Millionaire by 40 and How you Did it?

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BenfromToronto
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Joined: Sat Jun 03, 2017 11:43 am
Location: Toronto, Ontario, Canada

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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willthrill81
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Location: USA

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

warner25
Posts: 351
Joined: Wed Oct 29, 2014 4:38 pm

Re: Millionaire by 40 and How you Did it?

Post by warner25 » Sat Jan 12, 2019 12:02 pm

willthrill81 wrote:
Sat Jan 12, 2019 11:10 am
combination of a good income (low six-figure) and a high savings rate (about 50%).
We're also on track to have about $1M at about 40, and yeah, it's basically just this. We earned almost $1M, combined, over our first ten years out of college and put almost half of that in savings. Even if markets go sideways over the next ten years, doing more of the same will get us to $1M in savings. I don't discount the luck involved with getting scholarships and parental help during college, and having no serious setbacks since then, but it really is that simple.

dave_k
Posts: 256
Joined: Sat Dec 26, 2015 8:25 pm

Re: Millionaire by 40 and How you Did it?

Post by dave_k » Sat Jan 12, 2019 12:35 pm

My wife and I are in our mid-late 40s now, but we hit $1M sometime in our late 30s (if business assets are included - about 41 if not). Combination of LBYM and starting a company that finally became fairly profitable. When I co-founded the company 20 years ago I took a huge pay cut, and it didn't start paying off for about 10 years. It was a combination of hard work and luck that it finally did, and we're at a few $M now. Market returns were some help in getting to the first $M, but much more of a help since then.

I wouldn't be in this position now if I hadn't started the company, but it was a big risk and could easily have failed. I wouldn't have been in a position to do it if I wasn't already LBYM in my 20s.

We also didn't let our lifestyle increase to match our income as it rose, and in recent years saved over 2/3 of our after tax income. We do spend somewhat more though - no sense in putting off everything if we don't need to.

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

Re: Millionaire by 40 and How you Did it?

Post by Bacchus01 » Sat Jan 12, 2019 12:36 pm

We’re mid 40s, but deep into the “multi” mill category. We first hit $1M around 2007/8, but then fell back in 2009 and didn’t cross again until 2013, shortly before age 40.

And then it accelerated.

How? Working really hard to grow wages coupled with a LBYM (but not crazy frugal) lifestyle and solid investment returns. Unlike others we things working against us financially: both graduated with student loan debt, we had kids relatively early and three of them, we did not have inheritance or support from parents, my wife stopped working full time more than 10 years ago, and we never made money on real estate growth.

Investing and investing returns helps, but focusing on your career is my absolute #1 point of advice and #2 is LBYM. Investing won’t get you there unless you have those two things. Then put the investment on cruise control with a 2 or 3 fund low cost Bogleheads approach, and have fun.

harrychan
Posts: 1432
Joined: Sun Nov 14, 2010 9:37 pm
Location: Pasadena

Re: Millionaire by 40 and How you Did it?

Post by harrychan » Sat Jan 12, 2019 1:04 pm

Currently 39. Became millionaire around 36?. When I started working, I didn't know much about saving or retirement but I consistently put away money into 401k. I didn't make much either. After getting married, DW and I knew we wanted our own home and saved aggressively for a down payment. Bought a home in 2010 during the dip. Combination of our retirement accounts, investments and home equity takes us over $1.15M.
This is not legal or certified financial advice but you know that already.

travellight
Posts: 2792
Joined: Tue Aug 12, 2008 5:52 pm
Location: San Diego

Re: Millionaire by 40 and How you Did it?

Post by travellight » Sat Jan 12, 2019 1:25 pm

BenfromToronto wrote:
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!
I enjoyed reading this, thanks for sharing. I especially like reading how you are spending your money now.

AlphaLess
Posts: 1235
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Millionaire by 40 and How you Did it?

Post by AlphaLess » Sat Jan 12, 2019 1:27 pm

Well, there is one overlooked way of getting to a million by 40.

Answer: start by WAY more than a million in your 30s, and try not to spend most of it.
"You can get more with a kind word and a gun than with just a kind word." George Washington

BrooklynInvest
Posts: 148
Joined: Sun Jul 28, 2013 9:23 am

Re: Millionaire by 40 and How you Did it?

