If your networth is over $3 million, how did you do it?

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piperkub
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Re: If your networth is over $3 million, how did you do it?

Post by piperkub » Tue Nov 11, 2014 2:53 pm

Started with less than nothing, worked at a job that I loved and paid me reasonable. I studied anything I could find regarding investing and began buying plots of real estate for speculation in areas of growth. Some I turned quickly, some I held for future development to arrive. Slowly, I'd 1031 those gains into income producing leased commercial properties to create a strong stable cash flow. With interest rates low, I'm selling those as leased investments at a premium. I'm slowly shifting to a 3 fund ETF and look for more opportunities. One of the more complicated issues with any wealth creation is how to legally keep as much of your gains from taxation and continue working for you.

boro
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Re: If your networth is over $3 million, how did you do it?

Post by boro » Tue Nov 11, 2014 3:27 pm

I don't see how hard work and living below your means could achieve it. It would take putting away $3,000 a month for 30 years and earning 6% to achieve the sum. So how many workers in the US could do that? I had a decent career as a professor at major research universities and had always been supported by NIH grants, but my salary when I first started as an assistant professor did't even come to 3,000/month! Besides if you really lived that low beyond your means, what would you do with 3 millions anyway?

Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.

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Re: If your networth is over $3 million, how did you do it?

Post by nelson1015 » Tue Nov 11, 2014 3:33 pm

boro wrote:I don't see how hard work and living below your means could achieve it. It would take putting away $3,000 a month for 30 years and earning 6% to achieve the sum. So how many workers in the US could do that? I had a decent career as a professor at major research universities and had always been supported by NIH grants, but my salary when I first started as an assistant professor did't even come to 3,000/month! Besides if you really lived that low beyond your means, what would you do with 3 millions anyway?

Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.
Example: Dual Income earners both making 100k each = 200k gross income. In a situation like that you can easily put in 40-50k a year and still live a very comfortable lifestyle.

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Re: If your networth is over $3 million, how did you do it?

Post by JDCarpenter » Tue Nov 11, 2014 3:35 pm

boro wrote:
***
Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.
True. I would say that luck is necessary, but not sufficient. Unless one throws free will entirely out the window (which discussion is better for a philosophy board). No denying, however, that being born and raised by an intact family in the modern West, even though a lower income, not "educated," household, was a sine qua non
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Re: If your networth is over $3 million, how did you do it?

Post by Lynette » Tue Nov 11, 2014 3:36 pm

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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 3:43 pm

May never get there (retiring once we hit $2 million plus paid off house - so we'll be close), but we could easily have done it by 55-60 if my wife kept working her high-paid job.

Basically, we're two professionals (She was in HR, I'm in IT) who both got to $100k+ salaries by our 40s...

Combined $200k - $250k income for the last ten years while living a $100k lifestyle (which, by nearly all measures, is a very decent lifestyle) means you save a ton of money each year.

If we had done it for another 10-15 years, we would easily hit $3 million.

But she hated her job, and we don't need $3 million, so she "retired", and we're planning on coasting to $2 million over the next ten years when I get to retire as well.

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Re: If your networth is over $3 million, how did you do it?

Post by goodenyou » Tue Nov 11, 2014 3:44 pm

boro wrote:I don't see how hard work and living below your means could achieve it. It would take putting away $3,000 a month for 30 years and earning 6% to achieve the sum. So how many workers in the US could do that? I had a decent career as a professor at major research universities and had always been supported by NIH grants, but my salary when I first started as an assistant professor did't even come to 3,000/month! Besides if you really lived that low beyond your means, what would you do with 3 millions anyway?

Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.
The easy way to get rich is to be born rich. If you want to get really rich, start a religion. My FIL was a professor of ChE for 40 years and maxed out at $110,000/year in 2011. He retired with over $3M thanks to the State U pension (lump sum) and savings. He is an immigrant who came from nothing and is extraordinarily frugal. He is UBER LBYM. He has been single for most of his life.
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Re: If your networth is over $3 million, how did you do it?

Post by boro » Tue Nov 11, 2014 3:45 pm

nelson1015 wrote: Example: Dual Income earners both making 100k each = 200k gross income. In a situation like that you can easily put in 40-50k a year and still live a very comfortable lifestyle.
At your rate of saving you will have 3 million in 30 years, but that is not the same as having the equivalent of today's three million.

