Millionaire by 40 and How you Did it?

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bigtex
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Millionaire by 40 and How you Did it?

Post by bigtex » Fri Jan 11, 2019 11:39 am

I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?

jebmke
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Re: Millionaire by 40 and How you Did it?

Post by jebmke » Fri Jan 11, 2019 11:41 am

Married well + stock options (company bought out).
When you discover that you are riding a dead horse, the best strategy is to dismount.

barnaclebob
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Re: Millionaire by 40 and How you Did it?

Post by barnaclebob » Fri Jan 11, 2019 11:43 am

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
Age 33, wife 32. Both of us born on 3rd base (no student debt and good upbringings) Married early, both have good jobs, started at 60k, now at 115k each. The only other thing besides that is a high savings rate and favorable stock market for most of our investing careers.

I did receive an inheritance that has grown to 250k but we'd have a net worth over a million without it. If we need to have and average net worth of 1mm then we aren't there yet but should be within a couple years depending on market movement.
Last edited by barnaclebob on Fri Jan 11, 2019 11:56 am, edited 1 time in total.

HEDGEFUNDIE
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Re: Millionaire by 40 and How you Did it?

Post by HEDGEFUNDIE » Fri Jan 11, 2019 11:46 am

barnaclebob wrote:
Fri Jan 11, 2019 11:43 am
bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
Age 33, wife 32. Both of us born on 3rd base (no student debt and good upbringings) Married early, both have good jobs, started at 60k, now at 115k each. The only other thing besides that is a high savings rate and favorable stock market for most of our investing careers.
Ditto

Maverick3320
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Re: Millionaire by 40 and How you Did it?

Post by Maverick3320 » Fri Jan 11, 2019 11:47 am

Wrote a book on "how to be a millionaire by 40". Sold one million copies at $1 each on Facebook.

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GoldStar
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Re: Millionaire by 40 and How you Did it?

Post by GoldStar » Fri Jan 11, 2019 11:48 am

Maverick3320 wrote:
Fri Jan 11, 2019 11:47 am
Wrote a book on "how to be a millionaire by 40". Sold one million copies at $1 each on Facebook.
:)
There was an old Steve Martin joke where he said he had a scheme about how to become a millionaire. He starts the joke with "First, get a million dollars".

Olemiss540
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Re: Millionaire by 40 and How you Did it?

Post by Olemiss540 » Fri Jan 11, 2019 11:50 am

This has been hashed (consider reading the comprehensive net worth thread), but it comes down to mathematics and savings rate (LBYM) in almost all circumstances.

What return you have gotten (many 40 YO have ridden the latest bull market successfully whereas the current 30 YO shouldn't count on the same), compounded on what your annual savings is yields your nest egg value.

All you can do is disregard ambiguous goals and focus on intermediate steps of savings versus spending. Everything else is up to the market forces and outside of your control.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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Sandtrap
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Re: Millionaire by 40 and How you Did it?

Post by Sandtrap » Fri Jan 11, 2019 11:53 am

Examples that I have known personally.

1. Dual "gov't" or professional income. Early home purchase in UHCOL area of high appreciative value.
Factors: steady income, avoidance of bad financial behavior and black swans, rapid rise of home equity.

2. Business owners with a combination of high cash flow, stable and steady high cash flow, tax favorable, substantial asset value and rapid or steady appreciation of those assets, substantial and steady reinvestment of profits, sound strategies, persistence.

3. Substantial Inheritance. (does not apply to #1-2 above). Sometimes results in #4 below after a long period of time.

4. Interestingly, those that I have known that were beneficiaries of trust funds did not tend to accumulate substantial personal assets on their own as a result of sound financial strategy and personal discipline.

For myself, started with nothing, zero, nada. (long road long story) :shock:
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pacodelostigres
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Re: Millionaire by 40 and How you Did it?

Post by pacodelostigres » Fri Jan 11, 2019 11:55 am

Left college with significant negative net worth, poor families, and no safety net.

Waited until 35 to have a kid, LBYM, aggressively paid off all debt including mortgage then rerouted money to index funds.

Started in jobs that paid about 30k/yr each but worked hard and were very aggressive about getting paid our worth, and we're both now up to about 120k (with no real prospects for further advancement). We live on about 5k/mo net including a hefty daycare bill, but could easily live on 3k a month if we went to one income without reducing our standard of living beyond firing the monthly cleaners and buying a few less prepared meals from Costco.

Simple hobbies and low cost vacations. We spend about 3k a year on travel and about 3k a year on fitness/gym/outdoor stuff. No real other discretionary spending. I like Xbox, D&D, and cannabis. My wife likes Netflix and cheap wine/whiskey.