Post by BrooklynInvest » Sat Jan 12, 2019 1:32 pm

1. Got lucky by making major financial mistakes (divorce, tech stocks) early and recovered
2. Worked hard, got an MBA at night, maximized opportunities for salary increases
3. Invested prudently and improved knowledge over time
4. Got lucky and bought real estate in Brooklyn
5. Got lucky and didn't get sick or have extended periods of unemployment

travellight
Posts: 2792
Joined: Tue Aug 12, 2008 5:52 pm
Location: San Diego

Re: Millionaire by 40 and How you Did it?

Post by travellight » Sat Jan 12, 2019 1:33 pm

I invested (time and effort) in my education and started earning in my late 20s. High savings rate, MMM level, as high as 85%. I always traveled though and never felt deprived. Hit 1 million around 40 and probably 10 million 17 years later due to real estate investments.

onourway
Posts: 1478
Joined: Thu Dec 08, 2016 3:39 pm

Re: Millionaire by 40 and How you Did it?

Post by onourway » Sat Jan 12, 2019 1:33 pm

travellight wrote:
Sat Jan 12, 2019 1:25 pm
BenfromToronto wrote:
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!
I enjoyed reading this, thanks for sharing. I especially like reading how you are spending your money now.
Second!

Even though we feel very fortunate to be among this group at ~40 now, we sure don't feel especially wealthy with 3 young kids in a modest house. Mostly it just manifests itself as the ability to pay for things in cash that most of our peers would finance. I look forward to the day (hopefully about 10 years from now) when we can ease off a bit and start spending like Ben! :D

AlphaLess
Posts: 1235
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Millionaire by 40 and How you Did it?

Post by AlphaLess » Sat Jan 12, 2019 1:34 pm

BenfromToronto wrote:
Sat Jan 12, 2019 11:03 am
And here is my story; this is another version of some of the stories above.
..
Best wishes to you!
Nice story. Thanks for sharing.
"You can get more with a kind word and a gun than with just a kind word." George Washington

Jimsad
Posts: 100
Joined: Mon Mar 20, 2017 5:54 pm

Re: Millionaire by 40 and How you Did it?

Post by Jimsad » Sat Jan 12, 2019 3:09 pm

BrooklynInvest wrote:
Sat Jan 12, 2019 1:32 pm
1. Got lucky by making major financial mistakes (divorce, tech stocks) early and recovered
2. Worked hard, got an MBA at night, maximized opportunities for salary increases
3. Invested prudently and improved knowledge over time
4. Got lucky and bought real estate in Brooklyn
5. Got lucky and didn't get sick or have extended periods of unemployment
I think real estate bought at right price goes a long away in increasing net worth

User avatar
vitaflo
Posts: 1031
Joined: Sat Sep 03, 2011 3:02 pm

Re: Millionaire by 40 and How you Did it?

Post by vitaflo » Sat Jan 12, 2019 3:33 pm

I started my own business when I was 34. It generated 4x the income I had in my prior salaried job. My net worth before starting the biz was $100k. Hit the 2 comma club when I turned 39.

The only lifestyle change we made was eating out more than we used to, otherwise our spending stayed the same. Savings rate >50% and was able to pay the house off. NW now inching closer to $2m (43 years old now), still have over $1m in investments.

This forum has a lot of hand wringing about lots of minor things around the edges (how much international?, EM?, small caps?, etc), but nothing will make a bigger difference to your portfolio than investing in yourself, your sweat equity and upping your savings rate.

Glockenspiel
Posts: 631
Joined: Thu Feb 08, 2018 1:20 pm

Re: Millionaire by 40 and How you Did it?

Post by Glockenspiel » Sat Jan 12, 2019 3:49 pm

DesertDiva wrote:
Fri Jan 11, 2019 6:54 pm
surfstar wrote:
Fri Jan 11, 2019 4:24 pm
I started out with a "small" loan from my father...
lol :twisted:
Well played!

Glockenspiel
Posts: 631
Joined: Thu Feb 08, 2018 1:20 pm

Re: Millionaire by 40 and How you Did it?

Post by Glockenspiel » Sat Jan 12, 2019 3:59 pm

I’m only 33, but our retirement projection spreadsheet thinks we’ll hit $1 million around age 39. Wife grew up middle class and I was lower middle class. Both went to college, got civil engineering and nursing degrees.