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Re: If your networth is over $3 million, how did you do it?

Post by TheTimeLord » Tue Nov 11, 2014 3:55 pm

I am shocked to learn there are Bogleheads besides me with under $3 million. :oops:
I no longer feel like a abject failure. :D
Can I throw in the value of my SS and pension to try to reach $3 million?
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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 3:57 pm

DFrank wrote:Being a consistent two income household with above average salaries has allowed us to save aggressively - we save 30+% of our gross income. We didn't start out that high, but as our income has grown over the years we've plowed more and more into our savings rather than into our "lifestyle."
This.

The trick is to save half your raises... When my wife and I got married, we had a combined income of $90k, and we lived a $70k lifestyle...

5 years later, we were making $120k together, and living a $85k lifestyle... Our income went up $30k, but we only increased our lifestyle $15k, and increased our savings $15k.... That adds up fast.

Another factor is recognizing when you have "enough". When we got a $100k lifestyle, we didn't need to increase it anymore.. As we continued to get raises, we didn't need to buy bigger houses, nicer cars, etc. At that point, we started saving all our raises... Money piles up quick if you're lucky enough to have two people making decent money while living well below your means.

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Re: If your networth is over $3 million, how did you do it?

Post by selftalk » Tue Nov 11, 2014 3:57 pm

SamB did you just buy the VTSMX when cash became available to you for more shares regardless of world and local events and also ignoring general market measurement values?

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Re: If your networth is over $3 million, how did you do it?

Post by nelson1015 » Tue Nov 11, 2014 4:02 pm

boro wrote:
nelson1015 wrote: Example: Dual Income earners both making 100k each = 200k gross income. In a situation like that you can easily put in 40-50k a year and still live a very comfortable lifestyle.
At your rate of saving you will have 3 million in 30 years, but that is not the same as having the equivalent of today's three million.
Just an example and not my example. My income and savings rate has been a moving target over the last couple of years. Also, I think that is an issue for long term retirement planning. Most people do not make the same amount or save the same amount over a 30 year period. The numbers move all over the place over a 30 year period. If you graphed my spouse and I's joint income over the past 5 years it would be up and down.
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Post by Marmot » Tue Nov 11, 2014 4:03 pm

We removed all debt, maxed out all retirement vehicles since 1989. It just seemed to grow. We are DINC's, wife (attorney) has always been smart about jobs, that helped...me, I have been in the non-profit sector for 25+ years and we still managed it. Funny though, never looked at getting a number, we just got there one day:)

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Re: If your networth is over $3 million, how did you do it?

Post by chaz » Tue Nov 11, 2014 4:04 pm

Marry a rich spouse.
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Re: If your networth is over $3 million, how did you do it?

Post by bloom2708 » Tue Nov 11, 2014 4:05 pm

HomerJ wrote:May never get there (retiring once we hit $2 million plus paid off house - so we'll be close), but we could easily have done it by 55-60 if my wife kept working her high-paid job.

Basically, we're two professionals (She was in HR, I'm in IT) who both got to $100k+ salaries by our 40s...

Combined $200k - $250k income for the last ten years while living a $100k lifestyle (which, by nearly all measures, is a very decent lifestyle) means you save a ton of money each year.

If we had done it for another 10-15 years, we would easily hit $3 million.

But she hated her job, and we don't need $3 million, so she "retired", and we're planning on coasting to $2 million over the next ten years when I get to retire as well.
+1

We have no interest in getting to $3 million. Similar scenario for us only I am the one who hated their job. We have ~10 years to drift at a slightly slower pace to $2 million in investments with a paid off house.
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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 4:09 pm

boro wrote:I don't see how hard work and living below your means could achieve it. It would take putting away $3,000 a month for 30 years and earning 6% to achieve the sum. So how many workers in the US could do that?
Not everyone, but NO ONE needs $3 million anyway.
Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.
It takes a little bit of luck to have the right kind of career, and a little bit of luck to find the right spouse who also has the right career.... But jobs paying $75k-$100k by the time you're 40+ are not uncommon for most college graduates, and if you have two of you making that kind of money, and you're smart about your spending, you can save a lot.

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Re: If your networth is over $3 million, how did you do it?

