How many years for each $250k of net worth?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
bigtex
Posts: 257
Joined: Fri Jan 26, 2018 10:34 am

How many years for each $250k of net worth?

Post by bigtex » Thu Sep 12, 2019 3:33 pm

Is there a way to rough estimate how many years it takes to reach each $250k of net worth. Surely it gets shorter for each new set of 250 because of compound interest (snowball effect). It took me 7 years of full time work to hit the first 250k. Can I estimate like 5 years for the next $250k, and three years after that? Or is it all just at the mercy of the market returns? Thanks!

User avatar
bligh
Posts: 1139
Joined: Wed Jul 27, 2016 9:13 pm

Re: How many years for each $250k of net worth?

Post by bligh » Thu Sep 12, 2019 3:39 pm

It speeds up later in life as your human capital reaches its full potential (translation, you get promoted and accumulate raises) .. and your portfolio starts to work for you as well. There isn't a good rule of thumb though. It will depend on how well you do, whether you inflate your lifestyle, get married, have kids and have parents to support, get divorced, etc. or stay single, live frugally with room mates and get a job at Facebook making $500K a year saving most of it. Also it matters whether the next 5 years bring you a bull market or a stock market crash.

My advice, track it going backwards but don't try to project it forwards. Just keep plugging away and trust in the process.
Last edited by bligh on Thu Sep 12, 2019 3:40 pm, edited 1 time in total.

User avatar
Brianmcg321
Posts: 479
Joined: Mon Jul 15, 2019 8:23 am

Re: How many years for each $250k of net worth?

Post by Brianmcg321 » Thu Sep 12, 2019 3:40 pm

Just use any investment calculator with a given rate of return and adding funds monthly.

For example:
Saving $1000 a month with an 8% return:
First 250k will be reached by year 13
2nd 500k will be reached by year 19
3rd 750k will be reached by year 23
4th 1mil will be reached by year 26

Your next million will be reached at year 35.

Compounding is a wonderful thing if you can take advantage of it the younger you are.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

User avatar
anon_investor
Posts: 781
Joined: Mon Jun 03, 2019 1:43 pm

Re: How many years for each $250k of net worth?

Post by anon_investor » Thu Sep 12, 2019 3:55 pm

I think it depends on a lot of factors aside from just raises (e.g. doctors/lawyers may have a lot of student loan debt early only) which may make the first $250k take a lot longer to earn, than the subsequent $250k increments.

fortunefavored
Posts: 71
Joined: Tue Jun 02, 2015 8:18 pm

Re: How many years for each $250k of net worth?

Post by fortunefavored » Thu Sep 12, 2019 4:08 pm

From 1998 to the dip in 2013, my returns of a not particularly exciting 80/20 slice and dice portfolio were barely 2%.

Then we had a roaring bull and now my IRR is around 7%

That period taught me nothing is more important than "make a lot of money" and having a LONG investment horizon (15+ years at a minimum.)

HornedToad
Posts: 1015
Joined: Wed May 21, 2008 12:36 am

Re: How many years for each $250k of net worth?

Post by HornedToad » Thu Sep 12, 2019 4:21 pm

Both income and investment returns go up from the first $250k until income starts to flatline. Depending on how much you save your raises you can estimate something like 7 years, 5 years and then maybe perpetually 3-4 years afterwards depending on expenses/investment returns.

tesuzuki2002
Posts: 876
Joined: Fri Dec 11, 2015 12:40 pm

Re: How many years for each $250k of net worth?

Post by tesuzuki2002 » Thu Sep 12, 2019 4:26 pm

bigtex wrote:
Thu Sep 12, 2019 3:33 pm
Is there a way to rough estimate how many years it takes to reach each $250k of net worth. Surely it gets shorter for each new set of 250 because of compound interest (snowball effect). It took me 7 years of full time work to hit the first 250k. Can I estimate like 5 years for the next $250k, and three years after that? Or is it all just at the mercy of the market returns? Thanks!
market returns will certainly drive the end result a lot as well...

miamivice
Posts: 2197
Joined: Tue Jun 11, 2013 11:46 am

Re: How many years for each $250k of net worth?

