Hi everyone,
Thanks for the feedback, I figured there might be some interest in our financial geekery in this forum. There were some good questions that unfortunately I don't think I have all the data to answer, but I will try.
It looks like you've had a pretty incredible last year or so. Do you attribute the steeper curve to compounding return on investments or something else? I see you work in the Bay Area, do you have an equity stake in a startup? If yes, have you seen any returns on that (I see some big jumps in your chart)?
Good eye Trebeck. Some of that last year is certainly return on investments and stellar stock market performance that we saw until recently, but the main factor is that I finished grad school and got a job that pays ~4x my previous
pittance (before taxes anyways.. ) :) The plateau right before that is from our transition to the Bay Area where we were spending money on a move, having a cross-country road trip, and both funemployed.
No equity in a start-up: it would, be a stretch to say we are working class of course, but we both trade our labour for wages :) Most of the big jumps you see are probably changes in salaries and employment/fun-employment status. The range you see there includes periods of two people living on a grad student stipend, to a good dual income situation in a low cost of living area, to a current very high dual income in a high-cost of living situation.
Wow! that is quite an exponential jump :o
Nice work!
And to lolzmonster, that is most definitely a linear graph.
I was actually wondering that, I figure if the growth was being dominated by our savings rate, it would be more linear (barring salary increases), whereas if it was being driven by compounding returns it would be more exponential. It turns out an exponential fits the data better than a linear (R
2 = 0.99 for exponential vs R
2 = 0.93 for linear). In reality it's probably a combination of both, from our savings rate and investment returns.
This is an awesome graph! Do you mind saying how much you contribute to the stache every year? I'm at the beginning part of your graph and trying to see if I could also hope for a similar graph years from now based on how much I'm contributing. (I know the stock market will obviously be different though).
Given all the different accounts, it's hard to retrospectively figure out what is investment gain and what is our savings, but using our Vanguard accounts as a proxy for the whole stash, we can probably estimate that it is roughly 70% savings and 30% investment return. We did have the luck of strong market gains over the last few years (actually, our stash was smaller so it may not have helped us that much at the time), but we also have a relatively conservative asset allocation for our age(60% equities, 40% fixed income), for a variety of reasons. So if we had been invested even heavier in the stock market, it would have probably been larger gains. Oh well..
To answer your questions, I don't have the data for the earlier years, but in the last couple of years on much higher salaries we have been contributing ~$90k or more to the stash. So we make up for the conservative portfolio with a high savings rate (~80%).