Drove our first cars into the ground and then some. The next cars were both rear ended, but we planned to do the same. Recently we started leasing (still inexpensive cars) because we can afford to pay for simplicity now.

Picked a LCOL area so we got a 4br 2600 ft house in an area with good schools for 218k in 2011 as our 2nd home, which we'll probably live in until we retire. It's worth about 325k now, but we're millionaires without counting the equity.

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Re: Millionaire by 40 and How you Did it?

Post by stoptothink » Fri Jan 11, 2019 11:55 am

We're 37 and 32, guesstimating that we'll cross the 2-comma threshold sometime in 2020. Pure hard work and LBYM. Wife and I both grew up well below the poverty line and actually have helped our parents financially as we put ourselves through school (wife is still in school). We've also had a number of serious setbacks: both had financially devastating divorces in our 20's and I lost nearly my life's savings in real estate development '07-'09. We married in 2013 with a combined net worth of maybe $100k (her net worth was negative) and a HHI of ~$80k. In the last 6yrs our income has nearly tripled and our lifestyle hasn't changed at all. We are now saving ~55%+ of gross income and that should only ramp up in the next few years as wife finishes school, our youngest is done with daycare, and our home should be paid off all in the next 3yrs.

Millennial
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Re: Millionaire by 40 and How you Did it?

Post by Millennial » Fri Jan 11, 2019 12:08 pm

tl;dr: professional jobs, thoughtful spending, and some luck with real estate.

Wife and I are both 33, with a 1 YO son. Left college with little debt (<$20k each, very low interest rates) and paid it off. Two professional jobs starting in the mid 60k range and now around $125k. Started with 401ks to company match and maxed Roths, and each year we used most of our raises to add to 401k contributions until those were maxed too. Drove inexpensive cars for a long time, and purchased a 2-family house in 2010 for $600k. Lived in the smaller/older apartment while renting the larger/nicer one, which covered our full mortgage starting with a refi in 2012. Sweat equity into renovations, including kitchens. Sold that house this year for $1.2MM and moved to our dream neighborhood - but again we're living in the smaller/worse half of a 2 family and rent of other apartment covers 60% of mortgage. Current NW around $1.8MM, with about $400k of that as equity in house.

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JoMoney
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Re: Millionaire by 40 and How you Did it?

Post by JoMoney » Fri Jan 11, 2019 12:09 pm

Slightly above average income (based on BLS wage data), single, no kids, very frugal.
Travel frequently and able to get employer to pay a lot of living expenses (which bumps up income).
You can find data on net worth by age percentile here:
https://dqydj.com/net-worth-by-age-calc ... ed-states/
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

sixty40
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Re: Millionaire by 40 and How you Did it?

Post by sixty40 » Fri Jan 11, 2019 12:11 pm

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
It is exactly what you said, large annual income, frugal habits, spouse or significant other has same/similar goals, etc. Double income helps a lot. I don't think there is any magic to it. If at age 22 you got a good job and can save $20,000 per yr and get 10% on your money, you will have a little over $1.0M. That is not possible for most people. Out of college I was making about $20k/yr and at age 40 I was making over $150k/yr with combined income of over $200k/yr. Up to age 30-35, your savings may be in the lower to middle hundred k's, but it starts growing faster as your savings accumulate and you make more money. For us the first $1.0M was mostly (50% or more) from income savings.

This assumes you start out with nothing at age 22, which is what I had. Also remember from 22 to 40, there may be 2-3 recessions which will affect your investments.

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unclescrooge
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Re: Millionaire by 40 and How you Did it?

Post by unclescrooge » Fri Jan 11, 2019 12:12 pm

Born into a stable family that pushed me into a useful degree like engineering, and not art which was my first choice, and paid for undergrad.

Paid for 1/3rd of engineering grad school too. I covered the rest through internships and jobs.

Graduated into the tech recession, and found under paying jobs. Had the discipline to always save alreast 5% of my income no matter what, and usually 10-20%.

Got lucky in real estate, made $500k by 32, which paid for global travel, a full-time MBA, an amicable divorce, and left me up back at zero networth by 2009 at 35.

I foolishly turned down a full ride at UCSDs school of business, and a partial scholarship elsewhere. But at least I held on to tell rentals that were underwater by 2009.

Pulled out student loans I didn't need in early 2010 and invested it in the market.

In the four years between 2010 and 2013, I saved 50%+ of my gross income, investing it in the stock market.

Between 2014 and 2016, wife now contributes to household. Her income went to paying the mortgage and household expenses while my income went mostly into savings/investments.