Post by BHCadet » Tue Nov 11, 2014 4:16 pm

Salaries - we both work (however, I've retired) with above average salaries.
LBYM - We could have lived in a more expensive neighborhood and changed cars every couple years. But, we didn't. Our cars are over 10 years old.
Invest and Stay the course - Contributed to the maximum in 401k with additional savings/investments in taxable. Didn't sale during market crash in '87, '00, and '08.

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Re: If your networth is over $3 million, how did you do it?

Post by bhsince87 » Tue Nov 11, 2014 4:21 pm

goodenyou wrote:Make the choices that many do not want to make. Work hard, get educated, move to areas of opportunity and live below your means. If you get married, be sure your spouse shares your values.
Yes, that about sums it up for me. The first wife didn't share those values, but I made damn sure the next one did.

We're at about $2.7 million at ages 49 and 47, and plan to work a few more years.

100% came from our salaries (engineer and a systems analyst) and investment returns. Have about $400k in real estate equity.

We saved about 20% of our salaries 20 years ago, and about 50-75% now.

As they say, it's simple, but not easy.
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Re: If your networth is over $3 million, how did you do it?

Post by UADM » Tue Nov 11, 2014 4:25 pm

HomerJ wrote:
Not everyone, but NO ONE needs $3 million anyway.
Why not?

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Re: If your networth is over $3 million, how did you do it?

Post by Gill » Tue Nov 11, 2014 4:36 pm

Funny you should ask, because I sometimes wonder how I managed to reach that number. My wife never worked, I moved about a dozen times and my salary never reached low six figures until I was in my 50's. Went through a divorce and still pay alimony. I was fortunate to have had no college debt and a father who preached savings and watching expenses. I was always a saver and lived well below my means, spending very little on cars, clothes or travel but always had a nice house. Income taxes have always been sort of a hobby for me and I've probably kept taxes to a minimum over the years. Having one child helped, although I paid for private university undergraduate and graduate education.

Although I invested in equities at an early age, I went through much of the '80's invested in nothing but bonds. I took advantage of every opportunity to save, always investing the max in any savings plan that was offered. Most of my working years 401(k)'s didn't even exist and I was well into my career before IRA's were available. I guess time is a big factor. By my 40's I was worth over half a million which was a sizeable net worth in the '70's. I'm now 76 and wondering how I'll ever spend it all, even though I live in a large house on a golf course, belong to a country club, drive two nice cars and travel whenever we wish.

Life is good, I guess, and I've been very fortunate.

Gill

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Re: If your networth is over $3 million, how did you do it?

Post by gasdoc » Tue Nov 11, 2014 5:13 pm

I have a good salary, but that is not really the answer. As others on this board have said, the key is to spend less than you make. I have partners who have made a lot more money over their careers than I have, but have lived a lifestyle where they have saved very little. Also, as has been said, one spouse, one house (or nearly so)!

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Re: If your networth is over $3 million, how did you do it?

Post by nervousnovice » Tue Nov 11, 2014 5:29 pm

+1 more LBYM, no debt, paid off home in 10 years, max 401k contributions....only recently into boglehead investing, but that has given us peace of mind with our investment and retirement strategy.

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Re: If your networth is over $3 million, how did you do it?

Post by livesoft » Tue Nov 11, 2014 5:36 pm

boro wrote:I don't see how hard work and living below your means could achieve it. It would take putting away $3,000 a month for 30 years and earning 6% to achieve the sum. So how many workers in the US could do that? I had a decent career as a professor at major research universities and had always been supported by NIH grants, but my salary when I first started as an assistant professor did't even come to 3,000/month! Besides if you really lived that low beyond your means, what would you do with 3 millions anyway?
I am surprised that you wrote this. As someone who had NIH grants myself, I can say that it should be relatively easy to get to $3 million after 30 years. One thing it does take is a working spouse who made about 50% to 75% of what a great professor at a major research university was paid* coupled with saving/investing the professor's entire salary while living off the income of the lower paid spouse. Another thing is that professors make out like bandits with their 403(b) plans since every 403(b) that I participated in contributed 9.6% to 15% of my salary even if I contributed nothing (but I contributed the max).

Please do not be upset that you were not motivated to save and invest your entire salary when you were starting out and to keep that up for 30 years. I am sure that you spent your money wisely on useful things and that your career was fulfilling as you helped alleviate human pain and suffering. That's much more important than having $3 million stashed away somewhere. (BTW, I would not be surprised if you had $2+ million stashed away somewhere. :twisted:) Besides, this is not a contest to see who has the mostest.