Post by miamivice » Thu Sep 12, 2019 4:30 pm

My friends and I all agree, the first million was the hardest....

prairieman
Posts: 168
Joined: Thu Mar 01, 2018 3:17 pm

Re: How many years for each $250k of net worth?

Post by prairieman » Thu Sep 12, 2019 5:01 pm

This sounds like a futile waste of time. Looking back in my own life, the first 250 was reached before we had kids and bought a house. The next 250 took a long time because large gains were erased by the dot com bubble. But I did recover and lucked into a better, more rewarding jobsituation. Then 2008 happened and my wife was laid off.
The last ten years, however, were a dream, financially, and who’d have thunk it, but we became FIRE. I was certain at 40 I’d be working until 70- and I was wrong.
Just do the best you can. Nobody knows what’s going to happen in life - or in the world’s economy. You cannot predict it.

User avatar
Abe
Posts: 2024
Joined: Fri Sep 18, 2009 5:24 pm
Location: Earth in the Milky Way Galaxy

Re: How many years for each $250k of net worth?

Post by Abe » Thu Sep 12, 2019 5:03 pm

This is something that can't be predicted with any degree of accuracy. Too many variables.
Slow and steady wins the race.

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Thu Sep 12, 2019 5:08 pm

There are a lot of variables. How much is saved. Investment returns. Yes is compounds faster later in life. Takes a while to build.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

megabad
Posts: 2565
Joined: Fri Jun 01, 2018 4:00 pm

Re: How many years for each $250k of net worth?

Post by megabad » Thu Sep 12, 2019 5:14 pm

Assuming your savings has been steady and steadily increasing, I might guess you are saving 28k per year currently. At 28k per year, escalated at a modest 3%, guessing 6% nominal market return (invested aggressively), I would guess in 5 more years, you would hit $500k nominal. I would put a margin of error around that 500k as plus or minus $250k or so. Return here in 5 years and tell me if my guess is close. I would be thrilled but surprised. The calculation is simple. The predicting the future part isn't. Of course, networth really isn't all that meaningful anyway without context.

Admiral
Posts: 2626
Joined: Mon Oct 27, 2014 12:35 pm

Re: How many years for each $250k of net worth?

Post by Admiral » Thu Sep 12, 2019 6:25 pm

bigtex wrote:
Thu Sep 12, 2019 3:33 pm
Is there a way to rough estimate how many years it takes to reach each $250k of net worth. Surely it gets shorter for each new set of 250 because of compound interest (snowball effect). It took me 7 years of full time work to hit the first 250k. Can I estimate like 5 years for the next $250k, and three years after that? Or is it all just at the mercy of the market returns? Thanks!
You use the term "net worth" which implies non-liquid assets like home equity.

If what you mean is "investible assets" or "portfolio size" then there is no prediction worth anything without a presumed rate of return. The Rule of 72 is as good as any.

https://www.investopedia.com/ask/answer ... e-rule-72/

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Thu Sep 12, 2019 6:39 pm

As time goes on the additional funds one invests have less impact as the portfolio grows and investment gains and losses take over as having the biggest impact.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

User avatar
#Cruncher
Posts: 2869
Joined: Fri May 14, 2010 2:33 am
Location: New York City
Contact:

Re: How many years for each $250k of net worth?

Post by #Cruncher » Thu Sep 12, 2019 10:02 pm

Brianmcg321 wrote:
Thu Sep 12, 2019 3:40 pm
For example: Saving $1000 a month with an 8% return:
First 250k will be reached by year 13
2nd 500k will be reached by year 19
3rd 750k will be reached by year 23
4th 1mil will be reached by year 26
Expanding on this, here are the years needed to add each $250,000; with annual return assumptions of 0%, 2%, 4%, and 6% as well as 8%. I suggest the dollar amounts be considered as constant dollars and the growth rates as real.