As I was nearly 42 I woke up one day a realized we broke the million mark in networth a while back and never realized it. Wife has a great income, but at that point she had been contributing for 2 years, being a poorly paid resident before then with $130k of student loans.

Basically, get a good education, get someone else to pay for it, marry well, save a lot of your income and invest it.

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Re: Millionaire by 40 and How you Did it?

Post by Starfish » Fri Jan 11, 2019 1:01 pm

I am not sure if I had 1 million at 40 because I started using mint at 41 but I was very close. The funny thing is that we felt pretty poor, other people I knew and friends had a lot more and were younger, I was pretty surprised when I realized.

I came in US at 25 with a duffel bag and 2000$.
I spent 5 years in grad school (7 for my wife, including a professional degree) paid with about 15k a year.
I started working at 30 (from a NW of 0), my wife at 32. 200k in student debt. Two 6 digits incomes, but not particularly high especially for the area, not at a great company either. Lived well (not really MMM style) but did not waste money either. 2008 helped a lot. Had a kid at 38, bought first house at almost 40. We did nothing special, did not buy real estate or individual stocks on the dip like others (did not have much cash at the moment) etc.

That 1 million number includes everything we had, including equity.
I have plenty of examples who did A LOT better. In my circle of friends we are still in the second half for sure.

Ron
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Re: Millionaire by 40 and How you Did it?

Post by Ron » Fri Jan 11, 2019 1:42 pm

Simple; just follow this guy's formula:

https://finance.yahoo.com/news/millenni ... 00692.html :twisted:

- Ron

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Re: Millionaire by 40 and How you Did it?

Post by KyleAAA » Fri Jan 11, 2019 1:57 pm

Large annual income in conjunction with spouse also earning a good income. Not frugal, exactly, but living well below our means helped immensely.

bubbadog
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Re: Millionaire by 40 and How you Did it?

Post by bubbadog » Fri Jan 11, 2019 2:04 pm

Finished residency at age 29.

Worked in emergency medicine for above average compensation in a LCOL area.

Saved over half of my income.

Pretty simple formula.

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unclescrooge
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Re: Millionaire by 40 and How you Did it?

Post by unclescrooge » Fri Jan 11, 2019 2:13 pm

bubbadog wrote:
Fri Jan 11, 2019 2:04 pm
Finished residency at age 29.

Worked in emergency medicine for above average compensation in a LCOL area.

Saved over half of my income.

Pretty simple formula.
Funny how medicine works. You get paid above average wages in MCOL/LCOL areas, but below average in HCOL.

My wife could make 50% more if we moved somewhere cheaper.

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TheClash
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Re: Millionaire by 40 and How you Did it?

Post by TheClash » Fri Jan 11, 2019 2:17 pm

Started my own business at 35 after my employer did something unconscionable to me. Grabbed her clients (I kind of owned them already). Worked like a dog -- 80+ hours/week. Was there by 36 or 37. One of the best things I ever did...on many levels.

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Re: Millionaire by 40 and How you Did it?

Post by onourway » Fri Jan 11, 2019 2:28 pm

Good engineering job started at age 24. Said 'yes' to nearly every project offered me until kids were born. Saved 10-15%. Employer had above-average match. Bought a very inexpensive house. Didn't make any major mistakes.

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Re: Millionaire by 40 and How you Did it?

Post by deltaneutral83 » Fri Jan 11, 2019 2:36 pm

unclescrooge wrote:
Fri Jan 11, 2019 2:13 pm
Funny how medicine works. You get paid above average wages in MCOL/LCOL areas, but below average in HCOL.

My wife could make 50% more if we moved somewhere cheaper.
I would imagine it's more good old fashioned supply/demand. You aren't moving to the LCOL for a reason, and it's probably the same reason as everyone else who elects the lesser pay in the higher cost of living area.

mak1277
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Re: Millionaire by 40 and How you Did it?

Post by mak1277 » Fri Jan 11, 2019 2:42 pm

Big 4 CPA married another Big 4 CPA...both eventually transitioned out to other companies, ultimately both earning over 6 figures with no kids (at the time). Didn't really put any extra effort into saving/frugality or into aggressive investing...hit $1 million at 37 and $1 million each by 39.

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Re: Millionaire by 40 and How you Did it?

Post by bubbadog » Fri Jan 11, 2019 2:45 pm

unclescrooge wrote:
Fri Jan 11, 2019 2:13 pm
bubbadog wrote:
Fri Jan 11, 2019 2:04 pm
Finished residency at age 29.

Worked in emergency medicine for above average compensation in a LCOL area.

