Race from $2M to $4M...and Beyond!

[Bateaux]

I'm in CAT A.  Lost about 100k.

[itchyfeet]

I'm in CAT A.  Lost about 100k.

Sorry to hear that.

I guess when with the bulls occasionally one of the buggers will step on your foot. Sure this causes short term pain, but in the long run a bruised hoof is not going to stop you surging to your destination where you will graze on sweet pastures.

[wannabe-stache]

So.... which camp are you in:

A. The bigger you are the harder you fall. Ie: this small blip in the market set you back a 6 figure sum which is more than 3 or 4% of you net worth; or

B. As you are wealthy and properly diversified this small blip cost you far less than the market movement, like maybe only 1%; or

C. You knew the top was in, shorted the market, made an absolute killing and grew your stash even to a more enviable number??

D i suppose. young investor here, heavily exposed to equity mutual funds, lost a lot of $ on paper ($30K in one day - ouch!) and looking forward to putting more money to work for another 10-15 years according to the terms of my investment philosophy statement.

[EscapeVelocity2020]

So.... which camp are you in:

A. The bigger you are the harder you fall. Ie: this small blip in the market set you back a 6 figure sum which is more than 3 or 4% of you net worth; or

B. As you are wealthy and properly diversified this small blip cost you far less than the market movement, like maybe only 1%; or

C. You knew the top was in, shorted the market, made an absolute killing and grew your stash even to a more enviable number??

Another 'none of the above'.  Although I've been aware that the markets are freaking out as opposed to going straight up, I have only a vague idea (within 100k) of my net worth and even less idea what these gyrations have done to the portfolio.  I did check in on my son's 529 since those funds are coming closer to being tapped.  There's ~110k in a moderately aggressive 70/30 fund, so I might move to a more conservative 50/50 fund, but it's a small optimization in the whole scheme of things.  I still feel pretty good about my (thus far too conservative) AA, given that we have 'enough' and sufficient opportunity to make money in bond-like income.

Getting excited that long-bond income is finally on the rise though!

[AdrianC]

Definitely an 'A', not that it makes any difference to me. Surprised more people on here aren't 'A's.

3-4% drop after a 25% rise in one year...no worries.

[itchyfeet]

Yeah, no worries, but now down more than $50K for the week 😳

[bwall]

Just now found this thread and it's amazing. . . . I don't think anyone has used the term High Net Worth Individuals (HWNI) yet, but it applies to everyone with $1m in investible assets, not to mention $2m. Here is the definition per wiki:

High-net-worth individual (HNWI) is a term used by some segments of the financial services industry to designate persons whose investible assets (such as stocks and bonds) exceed a given amount. Typically, these individuals are defined as holding financial assets (excluding their primary residence) with a value greater than US$1 million.

https://en.wikipedia.org/wiki/High-net-worth_individual

Here's another article talking about the growth and distribution of HWNI's.

http://www.telegraph.co.uk/business/2017/09/28/number-high-net-worth-individuals-hits-all-time-high-165-million/

[Bateaux]

I  think High Net Worth Individual needs to be redefined.   I'd term that to be closer to 5 million.  If you have 1 million invested outside of home and pensions you have a nice pad, but in 2018 it's not high net worth.  It's bare bones living without extra income if retired.  Some here can do it.  If they do, they are very frugal.   I think you start to feel wealth at about 2.5 million invested, on up to about 5 million.   After 5 million your what I'd think of as rich and ready to take on the more risky investments of HNWI.

[itchyfeet]

$5M USD is a huge sum of money. In Australia it would put you in the top 1% based on Net Worth. I am not even talking investable assets.

Do you think that is the pass mark for HNWI in a wealthy developed country (top 1%)?

[Bateaux]

$5M USD is a huge sum of money. In Australia it would put you in the top 1% based on Net Worth. I am not even talking investable assets.

Do you think that is the pass mark for HNWI in a wealthy developed country (top 1%)?

If you're living on 1 million invested as a sole income stream, you're the typical millionaire next door.  There is very little flash living on 40k a year.  You're basically middle class but not having to work. (Mustacian)   At the 5 million invested level you can have flashy house, cars, vacations, parties...the things truly rich people do.

[Car Jack]

I believe $40k is under the poverty line for a family of 4.  If there is other sources of income (social security, pension, occasional bank robbery), then it's not a lot to get above the line.  But it ain't livin' high, that's for sure.

[Exflyboy]

A few generalisations of course.

I.e do you have kids? Location?.. $40k in NYC won't go far but in rural Wyoming it would.

If you live in UK your healthcare costs would also be zero.

We live in Oregon on our 5.5 acres (2 adults) and with the house paid off we consistently spend around $30k/year. But we have probably skimped on insurance during the accumulation phase so we are now paying about $1500/year more to protect our stash from lawsuits.

Assume we have a couple of vacations at say $10k would put us right at $40k/year.. If we had to pay fell whack on our HC premiums that would add another $14k.

So $55k for living decent in FIRE for us.

[itchyfeet]

A few generalisations of course.

I.e do you have kids? Location?.. $40k in NYC won't go far but in rural Wyoming it would.

If you live in UK your healthcare costs would also be zero.

We live in Oregon on our 5.5 acres (2 adults) and with the house paid off we consistently spend around $30k/year. But we have probably skimped on insurance during the accumulation phase so we are now paying about $1500/year more to protect our stash from lawsuits.

Assume we have a couple of vacations at say $10k would put us right at $40k/year.. If we had to pay fell whack on our HC premiums that would add another $14k.

So $55k for living decent in FIRE for us.

So you over saved??