Code: Select all

Row  Col A               Col B  Col C  Col D  Col E  Col F
  1  Monthly investment  1,000
  2  Annual return        0.0%   2.0%   4.0%   6.0%   8.0%
             Value       ---- Number Additional Years ----
  3              0       ---------------------------------
  4        250,000        20.8   17.5   15.2   13.7   12.5
  5        500,000        20.8   12.9    9.5    7.5    6.2
  6        750,000        20.8   10.3    6.9    5.2    4.2
  7      1,000,000        20.8    8.5    5.4    4.0    3.2
  8      1,250,000        20.8    7.3    4.5    3.2    2.5
  9      1,500,000        20.8    6.4    3.8    2.7    2.1
 10      1,750,000        20.8    5.7    3.3    2.3    1.8
 11      2,000,000        20.8    5.1    2.9    2.1    1.6
Here is the formula in cell B4 that is copied right to column F and down to row 11. It uses the Excel NPER function.
B4: 20.8 = NPER((1 + B$2) ^ (1 / 12) - 1, -$B$1, -$A3, $A4, 0) / 12

User avatar
yangtui
Posts: 285
Joined: Sun Mar 30, 2014 1:32 pm
Contact:

Re: How many years for each $250k of net worth?

Post by yangtui » Fri Sep 13, 2019 2:29 am

You should play around in Excel to get your answer. You can change the variables and make the necessary assumptions to get your answer.

User avatar
snackdog
Posts: 840
Joined: Wed Nov 12, 2014 4:57 am

Re: How many years for each $250k of net worth?

Post by snackdog » Fri Sep 13, 2019 5:32 am

What would you do if you had this information?

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How many years for each $250k of net worth?

Post by Bacchus01 » Fri Sep 13, 2019 5:36 am

It’s fun to see what compounding and continued investment can do.

But I’ve never seen anyone look at $250k increments.

Use $1M increments. It’s funner.

jharkin
Posts: 2410
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: How many years for each $250k of net worth?

Post by jharkin » Fri Sep 13, 2019 7:03 am

There is no one size fits all answer... there cant be.

It depends on:
* How much you earn
* how much your earnings increase (decrease) over time
* how much your living expenses are
* how much living expenses change over time
* How you invest
* market returns
* sequence of returns
* Major life altering events - windfall/inheritance/job loss/health crisis/black swan event


In my case it took 13 working years to reach the first 250 (with 2 major recessions along the way), 4 to get the second, 3 to get the third. Many people never even make it to the first, but I am lucky to have a good (tech) income and not have silicon valley living expenses. OTOH, unlike the people in the "350k middle class" thread my parents didn't (couldn't) pay for my education, my wedding or my down payment... in fact I had to start helping them as soon as I had real income.

Everyone is unique.



Bacchus01 wrote:
Fri Sep 13, 2019 5:36 am
Use $1M increments. It’s funner.
No, its actually depressing and discouraging for 95% of the population that will never make the incomes commonly bragged about on this board; for whom multiple millions are mathematically impossible.

scrabbler1
Posts: 2440
Joined: Fri Nov 20, 2009 2:39 pm

Re: How many years for each $250k of net worth?

Post by scrabbler1 » Fri Sep 13, 2019 8:00 am

jharkin wrote:
Fri Sep 13, 2019 7:03 am
There is no one size fits all answer... there cant be.

It depends on:
* How much you earn
* how much your earnings increase (decrease) over time
* how much your living expenses are
* how much living expenses change over time
* How you invest
* market returns
* sequence of returns
* Major life altering events - windfall/inheritance/job loss/health crisis/black swan event


In my case it took 13 working years to reach the first 250 (with 2 major recessions along the way), 4 to get the second, 3 to get the third. Many people never even make it to the first, but I am lucky to have a good (tech) income and not have silicon valley living expenses. OTOH, unlike the people in the "350k middle class" thread my parents didn't (couldn't) pay for my education, my wedding or my down payment... in fact I had to start helping them as soon as I had real income.