Saved over half of my income.

Pretty simple formula.
Funny how medicine works. You get paid above average wages in MCOL/LCOL areas, but below average in HCOL.

My wife could make 50% more if we moved somewhere cheaper.
Sure is.

Supply and demand I suppose.

MikeG62
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Re: Millionaire by 40 and How you Did it?

Post by MikeG62 » Fri Jan 11, 2019 4:18 pm

Big job that paid very well. Made sure my performance was such that I was considered indispensable.

Lived well below our means, but far from frugally.
Real Knowledge Comes Only From Experience

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Re: Millionaire by 40 and How you Did it?

Post by White Coat Investor » Fri Jan 11, 2019 5:40 pm

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
It was both. Don't know percentages but I would imagine under 1%. I suspect most millionaires are 50+ and the total is 3-4% of the population (11M out of 400M Americans).

https://www.cnbc.com/2017/03/24/a-recor ... shows.html

You can kind of follow my story on Bogleheads. I started posting here with nothing around age 29 and became a millionaire at 38.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

H-Town
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Re: Millionaire by 40 and How you Did it?

Post by H-Town » Fri Jan 11, 2019 5:52 pm

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
My wife and I are projected to get to the mark each by 38. We keep the living expense as we had when we start out our professional jobs. It's not frugal by any means. We bought a simple house during 2008 crisis. We spend more on traveling and memories. We both have significant pay raise since we started out and most of it goes to savings. The key thing is we both share common values in personal finance.

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Re: Millionaire by 40 and How you Did it?

Post by Longdog » Fri Jan 11, 2019 6:02 pm

GoldStar wrote:
Fri Jan 11, 2019 11:48 am
Maverick3320 wrote:
Fri Jan 11, 2019 11:47 am
Wrote a book on "how to be a millionaire by 40". Sold one million copies at $1 each on Facebook.
:)
There was an old Steve Martin joke where he said he had a scheme about how to become a millionaire. He starts the joke with "First, get a million dollars".
I started with $10M at age 30... :wink:
Steve

iamone
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Re: Millionaire by 40 and How you Did it?

Post by iamone » Fri Jan 11, 2019 6:15 pm

We started at close to zero in 99 and had more than a million when I started tracking my investments in 09. We may have been millionaires earlier than 09 as the stock market was already down quiet a bit by the time I started tracking. We also bought a house for 450k with 20% down in 2002 that I don't include that in my net worth.

So, how did I do it? We just had an above average income, low expenses (although we live in a very HCOL area) and income kept going up through the 2 recessions without a break. We also had a close to 100% stock allocation and never had any bond funds other than the emergency fund in the checking account. When you continue to invest without a break, the recessions are actually pretty good as you can buy low.

mc2
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Re: Millionaire by 40 and How you Did it?

Post by mc2 » Fri Jan 11, 2019 6:39 pm

Hit it at age 45-close right?

Son of a hardworking depression era dad set my fiscal tone. Married a beautiful, humble, giving wife. Raising 3 kids w/ old cars and no cable TV, saving as much as we can.

Oh and I'm at about 17,000 PB n J's and counting...brown bag that lunch my friend!

TimeMan
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Re: Millionaire by 40 and How you Did it?

Post by TimeMan » Sat Jan 12, 2019 1:20 am

My parents bought computers when they were unheard of. Apple II for the family business accounting. TI-99 and Commodore VIC-20 for me and my brother. I loved them and wanted to make them do my bidding. I dove into it all through elementary, middle and highschool.

I dropped out of HS at 17 because it was a horrible school district and I felt I was wasting my time. I partied for the next several years while trying to break into the internet bubble right as it crashed.

At 26, I got married and had a child soon after. We were living with my parents and didn't have a lot of options.

I happened to see an opportunity for an online product due to my past experience and current employment at 27. Negotiated with my boss and his partners to invest in the product and spun it off at 29 yo. Spent my entire 30's working on it and sold the company at 39.

I initially set my goal in my mid-20's to start a company by 30. A lot of hard work, stress, & hair loss, but I was able to buy my parents a new SUV and the downpayment on their retirement house. My NW is around $2 Million, was much better a few months ago.

The youngest will graduate HS in 6 years, so I give it another 10 years and I'm out of the game. If I can keep maxing 401k and not touch my balances, I'll hit my number of $5M around then.

I get a bit frustrated though as some have heard my story and used it as the "Bill Gates" excuse, "he didn't go to college, and he's doing well" type talk. I always have to correct them in that I had a burning, unrelenting desire to program and understand computing.