Lived with her parents for a year while saving to buy a house in 2010, near the market bottom. Started working with combined incomes of $100k. Wife went back to school to become a nurse practitioner, while working part time. Refinanced mortgage to a 15 year, 2.5% interest rate loan, which has drastically increased our home equity, since the value is at least $100k more than we bought for. Wife graduated school, we both kept working hard and now our combined income is about $190k/yr. We haven’t bought expensive vehicles and have driven them for a long time, and our home is way below what we can afford.

Saving about $50-$55k/year doesn’t hurt either.

ge1
Posts: 462
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Re: Millionaire by 40 and How you Did it?

Post by ge1 » Sat Jan 12, 2019 4:32 pm

Both DW and I had well paying jobs plus sizeable gains from 3 different real estate investments in major cities. I think we crossed the 1m mark when we sold our NYC apartment in our mid 30s.

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ChowYunPhat
Posts: 86
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Location: Houston, TX

Re: Millionaire by 40 and How you Did it?

Post by ChowYunPhat » Sat Jan 12, 2019 4:42 pm

We were able to do this with teamwork and discipline. 10 things that probably made the biggest difference in our journey to $1MM by 40.
1. Married a frugal wife.
2. Lived in smaller house, below our means
3. 15 year mortgages only
4. 50% savings rate
5. Invest on auto pilot, Vanguard with Roth and Taxable after maxing 401K
6. Kept hedonic treadmill in check
7. Purchased reasonable automobiles
8. Hobbies were hosting guests and other reasonably price things
9. Counter-intuitive, but we were charitable => believe this helped
10. Having decent jobs with decent benefits in a LCOL area
A wise man and his money are friends forever...

NextMil
Posts: 538
Joined: Wed Dec 13, 2017 12:33 pm

Re: Millionaire by 40 and How you Did it?

Post by NextMil » Sat Jan 12, 2019 7:32 pm

People’s heads may explode, but I have to credit Dave Ramsey, as I started my career with a bunch of debt. Anyone else finance an engagement ring? :oops:

bltn
Posts: 260
Joined: Mon Feb 20, 2017 9:32 pm

Re: Millionaire by 40 and How you Did it?

Post by bltn » Sat Jan 12, 2019 11:27 pm

vitaflo wrote:
Sat Jan 12, 2019 3:33 pm
I started my own business when I was 34. It generated 4x the income I had in my prior salaried job. My net worth before starting the biz was $100k. Hit the 2 comma club when I turned 39.

The only lifestyle change we made was eating out more than we used to, otherwise our spending stayed the same. Savings rate >50% and was able to pay the house off. NW now inching closer to $2m (43 years old now), still have over $1m in investments.

This forum has a lot of hand wringing about lots of minor things around the edges (how much international?, EM?, small caps?, etc), but nothing will make a bigger difference to your portfolio than investing in yourself, your sweat equity and upping your savings rate.
Nice observations in the last paragraph. Continuing to improve yourself to qualify for the best job you can get is vitally important. Then upping the savings rate as the income increases will be especially important early in your career. The investing in market indexes will then be straightforward and almost guarantee a healthy accumulation. One won t really need to worry about tweaking a two or three fund portfolio.

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

Post by crazycatman » Sun Jan 13, 2019 12:16 am

pacodelostigres wrote:
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.
Man, this sounds eerily like my wife and I, minus the kid(s). We’re 32 and 29, but will hopefully have a kid by 35, so we’ll probably be where you are by then. Income is about 125k, but we live on <3.25k/mo. And as much as I want expensive taste, I can’t shake Michelob Ultra and Wild Turkey, and she loves Rex Goliath Moscato. One of our cars has has minor damage since 2016. Could have repaired it 10x over, but haven’t because it’s a 10k car anyway, and who cares? Kudos to you and your beer taste on a champagne budget. 🍻

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

Post by crazycatman » Sun Jan 13, 2019 12:17 am

NextMil wrote:
Sat Jan 12, 2019 7:32 pm
People’s heads may explode, but I have to credit Dave Ramsey, as I started my career with a bunch of debt. Anyone else finance an engagement ring? :oops:
🖐🏻