Everyone is unique.
Well put. In my case, it (also) took me 13 working years to get to the first $250k (excluding home equity, which isn't much because I live in a fairly small co-op apartment owned outright). The next 5 steps took me as little as 2 years to as long as 5 years, despite retiring, 2 recessions, exploding company stock value, and strong market returns.

User avatar
CyclingDuo
Posts: 2834
Joined: Fri Jan 06, 2017 9:07 am

Re: How many years for each $250k of net worth?

Post by CyclingDuo » Fri Sep 13, 2019 8:41 am

bigtex wrote:
Thu Sep 12, 2019 3:33 pm
Is there a way to rough estimate how many years it takes to reach each $250k of net worth. Surely it gets shorter for each new set of 250 because of compound interest (snowball effect). It took me 7 years of full time work to hit the first 250k. Can I estimate like 5 years for the next $250k, and three years after that? Or is it all just at the mercy of the market returns? Thanks!
Although we all talk endlessly about asset allocation, rate of return and a myriad of subjects related to wealth accumulation - don't forget the important part of the equation is the amount of savings that you contribute.

How much can you save each year?

Saving $10K a year is nice. $25K is better. $50K is starting to kill it. $75K adds more smoke to the fire. $100K is really moving the needle. And on and on.

The more you want to see the needle move in shorter time frames, the more you need to save.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

NotWhoYouThink
Posts: 2812
Joined: Fri Dec 26, 2014 4:19 pm

Re: How many years for each $250k of net worth?

Post by NotWhoYouThink » Fri Sep 13, 2019 9:08 am

Sometimes net worth moves in the other direction. Like that year mine dropped by a 7 figure amount.

davidsorensen32
Posts: 436
Joined: Wed Jul 24, 2013 9:57 am

Re: How many years for each $250k of net worth?

Post by davidsorensen32 » Fri Sep 13, 2019 9:13 am

Took me 4 years in early 2000's to accumulate $250K. This year 0.6 months. YMMV.
bigtex wrote:
Thu Sep 12, 2019 3:33 pm
Is there a way to rough estimate how many years it takes to reach each $250k of net worth. Surely it gets shorter for each new set of 250 because of compound interest (snowball effect). It took me 7 years of full time work to hit the first 250k. Can I estimate like 5 years for the next $250k, and three years after that? Or is it all just at the mercy of the market returns? Thanks!

SeaToTheBay
Posts: 180
Joined: Thu Jun 08, 2017 6:11 pm

Re: How many years for each $250k of net worth?

Post by SeaToTheBay » Fri Sep 13, 2019 11:34 am

yangtui wrote:
Fri Sep 13, 2019 2:29 am
You should play around in Excel to get your answer. You can change the variables and make the necessary assumptions to get your answer.
I have a sheet that forecasts each year's portfolio size if I save $X and earn Y%, with those variables being adjustable. Obviously some very big assumptions and it will never be that steady, but it's interesting to plug in different amounts to see how it affects the date at which you reach FIRE.

At the end of each year, I have a copy of this sheet where I input that year's actual $X saved and Y% earned.

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Fri Sep 13, 2019 11:37 am

#Cruncher wrote:
Thu Sep 12, 2019 10:02 pm
Brianmcg321 wrote:
Thu Sep 12, 2019 3:40 pm
For example: Saving $1000 a month with an 8% return:
First 250k will be reached by year 13
2nd 500k will be reached by year 19
3rd 750k will be reached by year 23
4th 1mil will be reached by year 26
Expanding on this, here are the years needed to add each $250,000; with annual return assumptions of 0%, 2%, 4%, and 6% as well as 8%. I suggest the dollar amounts be considered as constant dollars and the growth rates as real.