My plan is a non-starter without that. I think about that constantly with my teenage kids as they are approaching late-stage highschool.

mattshwink
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Re: Millionaire by 40 and How you Did it?

Post by mattshwink » Sat Jan 12, 2019 3:40 am

When my wife and I got married in 2005 my wife I and committed to maximizing retirement contributions. We were also pretty aggressive (90+ stocks) slowly sliding to 60-40 at age 60 (16 years to go). My wife's match is excellent (6-9%) mine is average at 3%, though just last October took a job with no 401k for the first time (will probably switch to a job with a 401k in a few months). Also inherited 59K from my Aunt in 2012 and 25K from my parents in 2014. That money is in Inherited IRAs and only withdrawals are RMDs. In 2009 we had $274K. Crossed $1M in 2014. Peaked at 1.4M last year, now at 1.388M (2018 EoY).

My advice to get to 1M (and beyond!):
1. Commit to saving as much as you can. Make a goal to try to max retirement contributions (do not worry if this is not immediate, just start, keep it up, increase when you get raises or if you find you have excess cash)
2. Set an allocation (in your IPS) and then don't touch. An IPS does not have to be complicated (ours is a few sentences). We have weathered two recessions (once before when we just started investing and then once more in 2008-2009) plus a few small dips (including last year) and we made 0 changes. This is key. Don't be reactionary. If you find your allocation is wrong don't change immediately, take some time to figure out what you want to do, then wait a little to do it :) We only look at our accounts at the end of the year, and make any changes then.

WVbaron
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Re: Millionaire by 40 and How you Did it?

Post by WVbaron » Sat Jan 12, 2019 6:34 am

I am 38 and joined the two comma club a few months ago...although the recent market performance has caused it to slip back down a little. :oops:

You can go back and read the post I wrote when I hit it, as I shared my journey there but like most people on here, I did it mostly with the boglehead recipe.

I grew up in a lower middle class family, was the first to go to college (had to work FT job to put myself through it), and took as little in student loans as possible. Flashforward and somewhat uncommon for this group, but I actually work in retail. After college, did a few things and then landed a job with a really good company and have been with them for the past 13 years. My salary has steadily grown and now with bonus, etc make about $150K a yr. The past 6 yrs of which, I have been on an expat contract in Europe so it has definitely helped with my savings rate.

I also have always set smaller goals along the way, like increasing my monthly savings rate to different targets, hitting the next 'mini milestone', etc.

In some ways, the boglehead group can be a different version of 'keeping up with the joneses'. Someone on here will always have a higher salary, higher net worth, higher savngs rate, etc. My best advice is just to LBYM, save a bit of your salary increases each year to increase your savings rate, follow the 3 fund model, and enjoy the ride.

Good luck on your journey and achieving your goals.

A-Commoner
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Re: Millionaire by 40 and How you Did it?

Post by A-Commoner » Sat Jan 12, 2019 6:35 am

Including home equity, we hit 1m at 39. Excluding home equity, got there at 44. Dual physician household, graduated with no student loans. Lived in VLCOL. The biggest event that brought us into 7 figure territory was the sale of our practice to the local hospital. Investing in stocks also helped. Looking back, our consistently best performing investments were/are the Vanguard Health Care Fund and Vanguard Capital Opportunity. These 2 are just phenomenal wealth generators.

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Re: Millionaire by 40 and How you Did it?

Post by dziuniek » Sat Jan 12, 2019 6:39 am

TimeMan wrote:
Sat Jan 12, 2019 1:20 am
My parents bought computers when they were unheard of. Apple II for the family business accounting. TI-99 and Commodore VIC-20 for me and my brother. I loved them and wanted to make them do my bidding. I dove into it all through elementary, middle and highschool.

I dropped out of HS at 17 because it was a horrible school district and I felt I was wasting my time. I partied for the next several years while trying to break into the internet bubble right as it crashed.

At 26, I got married and had a child soon after. We were living with my parents and didn't have a lot of options.

I happened to see an opportunity for an online product due to my past experience and current employment at 27. Negotiated with my boss and his partners to invest in the product and spun it off at 29 yo. Spent my entire 30's working on it and sold the company at 39.

I initially set my goal in my mid-20's to start a company by 30. A lot of hard work, stress, & hair loss, but I was able to buy my parents a new SUV and the downpayment on their retirement house. My NW is around $2 Million, was much better a few months ago.

The youngest will graduate HS in 6 years, so I give it another 10 years and I'm out of the game. If I can keep maxing 401k and not touch my balances, I'll hit my number of $5M around then.

I get a bit frustrated though as some have heard my story and used it as the "Bill Gates" excuse, "he didn't go to college, and he's doing well" type talk. I always have to correct them in that I had a burning, unrelenting desire to program and understand computing.