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

Post by GCD » Sun Jan 13, 2019 1:10 am

I hit $1M when I was 44 so I don't count. But I wanted to comment on a couple of posts.
vitaflo wrote:
Sat Jan 12, 2019 3:33 pm
This forum has a lot of hand wringing about lots of minor things around the edges (how much international?, EM?, small caps?, etc), but nothing will make a bigger difference to your portfolio than investing in yourself, your sweat equity and upping your savings rate.
This is absolutely true, but the handwringing over minor things is because you are in good company. Most BHs have already figured out the basics and those aren't a matter of debate. Most people here have "first world problems".
ChowYunPhat wrote:
Sat Jan 12, 2019 4:42 pm
We were able to do this with teamwork and discipline. 10 things that probably made the biggest difference in our journey to $1MM by 40.
1. Married a frugal wife.
This is huge. Your choice of spouse is probably more important than choice of career. Not only for financial sucess, but for pure happiness. Choose well. Your spouse can completely sabotage your happiness and financial success, even without a divorce.

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

Post by travellight » Tue Jan 15, 2019 10:42 am

GCD wrote:
Sun Jan 13, 2019 1:10 am
I hit $1M when I was 44 so I don't count. But I wanted to comment on a couple of posts.
vitaflo wrote:
Sat Jan 12, 2019 3:33 pm
This forum has a lot of hand wringing about lots of minor things around the edges (how much international?, EM?, small caps?, etc), but nothing will make a bigger difference to your portfolio than investing in yourself, your sweat equity and upping your savings rate.
This is absolutely true, but the handwringing over minor things is because you are in good company. Most BHs have already figured out the basics and those aren't a matter of debate. Most people here have "first world problems".
ChowYunPhat wrote:
Sat Jan 12, 2019 4:42 pm
We were able to do this with teamwork and discipline. 10 things that probably made the biggest difference in our journey to $1MM by 40.
1. Married a frugal wife.
This is huge. Your choice of spouse is probably more important than choice of career. Not only for financial sucess, but for pure happiness. Choose well. Your spouse can completely sabotage your happiness and financial success, even without a divorce.
Reading about the handwringing made me think of a new term for a condition that I am afflicted with, OOD (obsessive optimization disorder).

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

Post by HomerJ » Tue Jan 15, 2019 10:54 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.
Top 10% live pretty well too.
The J stands for Jay

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

Post by unclescrooge » Tue Jan 15, 2019 10:59 am

tomtoms wrote:
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?
While it is definitely harder than you make it sound, your attitude in life impacts how you respond to adversity.

Do you give up and sit around whining, it do you pick yourself up and start again?

You definitely have the right attitude for success!

What business did you start?

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

Post by HomerJ » Tue Jan 15, 2019 11:04 am

Two income couple making $75k each by your early 30s and living on one salary will get you pretty close. By 45 at least.

But if you want to hit that milestone by 40, spend less or make more.

We always saved half of our raises. So our lifestyle would still go up year to year, but our savings percentage went up even faster.

At a certain point, we realized we had "enough" and stopped raising our lifestyle, and then 100% of raises just went into savings.
The J stands for Jay

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

Post by unclescrooge » Tue Jan 15, 2019 11:06 am

BenfromToronto wrote:
Sat Jan 12, 2019 11:03 am


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...
My wife and I moved into our dream home just over a year ago (HCOL, $2.M+), and we still have the Ikea dining table she bought used in 2005 for $100.

I won't let her upgrade it, because the kids are young and are the reason why we can't have nice things! :mrgreen:

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

Post by HomerJ » Tue Jan 15, 2019 11:19 am

bltn wrote:
Sat Jan 12, 2019 11:27 pm
vitaflo wrote:
Sat Jan 12, 2019 3:33 pm
I started my own business when I was 34. It generated 4x the income I had in my prior salaried job. My net worth before starting the biz was $100k. Hit the 2 comma club when I turned 39.

The only lifestyle change we made was eating out more than we used to, otherwise our spending stayed the same. Savings rate >50% and was able to pay the house off. NW now inching closer to $2m (43 years old now), still have over $1m in investments.