Code: Select all

Row  Col A               Col B  Col C  Col D  Col E  Col F
  1  Monthly investment  1,000
  2  Annual return        0.0%   2.0%   4.0%   6.0%   8.0%
             Value       ---- Number Additional Years ----
  3              0       ---------------------------------
  4        250,000        20.8   17.5   15.2   13.7   12.5
  5        500,000        20.8   12.9    9.5    7.5    6.2
  6        750,000        20.8   10.3    6.9    5.2    4.2
  7      1,000,000        20.8    8.5    5.4    4.0    3.2
  8      1,250,000        20.8    7.3    4.5    3.2    2.5
  9      1,500,000        20.8    6.4    3.8    2.7    2.1
 10      1,750,000        20.8    5.7    3.3    2.3    1.8
 11      2,000,000        20.8    5.1    2.9    2.1    1.6
Here is the formula in cell B4 that is copied right to column F and down to row 11. It uses the Excel NPER function.
B4: 20.8 = NPER((1 + B$2) ^ (1 / 12) - 1, -$B$1, -$A3, $A4, 0) / 12
This does not include the impact of additional contributions correct? Just investment returns?
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Fri Sep 13, 2019 11:40 am

CyclingDuo wrote:
Fri Sep 13, 2019 8:41 am
Although we all talk endlessly about asset allocation, rate of return and a myriad of subjects related to wealth accumulation - don't forget the important part of the equation is the amount of savings that you contribute.

How much can you save each year?

Saving $10K a year is nice. $25K is better. $50K is starting to kill it. $75K adds more smoke to the fire. $100K is really moving the needle. And on and on.

The more you want to see the needle move in shorter time frames, the more you need to save.
Well said and huge impact. We as investors can control what we save and invest. We can control costs. We can not control investment returns.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

Admiral
Posts: 2626
Joined: Mon Oct 27, 2014 12:35 pm

Re: How many years for each $250k of net worth?

Post by Admiral » Fri Sep 13, 2019 11:49 am

abuss368 wrote:
Fri Sep 13, 2019 11:40 am
CyclingDuo wrote:
Fri Sep 13, 2019 8:41 am
Although we all talk endlessly about asset allocation, rate of return and a myriad of subjects related to wealth accumulation - don't forget the important part of the equation is the amount of savings that you contribute.

How much can you save each year?

Saving $10K a year is nice. $25K is better. $50K is starting to kill it. $75K adds more smoke to the fire. $100K is really moving the needle. And on and on.

The more you want to see the needle move in shorter time frames, the more you need to save.
Well said and huge impact. We as investors can control what we save and invest. We can control costs. We can not control investment returns.
It's true that the amount you save matters, in all cases. But the larger your balance, the less actual impact it has on growth. As was pointed out, it's relative. $50k a year may be killing it, but once you have $1m, that's only equal to a pretty average RoR (5%). One thing is DOES do is help to limit your downside exposure.

User avatar
CyclingDuo
Posts: 2834
Joined: Fri Jan 06, 2017 9:07 am

Re: How many years for each $250k of net worth?

Post by CyclingDuo » Fri Sep 13, 2019 12:11 pm

Admiral wrote:
Fri Sep 13, 2019 11:49 am
abuss368 wrote:
Fri Sep 13, 2019 11:40 am
CyclingDuo wrote:
Fri Sep 13, 2019 8:41 am
Although we all talk endlessly about asset allocation, rate of return and a myriad of subjects related to wealth accumulation - don't forget the important part of the equation is the amount of savings that you contribute.

How much can you save each year?

Saving $10K a year is nice. $25K is better. $50K is starting to kill it. $75K adds more smoke to the fire. $100K is really moving the needle. And on and on.

The more you want to see the needle move in shorter time frames, the more you need to save.
Well said and huge impact. We as investors can control what we save and invest. We can control costs. We can not control investment returns.
It's true that the amount you save matters, in all cases. But the larger your balance, the less actual impact it has on growth. As was pointed out, it's relative. $50k a year may be killing it, but once you have $1m, that's only equal to a pretty average RoR (5%). One thing is DOES do is help to limit your downside exposure.
True, but the OP specifically asked about additional multiples of $250k in terms of time frame and adding that amount to your net worth. I will use our household as an example. In the last three years, we tucked away $75k, $99k, and are on pace to tuck away another $66k+ this year. We are obviously taking advantage of the empty nest years, but regardless of what it does to the overall net worth, the amount of additional contributions are important to what the OP was asking. At least in my thought process.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Fri Sep 13, 2019 12:20 pm

CyclingDuo wrote:
Fri Sep 13, 2019 12:11 pm
Admiral wrote:
Fri Sep 13, 2019 11:49 am
abuss368 wrote:
Fri Sep 13, 2019 11:40 am
CyclingDuo wrote:
Fri Sep 13, 2019 8:41 am
Although we all talk endlessly about asset allocation, rate of return and a myriad of subjects related to wealth accumulation - don't forget the important part of the equation is the amount of savings that you contribute.