My plan is a non-starter without that. I think about that constantly with my teenage kids as they are approaching late-stage highschool.
This takes me back. I had a Commodore C-64 with the tape drive.
Cleaning the tape drive was such a PITA.

Was always jealous of the folks who had an AMIGA at the time, eeh.

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Re: Millionaire by 40 and How you Did it?

Post by jharkin » Sat Jan 12, 2019 7:06 am

mc2 wrote:
Fri Jan 11, 2019 6:39 pm
Hit it at age 45-close right?

Son of a hardworking depression era dad set my fiscal tone. Married a beautiful, humble, giving wife. Raising 3 kids w/ old cars and no cable TV, saving as much as we can.

Oh and I'm at about 17,000 PB n J's and counting...brown bag that lunch my friend!
Im on track to hit it around the same milestone at 45 in a couple years.Started deep in the hole ( parents have nothing and will work till they can’t). Like others at least one high income, and living well below our means... biggest one here is buying a house much smaller than peers, modest reliable Japanese cars held 10+ years, and DIY the things everyone else pays for (yard work, snow removal, home maintenance, car repair, and as much renovating as I can do... only leave specialized things for the pros like roofing).

If my wife hadn’t taken 5 years off to be SAHM and we had parents able to pay our education, a million at 40 would have been possible.
Last edited by jharkin on Sat Jan 12, 2019 8:24 am, edited 1 time in total.

Cycle
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Re: Millionaire by 40 and How you Did it?

Post by Cycle » Sat Jan 12, 2019 7:07 am

Parents started me off with no debt out of undergrad. I had work pay for grad school, and used remaining college fund money ($20k) to buy a condo when I was 24. which i rented a bedroom out in. Nice headstart against most, like my wife had student loan debt when we married that I helped pay down.

Anyways, I hit 1MM for my wife and i at age 34 in 2017. My salary at that time was like 110k, and my wifes 95k. Most of the accumulation phase though, salary was below 90k ea.

I now live in a duplex and rent out the other half. My half cost $95k (minneapolis), plus $50k in rennovation costs. 1 car family. As our assets grew we actually downsized our housing and car situation. Am now able to save $170k per year on 290 salary, 10k rent.

The headstart I was given actually only equates to 6 months savings per child. We have a 3 week old, and his 529 will be fully funded for his private highschool and college by the end of the year. There'll be 17 years of tax free gains on his college money. :moneybag :greedy :moneybag

If we can manage a 0% real return in the 3-fund the next 5 years, will hit 2MM by 40, or 1MM per working adult.
Never look back unless you are planning to go that way

livesoft
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Re: Millionaire by 40 and How you Did it?

Post by livesoft » Sat Jan 12, 2019 7:11 am

I was not a millionaire by 40 ... not even if I go back and inflate the dollars to 2019.
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hdas
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Re: Millionaire by 40 and How you Did it?

Post by hdas » Sat Jan 12, 2019 7:58 am

1 mil it’s not what it used to be. It’s around 8-10 million these days in order to be in the top 1% of the distribution in the US.

Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

sambb
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Re: Millionaire by 40 and How you Did it?

Post by sambb » Sat Jan 12, 2019 8:17 am

i invested in myself rather than the market - this helped me raise my income and make it there. If i invested in the market instead of myself, i would not have made it. If i saved and invested in the market, i would not have raised my income, and i would have had a much lower standard of living to get close. Instead i invested in myself and raised the bar.

kayli69
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Re: Millionaire by 40 and How you Did it?

Post by kayli69 » Sat Jan 12, 2019 8:33 am

Negative 6 figure net worth at the end of fellowship at age 32. Millionaire by age 35. LBYM, dont buy a big stupid house or fancy European cars, waited a few years to have children, saved more than 50% of take home pay, invested in simple, low cost index funds and avoided foolish investments

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Re: Millionaire by 40 and How you Did it?

Post by runner540 » Sat Jan 12, 2019 8:50 am

kayli69 wrote:
Sat Jan 12, 2019 8:33 am
Negative 6 figure net worth at the end of fellowship at age 32. Millionaire by age 35. LBYM, dont buy a big stupid house or fancy European cars, waited a few years to have children, saved more than 50% of take home pay, invested in simple, low cost index funds and avoided foolish investments
Wow! would love to hear more about this story: negative to $1MM 3 years.

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Re: Millionaire by 40 and How you Did it?

