment and let the good times roll at 40% return. Like I said, if you've done it, that's great but I think you're discounting how uncommon it actually is.
WanderingDoc is in HCOL area in CA and has been real-estate investing for just a few years during a huge housing boom.

He does actually believe however, that real-estate investing works the same way across the entire country, and that CA real-estate will never go down.

Just for fun...

$20k at 40% returns. In 20 years, you're worth $16 million. In 30 years, you're worth $500 million. In 40 years, $14 billion.

Easy-peasy. Guaranteed.
Last edited by HomerJ on Wed Jun 20, 2018 10:16 am, edited 1 time in total.
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Re: Oh my! Cardone says we need $10m net worth

Post by HomerJ » Wed Jun 20, 2018 10:16 am

LiterallyIronic wrote:
Wed Jun 20, 2018 9:07 am
FTA: "If you retire today at 65 with $1 million in cash (after taxes) and no new income from any source, you would have to live off of $40,000 a year"
People read this and think, "There's no way I could live on $40k, I make $80k, $120k, whatever today!"

But $40k in retirement is very different than a $40k income while working.

Here's an example: Someone making $100k a year is paying $6k in payroll taxes, $24k for a mortgage, and saving $10k a year for retirement.

After all that, they have $60k to spend on other stuff.

If you get the house paid off by the time you retire, you no longer have to save money, and you no longer pay payroll taxes, you only need $60k a year to have the exact same lifestyle as you did when you were making $100k a year.

$40k from $1 million and $20k from Social Security gets you there.

So $1 million in retirement actually gives you the same lifestyle you had with a $100k a year job, not the equivalent of a $40k job.
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WanderingDoc
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Re: Oh my! Cardone says we need $10m net worth

Post by WanderingDoc » Wed Jun 20, 2018 11:28 am

HomerJ wrote:
Wed Jun 20, 2018 9:44 am
WanderingDoc wrote:
Sat Jun 16, 2018 11:51 pm
Median income is not my definition of "living well" or "not having to worry about money". Most Americans DO worry about money all the time, so they fail what we are talking about by a mile. The median income earner in NYC isn't even close to fulfilling what we are proposing here. 68% of Americans still live paycheck to paycheck. Most couldn't come up with $1000 in cash for a family emergency without borrowing the money. Average sucks. Middle class sucks. That is the idea here.
Think it through WanderingDoc.

Having $1.8 million in investments generating $60k a year (3%) is completely different from what you describe above. There is no worry about losing your job. Of course you can come up with $1000 in cash for a family emergency.

Think it through.
Think what through? Average (income or net worth, pick one) isn't prosperous or "not ever having to worry about money" in ANY U.S. city. I stand by that statement. $60K is a joke in NYC. $100K you are still struggling.
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Whakamole
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Re: Oh my! Cardone says we need $10m net worth

Post by Whakamole » Wed Jun 20, 2018 11:34 am

WanderingDoc wrote:
Sat Jun 16, 2018 11:24 pm
$300K is a lot/enough only if you're selfish. Imagine you're in a high cost of living area. Start at $300K. $120K to taxes. $60K to send 2 or 3 kids to private school. $50,000 to pay your rent/mortgage. Guess what? You are now in poverty. What if you want to eat at a nice restaurant? What if you want to give to charity, your church, or your community? You can't - you've just run out of money. $300K is NOT even close to being enough in the scenario I outlined.
Plus you need quality cars (high-end Teslas, Mercedes, etc.) for everyone, including the kids, plus the lake house for the weekends during the summer, and the house at Tahoe. You'd be bankrupt in no time! I don't see how people can even eat (caviar) on less than $1M/year, and even that is pushing it.

stoptothink
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Re: Oh my! Cardone says we need $10m net worth

Post by stoptothink » Wed Jun 20, 2018 11:42 am

WanderingDoc wrote:
Wed Jun 20, 2018 11:28 am
HomerJ wrote:
Wed Jun 20, 2018 9:44 am
WanderingDoc wrote:
Sat Jun 16, 2018 11:51 pm
Median income is not my definition of "living well" or "not having to worry about money". Most Americans DO worry about money all the time, so they fail what we are talking about by a mile. The median income earner in NYC isn't even close to fulfilling what we are proposing here. 68% of Americans still live paycheck to paycheck. Most couldn't come up with $1000 in cash for a family emergency without borrowing the money. Average sucks. Middle class sucks. That is the idea here.
Think it through WanderingDoc.

Having $1.8 million in investments generating $60k a year (3%) is completely different from what you describe above. There is no worry about losing your job. Of course you can come up with $1000 in cash for a family emergency.

