Author Topic: When did you first feel like your investments were really taking off?  (Read 6146 times)


boarder42

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thats a cool article. 

terran

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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

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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

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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

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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

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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.