Post by runner540 » Sat Jan 12, 2019 8:57 am

bigtex wrote:
Fri Jan 11, 2019 11:39 am
I would also like to learn how you became a millionaire by 40 and how you did it? Was it purely large annual income, frugal habits, or both? Also, how rare is a million dollar net worth by 40? 5% of the US population or possibly under 1%?
Check out this data:
Calculator by age using 2016 data: https://dqydj.com/net-worth-by-age-calc ... ed-states/
A 35-39 yo in 2016 with $1MM = top 1%

https://dqydj.com/net-worth-of-full-tim ... ed-states/ It's from 2013 but the blogger separates out full time college educated workers from the general population. Looks like in 2013, $1MM net worth for all ages put you in the top 10% of general population, and top 20% of full time college educated workers.

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Re: Millionaire by 40 and How you Did it?

Post by Jimsad » Sat Jan 12, 2019 8:57 am

Probably very high pay ; this detail was left out by last poster

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Re: Millionaire by 40 and How you Did it?

Post by Jimsad » Sat Jan 12, 2019 8:58 am

I mean Kaylie69

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Re: Millionaire by 40 and How you Did it?

Post by Cycle » Sat Jan 12, 2019 9:30 am

hdas wrote:
Sat Jan 12, 2019 7:58 am
1 mil it’s not what it used to be. It’s around 8-10 million these days in order to be in the top 1% of the distribution in the US.

Cheers :greedy
Not at 40, for a 40 year old:
8MM earning 5% real per year will be 27MM at 65.
2.4MM earning 5% real per year will be 8MM at 65
Never look back unless you are planning to go that way

staythecourse
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Re: Millionaire by 40 and How you Did it?

Post by staythecourse » Sat Jan 12, 2019 9:39 am

Olemiss540 wrote:
Fri Jan 11, 2019 11:50 am
This has been hashed (consider reading the comprehensive net worth thread), but it comes down to mathematics and savings rate (LBYM) in almost all circumstances.

What return you have gotten (many 40 YO have ridden the latest bull market successfully whereas the current 30 YO shouldn't count on the same), compounded on what your annual savings is yields your nest egg value.

All you can do is disregard ambiguous goals and focus on intermediate steps of savings versus spending. Everything else is up to the market forces and outside of your control.
I would agree with this. For the younger investors don't assume you can replicate any of the stories you hear. One aspect that no one admits to is being LUCKY. They started investing into a bull market. The ONLY things you can control is 1. How much you save per year and 2. The cost to invest.

The rest is up to luck of the markets.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Millionaire by 40 and How you Did it?

Post by tomtoms » Sat Jan 12, 2019 9:50 am

It is not as hard as you think. My family and I immigrated to the U.S when I was 8 years old. Both my brother and I became a millionaire before 40.

Here is my story:

- graduated from grad school in my late 20s during the Great Recession
- had about 150 k in student loan debt
- found a good paying career (6 months after graduation)
- started a thriving business
- maxed out my 401 k, SEP-IRA, HSA every year
- purchased rental properties
- have caring parents (can't beat a good home cooked meal)

On the other hand....my cousins who immigrated with us are still struggling. Their dad wasn't really at home most of the times. They didn't graduate from college and took on heavy debt to buy cars, clothes, gifts, etc. I always hear them complaining about their disadvantages which is ironic since we immigrated to the U.S. at the same time! I also had to face some struggles but I didn't complain about them. I overcame them and moved on with my life. Sometimes, I just want to ask them..If you can't make it here, where can you really make it?
Last edited by tomtoms on Sun Jan 13, 2019 2:22 am, edited 1 time in total.

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BenfromToronto
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Re: Millionaire by 40 and How you Did it?

Post by BenfromToronto » Sat Jan 12, 2019 11:03 am

And here is my story; this is another version of some of the stories above.

I was contributing to my 401 plan and an IRA but I did not think much about saving and investing until I read The Wealthy Barber when I was 31 (1991).
I completed my "financial education" reading Bogle's Common Sense on Mutual Funds(1993) and the Millionaire Next Door (1996).
It all made sense to me; I decided to implement their "recipe" as an experiment and to see whether it is true that one can become rich solely from one's work (as opposed to being a businessman or an entrepreneur or by inheriting).

I also met my DW when I was 31 and we got married when I was 35. We had our first kid a couple of years later.
Both DW and I went to "cheap" state universities and had no debts from our education.
We had decent jobs and were good at postponing gratification.
Except for nice vacations, we lived below our means (LBYM): a modest first house in a LCOL city (Pittsburgh); IKEA furniture; I bought a new Honda Civic hatchback in 1985, paid cash for it, and drove it for 20 years; our kids went to public schools and got their clothes at Wal-Mart; a lunch bag and a thermos every day...
Doing this, we were able to save about 1/3 of our gross income (or about 50% of our take-home pay).
We invested it all in stocks but through a friend I also "accumulated" 10 rental apartments that were cash-flow positive from day-1 (I have now sold all of them because of the PITA factor and the potential liability issues associated with being a landlord).