*I have reviewed many NIH grants with salary information, so I have a very good idea of what professors are paid.

(And after re-reading your post, you actually didn't say you what you had or didn't have, but wrote about others.)
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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 5:42 pm

UADM wrote:
HomerJ wrote:
Not everyone, but NO ONE needs $3 million anyway.
Why not?
I'm not sure what you're asking.

Someone else posted like it was unfair that the average American family earning the median income would find it impossible to save that much. But the average American family earning the median income doesn't need to save $3 million to live comfortably in retirement. Even those of us in the top 10% don't need $3 million to live comfortably in retirement.

Now the top 5% or 1% may WANT $3 million+ to keep up their current lifestyle, but they certainly could live comfortably on less.

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Re: If your networth is over $3 million, how did you do it?

Post by UADM » Tue Nov 11, 2014 6:11 pm

HomerJ wrote:
UADM wrote:
HomerJ wrote:
Not everyone, but NO ONE needs $3 million anyway.
Why not?
I'm not sure what you're asking.

Someone else posted like it was unfair that the average American family earning the median income would find it impossible to save that much. But the average American family earning the median income doesn't need to save $3 million to live comfortably in retirement. Even those of us in the top 10% don't need $3 million to live comfortably in retirement.

Now the top 5% or 1% may WANT $3 million+ to keep up their current lifestyle, but they certainly could live comfortably on less.
How much do you think is needed and at what age?

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Re: If your networth is over $3 million, how did you do it?

Post by livesoft » Tue Nov 11, 2014 6:17 pm

Here is something else. The stock market has had an annual average return of about 20% since around March 2009. That means that a working family with a portfolio of $1.5 million or so, should have a portfolio now worth around $3 million if they continued another 5 years of maximum contributions to tax-advantaged accounts and did not have too high a fixed income asset allocation. Of course, to have $1.5MM in March 2009 probably meant they had $2 MM in late 2007 and it also meant they were contributing to a taxable account, too. That is, they were living well below their means.
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Re: If your networth is over $3 million, how did you do it?

Post by boro » Tue Nov 11, 2014 6:44 pm

livesoft wrote: One thing it does take is a working spouse who made about 50% to 75% of what a great professor at a major research university was paid* coupled with saving/investing the professor's entire salary while living off the income of the lower paid spouse. Another thing is that professors make out like bandits with their 403(b) plans since every 403(b) that I participated in contributed 9.6% to 15% of my salary even if I contributed nothing (but I contributed the max)......(And after re-reading your post, you actually didn't say you what you had or didn't have, but wrote about others.)
Livesoft, Always enjoyed reading your posts here. My saving rate was atrocious, mainly because I became a single parent of two very young children early in my career. My salary was sufficiently high that I paid full fare for my children's education at two colleges that only give need-based aids. I think it is money well spent. Otherwise, I live "below my means" as well. I did achieve the net worth; otherwise I would not have posted here. But as I said in my post, it was luck. I participated in developing a cancer drug. The science was fun and the money was good. Without it, I would not likely achieving it without working for another 10 years. Cheers.

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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 7:03 pm

UADM wrote:
HomerJ wrote:
UADM wrote:
HomerJ wrote:
Not everyone, but NO ONE needs $3 million anyway.
Why not?
I'm not sure what you're asking.

Someone else posted like it was unfair that the average American family earning the median income would find it impossible to save that much. But the average American family earning the median income doesn't need to save $3 million to live comfortably in retirement. Even those of us in the top 10% don't need $3 million to live comfortably in retirement.

Now the top 5% or 1% may WANT $3 million+ to keep up their current lifestyle, but they certainly could live comfortably on less.
How much do you think is needed and at what age?
Less than $3 million at or near retirement age (60-70). That is what we're talking about right? If you're having a conversation about something else, you might want to tell me.

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Re: If your networth is over $3 million, how did you do it?

