Author Topic: can't believe we could be 40x richer than average ??  (Read 3088 times)

Le Barbu

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can't believe we could be 40x richer than average ??
« on: October 09, 2014, 12:17:34 PM »
Is it possible that if we save 10x more than average and our investments earn 4x more, we're actually 40x richer??

Is it possible that if we save 10x more than average and our investments earn 4x more, we're actually 40x richer??

We save 50% from income compared to 5% for Average Joe. (stats Canada)

My investments returned 4% after inflation compared to 1%* (4x more)

10 x 4 = 40

I'm shocked; we're just above average wages...

Sorry to just realize this

*most peoples I know with some money aside own CDs


Bob W

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Re: can't believe we could be 40x richer than average ??
« Reply #1 on: October 09, 2014, 12:24:55 PM »
The math isn't exactly that but you are doing well.

The converse -- If the average MMM forum reader is saving 75% and earning 9% (which I believe are kinda unstated goals.    Then your saving and investing rate would be far below the average MMM reader.   That wouldn't mean your richer or poorer though. 

I think your total net worth is what determines how rich you are. 

As always,  I could be wrong on this.

matchewed

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Re: can't believe we could be 40x richer than average ??
« Reply #2 on: October 09, 2014, 12:28:19 PM »
Yeah what Bob said. the math doesn't quite work out that way. If someone invests 5k and gets a 1% after inflation return they have 5.05k. If you invest 50k (10x as much) and earn 4% after inflation (4x as much return) you'll have 52k. 52/5.05=10.3 or only a little over 10x as much.

But keep at it. Fact of the matter it is "easy" to save more than average in today's environment. And it's better for you and your life.

Le Barbu

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Re: can't believe we could be 40x richer than average ??
« Reply #3 on: October 09, 2014, 12:42:27 PM »
I also aim for 7-10% myself but accounting for inflation, my returns have been 5% so far (from 1998)

Saving rate also widely range from 10% to 90% in the MMM community, don't know what's the average but 75% seams high

I think net worth is a bit correlated with age. i.e. 22 y.o. with 100k is a lot better than 55 y.o. with that same 100k don't you think?

Bottom line, I knew we were doing well compared to neighbors, friends, related but not THAT MUCH.

matchewed is right, I ran those numbers a bit to fast but, 10x is still KICKASS for the same income range !

Bob is 2.5x better than me so, depends who you compare to.

Even with my "wrong" statement calculation etc, in some case, it could be 100x & more compared to the SAME situation (income, age, kidz#, house size etc) who knows...


« Last Edit: October 09, 2014, 12:55:31 PM by Le Barbu »

Bob W

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Re: can't believe we could be 40x richer than average ??
« Reply #4 on: October 09, 2014, 12:54:54 PM »
Oh no! Bob is actually jealous of your savings rate. 

Le Barbu

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Re: can't believe we could be 40x richer than average ??
« Reply #5 on: October 09, 2014, 01:00:43 PM »
Bob, everything being relative. I once find that 20% saving rate was a chore with a 60k (family) income and now find a 50% easy with 90k.

I would say that Mustachianism make it easier than ever !

foobar

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Re: can't believe we could be 40x richer than average ??
« Reply #6 on: October 09, 2014, 01:30:30 PM »

My investments returned 4% after inflation compared to 1%* (4x more)



You earn 6% (4%+2%) only 100k. In 30 years you have 574k. The average person earns 3% and has 242k. You made ~2.4x as much by investing as the average person. Not 4x.

Le Barbu

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Re: can't believe we could be 40x richer than average ??
« Reply #7 on: October 09, 2014, 01:58:34 PM »
don't forget to add the savings on top of the earnings