This forum has a lot of hand wringing about lots of minor things around the edges (how much international?, EM?, small caps?, etc), but nothing will make a bigger difference to your portfolio than investing in yourself, your sweat equity and upping your savings rate.
Nice observations in the last paragraph. Continuing to improve yourself to qualify for the best job you can get is vitally important. Then upping the savings rate as the income increases will be especially important early in your career. The investing in market indexes will then be straightforward and almost guarantee a healthy accumulation. One won t really need to worry about tweaking a two or three fund portfolio.
Exactly.
The J stands for Jay

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

Post by kenyan » Tue Jan 15, 2019 11:22 am

Made this milestone in net worth, but not in liquid investments. I don't really think of myself as a millionaire with $400k tied up in our primary residence (and if you ding me for this being household NW, then I certainly didn't make it).

Nevertheless, we managed by having a reasonably good income and a high savings rate (both of which have really spiked in the past 1.5 years), as well as a debt burden that wasn't too bad. We got a pretty late start, not finishing grad school until 27-28. Starting income wasn't great, either ($90k in HCOLA, with $90k debt), what with DW unemployed. Still, we just kept at it, and stuck to a savings rate that grew from about 20% to 50%+.
Retirement investing is a marathon.

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

Post by hdas » Tue Jan 15, 2019 11:24 am

HomerJ wrote:
Tue Jan 15, 2019 10:54 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.
Top 10% live pretty well too.
Yes!. If only ppl were so rational. But relative wealth seems to be more important, as evidenced by the myriad threads that enable forum members easy comparisons to each other (wealth, portfolio size, returns, income, asset allocation...etc). :greedy

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"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

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marti038
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Re: Millionaire by 40 and How you Did it?

Post by marti038 » Tue Jan 15, 2019 12:52 pm

Looks like a lot of success is driven by income. I should hit $1M around 42 or 43, and guess what? I have a relatively high income.

For those of you reading this who may feel discouraged because you're not able to save as much as you'd like, just keep saving what you can. $1M at age 50 or 60 or 70 is still $1M and way better than nothing.

We're a very wealthy country. Don't let the Jones's bother you. Head down, work hard, keep going.

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

Post by MarkerFM » Tue Jan 15, 2019 1:39 pm

When I was 33, our net worth was barely above $50K. Then the company I owned and ran took off (after several years of hard work). By age 37, net worth not including the company was over $1 million. Wife didn't work, we lived well but still saved, Lucky to be smart and get a good education. By the time I sold eight years later, was sitting at the $15 million level.

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

Post by SeaToTheBay » Tue Jan 15, 2019 1:50 pm

Hit $1M NW at 33 and should hit $1M portfolio at 35. A few positive factors:

1. My parents taught me great fundamentals. Saved all my Xmas and Bday money from age 5. Started mutual fund at age 10 (I picked it). Started Roth at 16 and my parents made me save $200/mo from my HS/college job (I saved $300/mo instead). This is the best thing they could have possibly done.

2. After 5 years of FT work and saving well (NW close to $200k at 27) I got a FT MBA, upgrading my earnings and finding an MBA wife who now makes more than me in the process.

3. Wife got a full ride to undergrad and MBA. She got one A- from HS through college.

4. We don't live according to our income. In the five years since MBA our income has doubled, but we haven't increased our spending much. I still cook my own lunches to bring almost every day. With the huge exception of our hobby of travel and my hobby of cars (bought a 2nd fun car last year, which some would view as extremely wasteful), we simply don't really buy much - not because we're holding back, we just don't like spending money if we don't see the value in it.

5. Just doing the smart, easy stuff. Max 401k and matching. Use credit cards but pay off in full. Buy used cars that don't depreciate much (I made money on the last two I sold).


I can summarize the above even further to two things: Upbringing and Marrying. My parents instilled a "pay yourself first" mindset VERY early on. Note that this isn't a "save everything and never have fun" mindset - I still spent a ton when I was a teenager on girls, cars, etc. But that was always after I had saved. And for marrying, I really couldn't have gotten any luckier. Not only is she a smart, hard worker, but we are of the same mindset financially and I know that's rather rare.

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

Post by HomerJ » Tue Jan 15, 2019 1:58 pm

hdas wrote:
Tue Jan 15, 2019 11:24 am
HomerJ wrote:
Tue Jan 15, 2019 10:54 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.
Top 10% live pretty well too.
Yes!. If only ppl were so rational. But relative wealth seems to be more important, as evidenced by the myriad threads that enable forum members easy comparisons to each other (wealth, portfolio size, returns, income, asset allocation...etc). :greedy

Image
That table doesn't make a lot of sense to me. Is the income the actual statistic? 1% incomes for those ages? And then they multiply it by some made-up "ideal" number?
The J stands for Jay

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

Post by mnsportsgeek » Tue Jan 15, 2019 2:30 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 think Steve Martin was also in the SNL skit "Don't buy stuff you can't afford." I go back and watch that every once in a while.