Post by Professor Emeritus » Tue Nov 11, 2014 7:05 pm

I actually went back and looked and it was surely extensive savings combined with pure dumb luck

We made our first Stock purchase in 1983. DW went full time with the feds in 1990and in the year 2000 they altered the 403 b and 457 rules.
starting in 2000 we maxed out all our tax advantaged possibilities with equity index funds. We were saving about 75K per year in 2000. 2014 was the first year we actually voluntarily sold anything. I did shift our LTC reserve to Wellesley two years ago. But certainly steady investment in equities over 24 years has produced outstanding returns We both had DB pensions and SS and the house was paid off in 1991 so we could take the risk and price variability without panicking

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Re: If your networth is over $3 million, how did you do it?

Post by UADM » Tue Nov 11, 2014 7:09 pm

HomerJ wrote:
UADM wrote:
HomerJ wrote:
UADM wrote:
HomerJ wrote:
Not everyone, but NO ONE needs $3 million anyway.
Why not?
I'm not sure what you're asking.

Someone else posted like it was unfair that the average American family earning the median income would find it impossible to save that much. But the average American family earning the median income doesn't need to save $3 million to live comfortably in retirement. Even those of us in the top 10% don't need $3 million to live comfortably in retirement.

Now the top 5% or 1% may WANT $3 million+ to keep up their current lifestyle, but they certainly could live comfortably on less.
How much do you think is needed and at what age?
Less than $3 million at or near retirement age (60-70). That is what we're talking about right? If you're having a conversation about something else, you might want to tell me.
Well, you are saying that 3 is too much. I am wondering what number you think would be more reasonable.

Retirement age can be 60-70. Personally, I'll be doing it MUCH sooner.

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Re: If your networth is over $3 million, how did you do it?

Post by Toons » Tue Nov 11, 2014 7:25 pm

Live beneath your means for decades,Take advantage of any 401k,IRA and max every year.Never incur debt other than house payment(15 year mortgage),work to pay it off.Invest early and as often as possible in equity funds so that the compounding machine can go to work for you. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: If your networth is over $3 million, how did you do it?

Post by htdrag11 » Tue Nov 11, 2014 7:57 pm

livesoft wrote:Here is something else. The stock market has had an annual average return of about 20% since around March 2009. That means that a working family with a portfolio of $1.5 million or so, should have a portfolio now worth around $3 million if they continued another 5 years of maximum contributions to tax-advantaged accounts and did not have too high a fixed income asset allocation. Of course, to have $1.5MM in March 2009 probably meant they had $2 MM in late 2007 and it also meant they were contributing to a taxable account, too. That is, they were living well below their means.
On target, as always.

Living below our means:
1) Own one car with a 2-car garage; Japanese cars are low maintenance
2) cut down on cable
3) still got dumb phone (but not for long)
4) shop in outlets or Marshall's
5) borrow books from the library instead of buying them
6) buy refurb or used products instead of new
7) buy Android instead of iPad (though wife has one)
8) make your own lunches instead of going out all the time
9) eat dinner at home, usually
10) paid off all loans but maintain good credit to keep insurance low
11) keep house well insulated and lower the temperature in the winter but raise it during the summer
12) ceiling fans are hung in most of the rooms
13) exercise and stay healthy (minimizing doctor bills)
14) moving more money into Vanguard
15) do I need it or just want it?
16) make my own coffee or espresso instead of buying pods,
17) buy a juicer or blender to make fresh juice or smoothy, etc.

Unlike most folks, I got lucky and have a pension and able to retire early with full benefits since 1998. It has quadrupled.

Homer is right, we do not need this kind of money to retire but one could never tell about our future.

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Re: If your networth is over $3 million, how did you do it?

Post by obgraham » Tue Nov 11, 2014 7:58 pm

I agree with some others that the initial premise is faulty.

I retired at 54, 15 years ago. If I had continued to work till, say, 70, I expect I would have reached 3 mill +. But we made the decision that work and a large estate to pass to our kids was not the highest priority in our lives. I'm completely comfortable with our lifestyle now, which is pretty modest, and my net worth, well below 3 mill, is almost exactly where it was at retirement, if not a bit above. Of course, the allocation has to be conservative. If the economic S should really hit the fan, I know we could get by on lots less than we spend these days.

As to how to get there, a colleague years ago advised the simplest of financial tactics: "Stay married to the same spouse, and buy only ONE ridiculous car in your life". Those two areas have been the ruin of many of my acquaintances!

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Re: If your networth is over $3 million, how did you do it?