Think it through.
Think what through? Average (income or net worth, pick one) isn't prosperous or "not ever having to worry about money" in ANY U.S. city. I stand by that statement. $60K is a joke in NYC. $100K you are still struggling.
That's your own judgement coming out. I have a sister who spent most of her adult life in NYC before moving to Salt Lake City last year. She never made $60k (or really even close) and was never in any sort of risk for going without any of her needs; was she struggling? I bet her definition is much different than yours. Your opinion that the average/median income families are "struggling" is your own subjective belief; it is not fact and may not be shared by others.

wolf359
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Re: Oh my! Cardone says we need $10m net worth

Post by wolf359 » Wed Jun 20, 2018 11:52 am

The article states that that only way to be free from economic worries is to be a 1%-er. The top 1% of net worth in the US is $10 million or more.

Does anybody disagree that 1%-ers worry less about economic issues?

Yes, you can achieve financial independence with $10m. However, if you are willing to accept some tradeoffs, like flexibility and frugality, you can live with much less. It isn't about your net worth. It's about your net worth relative to your expenses.

If I'm passing $10m, though, I'll be sure to remember this article and know that I should have pulled the cord already.

WhiteMaxima
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Re: Oh my! Cardone says we need $10m net worth

Post by WhiteMaxima » Wed Jun 20, 2018 12:06 pm

depend on your lifestyle. if you want a space travel, 10 mil might be good enough for one 5 hr round trip ticket.

mountain-lion
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Re: Oh my! Cardone says we need $10m net worth

Post by mountain-lion » Wed Jun 20, 2018 1:25 pm

WanderingDoc wrote:
Wed Jun 20, 2018 12:24 pm
By definition (not my opinion), the dead center 50th %ile "average" household is struggling.
"Where angels fear to tread" and all that, but the rhetorician in me can't let this statement slide.

This is an incorrect use of "by definition". It may indeed be true that the "average household is struggling", but it isn't "by definition". By definition, the average household's income is the sum of all households' income divided by the total number of households.

That definition has nothing whatever to do with whether that particular amount of money is enough or close to enough to live on.

Consider if the average household income was $1,000,000. This wouldn't change the definition of "average household income" in any way, but it does change whether or not they are struggling. Therefore, your reasoning:

"By definition (not my opinion), the dead center 50th %ile "average" household is struggling."

is invalid.

wrongfunds
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Re: Oh my! Cardone says we need $10m net worth

Post by wrongfunds » Wed Jun 20, 2018 1:36 pm

After reading WandringDOC, I think 10MM is just not enough. I think I need $100MM to feel financially secure.

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HomerJ
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Re: Oh my! Cardone says we need $10m net worth

Post by HomerJ » Wed Jun 20, 2018 2:07 pm

KyleAAA wrote:
Wed Jun 20, 2018 1:25 pm
HomerJ wrote:
Wed Jun 20, 2018 12:29 pm
WanderingDoc wrote:
Wed Jun 20, 2018 12:24 pm
It's not judgement, it's statistics. 68% of Americans live paycheck to paycheck. 65% can't come up with $1000 right away (without borrowing it or putting it on a credit card) in the event of an emergency. Half don't have any retirement savings.
And NONE of that applies to a person pulling $60k from $1.8 million portfolio.

It's not the living on $60k that's hard. It's the uncertainty of job loss, or trying to save on that salary.

When you're retired, you're SUPPOSED to live "paycheck-to-paycheck". I pull $60k a year and get to spend ALL of it. That's a not a negative thing. That's the PLAN.
I know several people with significantly higher guaranteed income streams (govt pension, SS, $1mm+ in investments) in LCOL areas who still worry about money. Somebody with just $1.8mm is still vulnerable to a lot of shocks. Rare shocks, to be sure, but it's not bullet-proof. $10mm is getting into bullet-proof territory, which was Cardone's point. People who follow him want their finances to be bullet-proof. A LTC stay coupled with a cancer diagnosis of an uninsured family member (what, are you going to let them just die?) and/or a high needs child who needs life-long financial support can torch $1.8mm surprisingly fast. I have seen it happen. You can weather those storms with $10mm.
People can worry about anything. Even a $10 million dollar guy has to worry about his grandkid being kidnapped (what, are you going to let them just die?). :)

Yes, it's all subjective. I'm sure there are people who worry about money with higher guaranteed income streams in LCOL areas. I know how much it costs to cover the basics in LCOL area, and it's not much. So I feel pretty safe. Others might not.

Obviously $10 million is more than $2 million, and can cover more 0.01% situations.

But then you can make a case for $100 million to cover the 0.001% situations (round-the-clock bodyguards for all family members)
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