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marti038
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Re: Millionaire by 40 and How you Did it?

Post by marti038 » Tue Jan 15, 2019 2:45 pm

NextMil wrote:
Sat Jan 12, 2019 7:32 pm
People’s heads may explode, but I have to credit Dave Ramsey, as I started my career with a bunch of debt. Anyone else finance an engagement ring? :oops:
I didn't finance the ring, but I have to credit Dave Ramsey with getting me started in the right direction. My brother recommended his Total Money Makeover book when I graduated college. I sidestepped a lot of debt my friends were incurring and paid down my student loans quickly.

A few years after I was out of debt I realized that I should broaden my horizons on investing. Dave's plan is great for debt elimination, but his plans for building wealth are a little simple for my taste (to put it kindly).

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

Post by latesaver » Tue Jan 15, 2019 5:19 pm

i didn't track my NW or spending until may 2017. i was oblivious. when i added everything up i was already there (at age 38). wife is 35 and will likely hit it as well.

- had supportive (not wealthy) parents
- got lucky
- took risk (not leverage)
- worked hard starting around 13 yrs of age and still work hard
- lbym

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

Post by FinTruth » Tue Jan 15, 2019 6:22 pm

Made it to $1M at age 35. Graduated from college with an MS in engineering. Wife is an immigrant, and my parents were immigrants, so I grew up lower middle class, and less than that for wife. No loans, parents paid for low cost state school undergrad where I finished in 3 years and in a top grad school I was a research assistant with free tuition and a stipend. First job was $72k a year, and fiancee was making around $60k in HCOL. Switched job three years later making $107k in 2004, wife stopped working, and we moved to a low COL area with same salary within the company. Saved a lot.....easy to save in LCOL area. Took a lot of local vacations, camping, skiing. Maxed out 401k every year, and got super lucky market timing the large drops. Did all maintenance on vehicles myself, and all home repairs and upgrades. Wife likes thrift stores, and extensive online shopping as well. :)

41 now, and since I had enough saved, told the employer no thanks, and started own business. That one failed, partner was a moron. Started a second business that has been successful for the last 4 years and growing. At $2.5M net worth now, making about $500k last year. We are definitely starting to spend more now. Have a great 4500ft2 home with amazing views, yet it still only costs us $2600/month for interest, taxes and insurance.

I think it is all about saving before spending. Although I could afford the beach condo with views, we settled for less. Although we could afford the Lexus, we bought new Honda's and Toyotas. Although I could pay someone for home repairs, I did them myself. We never spent before we had the money. That is how I have seen people get into trouble, spending that upcoming raise before they even receive it.

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market timer
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Re: Millionaire by 40 and How you Did it?

Post by market timer » Tue Jan 15, 2019 7:13 pm

I did it by consistently earning a top 1% income, according to the table below.
hdas wrote:
Tue Jan 15, 2019 11:24 am
Image

keith6014
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Re: Millionaire by 40 and How you Did it?

Post by keith6014 » Tue Jan 15, 2019 8:38 pm

HomerJ wrote:
Tue Jan 15, 2019 1:58 pm
hdas wrote:
Tue Jan 15, 2019 11:24 am
HomerJ wrote:
Tue Jan 15, 2019 10:54 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.
Top 10% live pretty well too.
Yes!. If only ppl were so rational. But relative wealth seems to be more important, as evidenced by the myriad threads that enable forum members easy comparisons to each other (wealth, portfolio size, returns, income, asset allocation...etc). :greedy

Image
That table doesn't make a lot of sense to me. Is the income the actual statistic? 1% incomes for those ages? And then they multiply it by some made-up "ideal" number?
Yep. The ideal number is a number you pick. ($RANDOM%7)+1.
That site is the ultimate click bate site; The author gets commission on clicks and purchases. If you are critical of any article on the site he wouldn't publish it.
I wouldn't take it too seriously.

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