Post by chabil » Tue Nov 11, 2014 8:03 pm

Toons wrote:Live beneath your means for decades,Take advantage of any 401k,IRA and max every year.Never incur debt other than house payment(15 year mortgage),work to pay it off.Invest early and as often as possible in equity funds so that the compounding machine can go to work for you. :happy
that is pretty much what we did. we bought a smaller house than what we could have afforded and paid it off several years before my husband retired. but sometimes i regret
we did not buy a nicer, larger, house so our kids and us could have lived in more comfort and style. the house is perfect for us now, even too big as we don't use all the spaces, but when the kids come to visit it is inadequate. other than that no regrets.

Lorenz
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Re: If your networth is over $3 million, how did you do it?

Post by Lorenz » Tue Nov 11, 2014 8:28 pm

Business income, would be 5+ mil without stock investments

Bubbagump
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Re: If your networth is over $3 million, how did you do it?

Post by Bubbagump » Tue Nov 11, 2014 9:45 pm

boro wrote: Perhaps we should just confess that we have been lucky. Some of us were born with the ability, drive and desire to enter high earning professions. Some of us were born into money. Some of us, like me, got lucky with turning unlikely ideas into monetary profit.
While you're certainly correct regarding my situation, I don't see how I would be in my situation without hard work, sacrifice, and taking a heap of risk. My situation is the like cancer were it a good thing.... I simply increased my chances. So yeah, lucky as hell, but we also (assuming not inherited, married into, etc wealth) made our luck to a point.

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Re: If your networth is over $3 million, how did you do it?

Post by absauston » Tue Nov 11, 2014 9:49 pm

It took 4 things for me to start my business:
A marketable idea
Passion
Well thought out plan (very important)
Being risk adverse (I would argue this point is what stops the majority of people from being entrepreneurs)

In my experience it's a sure fire way to be broke or well off.

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Re: If your networth is over $3 million, how did you do it?

Post by MossySF » Tue Nov 11, 2014 9:53 pm

To do it the LBYM way, you have to really like your job. Because after you hit say $1M, it'll be enough for you to bail if you don't like heading to work everyday.

Professor Emeritus
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Re: If your networth is over $3 million, how did you do it?

Post by Professor Emeritus » Tue Nov 11, 2014 10:03 pm

livesoft wrote: One thing it does take is a working spouse who made about 50% to 75% of what a great professor at a major research university was paid* coupled with saving/investing the professor's entire salary while living off the income of the lower paid spouse. Another thing is that professors make out like bandits with their 403(b) plans since every 403(b) that I participated in contributed 9.6% to 15% of my salary even if I contributed nothing (but I contributed the max).
My university it was 7.2% . I never actually met anyone with the title of "great" professor. My spouse routinely made more money , and I was a Professor in an Eng School at a Class 1 university

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Re: If your networth is over $3 million, how did you do it?

Post by bawr » Tue Nov 11, 2014 10:13 pm

1. Invested in AAPL when it was $0.97 (split adjusted).
2. Invested in Bitcoin when XBT was a few cents.
3. Held a portfolio of shares in approximately 15 companies, actively managed by myself.

I have never invested in funds or bonds.

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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Tue Nov 11, 2014 10:34 pm

UADM wrote:Well, you are saying that 3 is too much. I am wondering what number you think would be more reasonable.

Retirement age can be 60-70. Personally, I'll be doing it MUCH sooner.
Retiring MUCH sooner is a want, not a need...

ahmadcpa
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Re: If your networth is over $3 million, how did you do it?

Post by ahmadcpa » Tue Nov 11, 2014 10:58 pm

Most of the respondents are self made millionaires. That's amazing and very encouraging!

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Re: If your networth is over $3 million, how did you do it?

Post by hmw » Tue Nov 11, 2014 11:05 pm

We are not there yet but I expect we will reach 3 mil in our mid-40's.

-We are lucky that we don't have any educational debt.
- We have a high income
- live below our means and we save a large portion of our income
- we started seriously saving and investing in 2009 and the market has been good.

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Re: If your networth is over $3 million, how did you do it?

Post by Professor Emeritus » Tue Nov 11, 2014 11:29 pm

ahmadcpa wrote:Most of the respondents are self made millionaires. That's amazing and very encouraging!
I don't know if I'd go as far as the "self made" . Families get you started in many ways other than inherited money.
all of the traits that make up work ethic, delayed gratification and self discipline are handed down through families.