How much can you save each year?

Saving $10K a year is nice. $25K is better. $50K is starting to kill it. $75K adds more smoke to the fire. $100K is really moving the needle. And on and on.

The more you want to see the needle move in shorter time frames, the more you need to save.
Well said and huge impact. We as investors can control what we save and invest. We can control costs. We can not control investment returns.
It's true that the amount you save matters, in all cases. But the larger your balance, the less actual impact it has on growth. As was pointed out, it's relative. $50k a year may be killing it, but once you have $1m, that's only equal to a pretty average RoR (5%). One thing is DOES do is help to limit your downside exposure.
True, but the OP specifically asked about additional multiples of $250k in terms of time frame and adding that amount to your net worth. I will use our household as an example. In the last three years, we tucked away $75k, $99k, and are on pace to tuck away another $66k+ this year. We are obviously taking advantage of the empty nest years, but regardless of what it does to the overall net worth, the amount of additional contributions are important to what the OP was asking. At least in my thought process.
Agreed. I watched my folks sock it away during empty nest time in the decade or more before retirement. It makes a difference.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

LiterallyIronic
Posts: 1353
Joined: Sat Dec 05, 2015 10:36 am

Re: How many years for each $250k of net worth?

Post by LiterallyIronic » Fri Sep 13, 2019 12:30 pm

Bacchus01 wrote:
Fri Sep 13, 2019 5:36 am
It’s fun to see what compounding and continued investment can do.

But I’ve never seen anyone look at $250k increments.

Use $1M increments. It’s funner.
I'm still in the $10k increments, but I'll switch to $25k increments once I get past $100k. Maybe.

Dottie57
Posts: 7566
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: How many years for each $250k of net worth?

Post by Dottie57 » Fri Sep 13, 2019 12:50 pm

I haven’t kept good stats, but since Great Recession I have gained through contributions and return slightly more than 150%. While it was a truly tortuous time, the GR truly benefited my portfolio. I just didn’t have an accurate crystal ball at the time.

User avatar
CyclingDuo
Posts: 2834
Joined: Fri Jan 06, 2017 9:07 am

Re: How many years for each $250k of net worth?

Post by CyclingDuo » Fri Sep 13, 2019 1:39 pm

abuss368 wrote:
Fri Sep 13, 2019 12:20 pm
Agreed. I watched my folks sock it away during empty nest time in the decade or more before retirement. It makes a difference.
We didn’t have the type of household income to save as much as we are saving now, raise children and fund their college educations all at once. Hence, the focus during the catch up years now that the 6-8 years of tuition bills, rent, and food for the kids in college are all behind us.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Slacker
Posts: 721
Joined: Thu May 26, 2016 8:40 am

Re: How many years for each $250k of net worth?

Post by Slacker » Fri Sep 13, 2019 2:06 pm

miamivice wrote:
Thu Sep 12, 2019 4:30 pm
My friends and I all agree, the first million was the hardest....
I've heard that your first billion is actually much more difficult to achieve...

User avatar
abuss368
Posts: 17202
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: How many years for each $250k of net worth?

Post by abuss368 » Fri Sep 13, 2019 3:00 pm

CyclingDuo wrote:
Fri Sep 13, 2019 1:39 pm
Hence, the focus during the catch up years now that the 6-8 years of tuition bills, rent, and food for the kids in college are all behind us.
That has to be a great feeling that those cash outflows and expenses are in the rear view mirror!
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 9:35 pm

Re: How many years for each $250k of net worth?