Our net worth reached $1M after 6 years when I was 37 (1997), or 1 year later if you exclude one's home and include only investments in net worth.
To put things in perspective, our cumulative total earned income (i.e., all the money my wife and I had earned from our work) was $1.3M when our net worth topped $1M.

Even though we benefited from the 1990's bull market, this first $M felt the "hardest" one (I believe this is a common experience).
Now, after 20 years, two market crashes and many dips later, our net worth has increased exponentially.
We are financially independent and we could retire (with a SWR of less than 2%) but we like our jobs.
We sill do not own (or like) fancy cars, but we no longer live frugally.
We now spend most of our earned income; we live in our fully paid dream house in a HCOL city (market value: $3M+); we have a full-time housekeeper/cook; we are paying cash for our kids colleges; we travel in front of the plane to our summer beach house or to exotic places (Asia, Africa…); we buy collectibles (because we like them but it is also a form of diversification); we donate 6-figure gifts (appreciated shares) to our favorite charities...
Our lifestyle does not matter anymore because the pump has been primed: in a good year (e.g., 2017 - but not 2018 ;-), our invested net worth increases 3-5 times more than what we earn before taxes.
Even with a 50% market crash, we could maintain our lifestyle for 10+ years spending only dividends and our cash (still, I am bothered on bad market days -on average 36 days each year - when we suffer a 6-figure loss of our net worth).

Some posters say it has been all luck for our generation because the market has done very well.
Actually, during my investing lifetime -1991-2018- the market has been doing relatively poorly compared to other historical periods (particularly when one takes a global rather than a US-centric perspective).
However our approach to investing took advantages of the expected crashes and dips.
When we started investing in 1991, we were still traumatized by the crash of 1929 (that had ruined my grandparents), the stagflation of the 1970's (that had hurt our parents), the Japanese bubble of the 1980’s and the flash crash of 1987 (that led some of my friends to completely avoid stocks).
Based on my readings, I understood that stock picking and market timing were bad but I was not satisfied intellectually with “overpaying” for stocks bought when the market peaks.
In 1991, I created an Excel spreadsheet to implement a system I invented; it ends up being a Dollar Value Averaging (DVA) approach (https://en.wikipedia.org/wiki/Value_averaging) with one modification: I only bought but never sold any shares.
Also, I wanted to be an owner and I favored stocks and avoided bond (also, I belong to the group who believes that it makes no sense to buy bonds when one has a mortgage).
Finally, I took a global perspective, with a target of 50% US stocks (with a tilt towards small stocks) and 50% international stocks (including 10% emerging markets).
With DVA but no rebalancing, our current AA ends up being: US stocks: 45%; international stocks (including emerging markets) 40%; cash: 10% (yes, DVA and the bull market of 2008-2017 have resulted in a rather large cash position and I am okay with it).
Finally, as I get older and after having sold all our rental units, I have started to accumulate some TIPS and REITs: 5%.

With an early form of "robot adviser" and DVA, as predicted by some academic studies, our IRR over almost 20 years beats the market return (S&P500) by about 1% and the more typical Dollar Cost Averaging (DCA) by about 0.5%.
We mostly used Vanguard low cost index funds (thank you Mr. Bogle) and now ETFs but I also accumulated about $1M in BRK.A and BRK.B (thank you Mr. Buffet).
Finally, I have had a trading (play) account since 1994.
I started with a few $100's and it is now about 4% of our net worth.
I mostly bought and held out-of-favor individual stocks (selling half each time they doubled and reinvesting the profits in new out-of-favor stocks).
Overall, I have been lucky but I have had some total losses (e.g., K-Mart went bankrupt), which have reinforced my determination to mostly do what the Excel “robot” tells me to do.

So, my conclusion is that Chilton (the author of the Wealthy Barber) was right: it is possible for a working person to become rich (slowly) from investing 10-20% of their modest earned income in low-cost (Vanguard) index funds.

Best wishes to you!
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

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Re: Millionaire by 40 and How you Did it?

Post by willthrill81 » Sat Jan 12, 2019 11:10 am

I probably won't reach millionaire status until 42, but we didn't start saving in earnest until four years ago.

If we're blessed to get there, it will be due to a combination of a good income (low six-figure) and a high savings rate (about 50%).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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