Author Topic: When did you first feel like your investments were really taking off?  (Read 5203 times)

boarder42

  • Walrus Stache
  • *******
  • Posts: 7176
I think about it this way.  When you hit $100K, every time the market makes a 1% jump, your investments go up by $1,000 (assuming a 100% index allocation)... that's pretty impressive, but to say that is taking off, not really (about a weeks worth of take home pay at work).  With a half a million invested a 1% jump is $5,000 that's a months worth of take home pay at work and that, to me, feels like it's starting to "take off" being a month's worth of work gained in a single day in the market.

yeah at the beginning of 2017 when the market was jumping and i had around 500k invested and we earned more in the first 1/3 of the year than we spent that felt pretty good. 
My Miles Journal -Learn to Manufacture spend(MS)

Best bonuses on Credit cards right now
SW Plus Card 50k Bonus - use it with the Companion pass hack!

Personal Capital - Track your spending and Investing


boarder42

  • Walrus Stache
  • *******
  • Posts: 7176
thats a cool article. 
My Miles Journal -Learn to Manufacture spend(MS)

Best bonuses on Credit cards right now
SW Plus Card 50k Bonus - use it with the Companion pass hack!

Personal Capital - Track your spending and Investing

terran

  • Handlebar Stache
  • *****
  • Posts: 1197
http://www.fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/

This was a really good read.

On a little more pessimistic note (if you can be a pessimist while saving $50k/year), I found the chart showing years to increase net worth an additional $100k at different savings levels interesting. While the main example in the article (saving $10k per year) is able to increase net worth twice as fast once they reach $300k net worth as compared to when they started, a person saving $50k/year won't double their net worth increase speed until they reach more like $900k. We save more than that a year, so it would take even longer before the stash is generating as much as we save.

sherr

  • Bristles
  • ***
  • Posts: 498
  • Age: 32
  • Location: North Carolina
http://www.fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/

This was a really good read.

On a little more pessimistic note (if you can be a pessimist while saving $50k/year), I found the chart showing years to increase net worth an additional $100k at different savings levels interesting. While the main example in the article (saving $10k per year) is able to increase net worth twice as fast once they reach $300k net worth as compared to when they started, a person saving $50k/year won't double their net worth increase speed until they reach more like $900k. We save more than that a year, so it would take even longer before the stash is generating as much as we save.

That is an incredibly "pessimistic" way to look at it indeed. The time it takes to reach either "doubling point" is the same either way.

More money growing faster (in an absolute sense) in the same amount of time shouldn't leave room for anything to be "pessimistic" about. Don't go looking for things to be pessimistic about.
« Last Edit: June 13, 2018, 01:56:58 PM by sherr »

YttriumNitrate

  • Bristles
  • ***
  • Posts: 275
  • Location: Northwest Indiana
On a little more pessimistic note (if you can be a pessimist while saving $50k/year), I found the chart showing years to increase net worth an additional $100k at different savings levels interesting. While the main example in the article (saving $10k per year) is able to increase net worth twice as fast once they reach $300k net worth as compared to when they started, a person saving $50k/year won't double their net worth increase speed until they reach more like $900k. We save more than that a year, so it would take even longer before the stash is generating as much as we save.
Interestingly, when Charlie Munger made his first $100,000 it was worth about $900k in today's dollars.

Scortius

  • Bristles
  • ***
  • Posts: 397
http://www.fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/

This was a really good read.

On a little more pessimistic note (if you can be a pessimist while saving $50k/year), I found the chart showing years to increase net worth an additional $100k at different savings levels interesting. While the main example in the article (saving $10k per year) is able to increase net worth twice as fast once they reach $300k net worth as compared to when they started, a person saving $50k/year won't double their net worth increase speed until they reach more like $900k. We save more than that a year, so it would take even longer before the stash is generating as much as we save.

That is an incredibly "pessimistic" - if not delusional - way to look at it indeed. It takes you far fewer years to hit the doubling rate if you're saving $50k a year (1.94 + 1.71 + 1.53 + 1.39 + 1.27 + 1.17 + 1.08 + 1.01 + .95 = 12.05) instead of $10k a year (7.84 + 5.10 + 3.78 = 16.72).

More money growing faster in less time shouldn't leave room for anything to be "pessimistic" about. Don't go looking for things to be pessimistic about.

Intuitively, this doesn't make sense. Your rates of increase relative to your contribution amounts should be the same assuming you continue contributing the same amount each year and your return remains fixed. I'm not sure exactly what you mean by 'doubling rate', would it be possible to explain in more detail what you're getting at?

I think your mistake is that you're looking at the rows in the final table as if they're comparable between $10k/year and $50k/year, but the rows themselves are in increments of $100k. At $10k/year, you're going from $200k to $300k in about 3.78 years (according to the corresponding cell).  At $50k/year (5x more), you're going from $1M to $1.5M in 0.84+0.79+0.75+0.72+0.68 = 3.78 years. Looks the same to me.

sherr

  • Bristles
  • ***
  • Posts: 498
  • Age: 32
  • Location: North Carolina
http://www.fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/

This was a really good read.

On a little more pessimistic note (if you can be a pessimist while saving $50k/year), I found the chart showing years to increase net worth an additional $100k at different savings levels interesting. While the main example in the article (saving $10k per year) is able to increase net worth twice as fast once they reach $300k net worth as compared to when they started, a person saving $50k/year won't double their net worth increase speed until they reach more like $900k. We save more than that a year, so it would take even longer before the stash is generating as much as we save.

That is an incredibly "pessimistic" - if not delusional - way to look at it indeed. It takes you far fewer years to hit the doubling rate if you're saving $50k a year (1.94 + 1.71 + 1.53 + 1.39 + 1.27 + 1.17 + 1.08 + 1.01 + .95 = 12.05) instead of $10k a year (7.84 + 5.10 + 3.78 = 16.72).

More money growing faster in less time shouldn't leave room for anything to be "pessimistic" about. Don't go looking for things to be pessimistic about.

Intuitively, this doesn't make sense. Your rates of increase relative to your contribution amounts should be the same assuming you continue contributing the same amount each year and your return remains fixed. I'm not sure exactly what you mean by 'doubling rate', would it be possible to explain in more detail what you're getting at?

I think your mistake is that you're looking at the rows in the final table as if they're comparable between $10k/year and $50k/year, but the rows themselves are in increments of $100k. At $10k/year, you're going from $200k to $300k in about 3.78 years (according to the corresponding cell).  At $50k/year (5x more), you're going from $1M to $1.5M in 0.84+0.79+0.75+0.72+0.68 = 3.78 years. Looks the same to me.

You're right, the time it takes to until your investments appreciation equals your contribution is constant for a given interest rate. The point remains though that it's not worse if you're contributing more; so there's still nothing to be pessimistic about. I'll delete my dumb adding.