Post by Bacchus01 » Fri Sep 13, 2019 3:04 pm

LiterallyIronic wrote:
Fri Sep 13, 2019 12:30 pm
Bacchus01 wrote:
Fri Sep 13, 2019 5:36 am
It’s fun to see what compounding and continued investment can do.

But I’ve never seen anyone look at $250k increments.

Use $1M increments. It’s funner.
I'm still in the $10k increments, but I'll switch to $25k increments once I get past $100k. Maybe.
Gotta start somewhere!

User avatar
#Cruncher
Posts: 2869
Joined: Fri May 14, 2010 2:33 am
Location: New York City
Contact:

Re: How many years for each $250k of net worth?

Post by #Cruncher » Fri Sep 13, 2019 4:37 pm

abuss368 wrote:
Fri Sep 13, 2019 11:37 am
This [the table in my post above] does not include the impact of additional contributions correct? Just investment returns?
No, it does include the $1,000 monthly contributions.

Code: Select all

         ---------- Grows To ----------
 Years   Principal  Contribs    Total
-------  ---------  --------  ---------
12.4580          0   250,000    250,000
 6.2415    404,160    95,840    500,000
 4.1985    690,716    59,284    750,000 [*]
 3.1681    957,085    42,915  1,000,000
 2.5451  1,216,371    33,629  1,250,000
 2.1273  1,472,353    27,647  1,500,000
 1.8275  1,726,528    23,472  1,750,000
 1.6019  1,979,608    20,392  2,000,000
* For example, it takes 4.1985 years for the portfolio to grow from $500,000 to $750,000 with a constant 8% annual growth rate. $651,000 $691,000 is the result of the $500,000 growth and $59,000 is the result of the $1,000 monthly contribution growth as shown here with the Excel FV function:

Code: Select all

 4.1985 = NPER(1.08 ^ (1 / 12) - 1,              -1000, -500000, 750000, 0) / 12
690,716 = 500000 * 1.08 ^ 4.1985
 59,284 =   FV(1.08 ^ (1 / 12) - 1, 12 * 4.1985, -1000,       0,         0)
Edit 7:50 PM to correct typo: $651,000 should be $691,000 -- thanks to finite_difference in post below.
Last edited by #Cruncher on Fri Sep 13, 2019 6:50 pm, edited 1 time in total.

finite_difference
Posts: 1560
Joined: Thu Jul 09, 2015 7:00 pm

Re: How many years for each $250k of net worth?

Post by finite_difference » Fri Sep 13, 2019 4:47 pm

#Cruncher wrote:
Fri Sep 13, 2019 4:37 pm
abuss368 wrote:
Fri Sep 13, 2019 11:37 am
This [the table in my post above] does not include the impact of additional contributions correct? Just investment returns?
No, it does include the $1,000 monthly contributions.

Code: Select all

         ---------- Grows To ----------
 Years   Principal  Contribs    Total
-------  ---------  --------  ---------
12.4580          0   250,000    250,000
 6.2415    404,160    95,840    500,000
 4.1985    690,716    59,284    750,000 [*]
 3.1681    957,085    42,915  1,000,000
 2.5451  1,216,371    33,629  1,250,000
 2.1273  1,472,353    27,647  1,500,000
 1.8275  1,726,528    23,472  1,750,000
 1.6019  1,979,608    20,392  2,000,000
* For example, it takes 4.1985 years for the portfolio to grow from $500,000 to $750,000 with a constant 8% annual growth rate. $651,000 is the result of the $500,000 growth and $59,000 is the result of the $1,000 monthly contribution growth as shown here with the Excel FV function:

Code: Select all

 4.1985 = NPER(1.08 ^ (1 / 12) - 1,              -1000, -500000, 750000, 0) / 12
650,716 = 500000 * 1.08 ^ 4.1985
 59,284 =   FV(1.08 ^ (1 / 12) - 1, 12 * 4.1985, -1000,       0,         0)
Do you mean 691 and not 651?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

Post Reply