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Re: If your networth is over $3 million, how did you do it?

Post by madbrain » Tue Nov 11, 2014 11:55 pm

MossySF wrote:To do it the LBYM way, you have to really like your job. Because after you hit say $1M, it'll be enough for you to bail if you don't like heading to work everyday.
Using a 4% safe withdrawal rate which is generally recommended, $1 million is only about $40k annual income. It can be pretty difficult in some areas to live on that even if you live very frugally and your family is just yourself. Frugality may dictate relocating to a less expensive area. Also, the longer the retirement, the higher the possibility of running out of funds - 4% might not be completely safe for early retirees.

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Re: If your networth is over $3 million, how did you do it?

Post by mrpotatoheadsays » Wed Nov 12, 2014 12:32 am

asset_chaos wrote:I'm more curious as to why you picked the precise value of $3 million.
It's a good value to keep the riff-raff out.

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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Wed Nov 12, 2014 1:29 am

Professor Emeritus wrote:
ahmadcpa wrote:Most of the respondents are self made millionaires. That's amazing and very encouraging!
I don't know if I'd go as far as the "self made" . Families get you started in many ways other than inherited money.
all of the traits that make up work ethic, delayed gratification and self discipline are handed down through families.
I don't know if that's completely true... There are plenty of people on these boards who talk of parents and family who are clueless about money, yet they still found the way.

And my sister and I are two very different people when it comes to money. My two daughters are very different people when it comes to money.

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Re: If your networth is over $3 million, how did you do it?

Post by oragne lovre » Wed Nov 12, 2014 1:34 am

ahmadcpa wrote:Hello..just curious for those of you who has a net worth over $3 million, what was the most significant source of those savings? Inheritance, real estate, business income, salary or just appreciate in your stock market investments?
This is a tough question for those who want to chime in but do not want to be known as 3-million-plus Bogleheads :)
The finest, albeit the most difficult, of all human achievements is being reasonable.

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HomerJ
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Re: If your networth is over $3 million, how did you do it?

Post by HomerJ » Wed Nov 12, 2014 1:36 am

madbrain wrote:
MossySF wrote:To do it the LBYM way, you have to really like your job. Because after you hit say $1M, it'll be enough for you to bail if you don't like heading to work everyday.
Using a 4% safe withdrawal rate which is generally recommended, $1 million is only about $40k annual income. It can be pretty difficult in some areas to live on that even if you live very frugally and your family is just yourself. Frugality may dictate relocating to a less expensive area. Also, the longer the retirement, the higher the possibility of running out of funds - 4% might not be completely safe for early retirees.
$40k in retirement isn't the same as a $40k job when you're working.

If you have the house paid off, and Social Security coming in, it's a lot like making $100k during your working years...

Normal working guy making $100k
$6000 goes to payroll taxes
$24,000 goes to mortgage
$15,000 goes to savings.

So he really has only $55,000 for everything else...

Social Security will easily generate $15,000 a year, so $40,000 a year from your million bucks will give you the exact same lifestyle as when you were making $100k from a job... And you don't have to get up and go to work!

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Re: If your networth is over $3 million, how did you do it?

Post by madbrain » Wed Nov 12, 2014 1:50 am

HomerJ wrote: Social Security will easily generate $15,000 a year, so $40,000 a year from your million bucks will give you the exact same lifestyle as when you were making $100k from a job... And you don't have to get up and go to work!
I was talking about early retirement, as was the person I was responding to - when saying that $1M gives you the flexibility to quit working anytime you want.

Social security is generally not available during early retirement.

Also, there was no mention of any other assets besides the $1M - ie. there is no paid-off house. You would have to pay rent and/or other accommodations out of your $40k income.

You also forgot the huge extra cost if you take early retirement - healthcare.

I am not sure what the numbers exactly would look like in terms of ACA subsidy for someone with a $40k income.
But I have run the numbers for my current situation comparing ACA plan and employer plan last year, and it looked like the ACA plan was much more expensive, around $8k more per year for two, even ignoring both employer and ACA subsidy, and ignoring tax deductibility of employer premiums paid as well as the ability to use an FSA.

I am sure some can make early retirement work on $1 million of course, but IMO it's far from a slam dunk.

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