[Exflyboy]

A few generalisations of course.

I.e do you have kids? Location?.. $40k in NYC won't go far but in rural Wyoming it would.

If you live in UK your healthcare costs would also be zero.

We live in Oregon on our 5.5 acres (2 adults) and with the house paid off we consistently spend around $30k/year. But we have probably skimped on insurance during the accumulation phase so we are now paying about $1500/year more to protect our stash from lawsuits.

Assume we have a couple of vacations at say $10k would put us right at $40k/year.. If we had to pay fell whack on our HC premiums that would add another $14k.

So $55k for living decent in FIRE for us.

So you over saved??

Yes at 4% our income could be about $115k/yr.. Prior to the correction at least.

[bigchrisb]

Category a for me. Down over 100k, or about 3%. Given I gained the same the month before, I'm not exactly losing sleep!

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

[bwall]

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

I believe your analysis to be accurate, not cynical. Giving a demographic a name helps in lots of ways. As you mention, financial advisors provided the definition for their own purposes, such as allowing actors across the industry to identify a 'whale' when they see one. However, the same classification also allows the 'marks' to know that they've been identified as such and then to react accordingly. By knowing better how scare the cohort you belong to is, it allows you to better understand the motivations of financial advisors you may encounter.

For example, a couple of months ago I was in Europe trying to open a business bank account. The gentleman I spoke with began the conversation by saying that they had strict requirements for new account holders, such as monthly fees of 60 EUR and minimum capital of 500,000 EUR. "Not a problem", I said. And, immediately the tone of the conversation changed significantly. I hung up the phone and it occurred to me that the banker doesn't get such phone calls often.

[Exflyboy]

Category a for me. Down over 100k, or about 3%. Given I gained the same the month before, I'm not exactly losing sleep!

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

So you have $3.3M?... Nice..:)

[Dicey]

Category a for me. Down over 100k, or about 3%. Given I gained the same the month before, I'm not exactly losing sleep!

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

So you have $3.3M?... Nice..:)

Hmmm, I think those might be Aussie dollars. Still mighty nice, but they don't stretch quite as far as USD.

[bigchrisb]

Category a for me. Down over 100k, or about 3%. Given I gained the same the month before, I'm not exactly losing sleep!

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

So you have $3.3M?... Nice..:)

Hmmm, I think those might be Aussie dollars. Still mighty nice, but they don't stretch quite as far as USD.

Yep, Pacific Pesos. I don't convert as,
A) I save and spend in Aud, and
B) the exchange rate is quite volatile, having ranged between 1.1 and 0.7 usd in recent memory.
Current conversion puts me at about 2.5m in greenbacks.

[Exflyboy]

Still a sizable stash.. Well done..:)

[farmecologist]

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

'Accredited investor' is also a classification and is currently required by law for some investments such as PeerStreet, etc...

  https://info.peerstreet.com/glossary/accredited-investor/

[Bateaux]

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

'Accredited investor' is also a classification and is currently required by law for some investments such as PeerStreet, etc...

  https://info.peerstreet.com/glossary/accredited-investor/

I'd qualify by item number 2.  Doesn't mean much, I'm not qualified in any way to play with big boy investments.  I've got primal fear just buying some individual stocks.

[itchyfeet]

Well folks, it’s a big pay day today 👀

[Bateaux]

Good.  I'm down over 100k.

[Exflyboy]

Good.  I'm down over 100k.

Only about 1.0 Tesla's then..:)

[Bateaux]

Good.  I'm down over 100k.

Only about 1.0 Tesla's then..:)

Sub 100k losses now.  Not Model X or P100D Model S.  Getting into Model 3 range.


😁

[JoJoP]

Category a for me. Down over 100k, or about 3%. Given I gained the same the month before, I'm not exactly losing sleep!

As for "high net worth" classifications, the cynic in me thinks it's a bracket thought up by the financial sharks (advisors, fund managers and hedge funds), not because it's a mark of independent wealth, but rather a target market.  I'd like to be collecting 2% on someone else's investable assets!

I agree.  It's like the old song "Would you walk away from a fool and his money?"  Once they know you've got some, you might as well paint a bulls-eye on your forehead.  I wanted to be a Chase Private Client, because at the time it allowed you to get the valuable 100,000 point Chase Sapphire Reserve credit card, even if you had a lot of recent credit cards open.  CPC allowed an override of policy restrictions.  The CPC query happened right AFTER we took our liquid cash and bought an investment property.  So our funds at Chase were shy of private client material, and they kept an eagle eye on our assets to make sure we surpassed the requirements within a couple of months.  Then they requested multiple meetings with the Investment Banker, whose goal was to get us to move our assets over to him for "management."  No thanks, I said.  We'll keep an eye on our own money, thanks anyway. 

As an aside, the Private Client status does give some perks, such as fee free ATMs world wide.  That's been handy on our international travels. 

Hope you all rebounded from the dip.  We're mostly in real estate, so I didn't even look to see what happened with my brokerage account.   I'm only sorry that I didn't have some spare cash to buy on the dip.   ExFlyBoy, are you back with us yet?

[JoJoP]

I  think High Net Worth Individual needs to be redefined.   I'd term that to be closer to 5 million.  If you have 1 million invested outside of home and pensions you have a nice pad, but in 2018 it's not high net worth.  It's bare bones living without extra income if retired.  Some here can do it.  If they do, they are very frugal.   I think you start to feel wealth at about 2.5 million invested, on up to about 5 million.   After 5 million your what I'd think of as rich and ready to take on the more risky investments of HNWI.

 Great point, Bateaux.  This is the shame of it... very few people (relative to the population) have 1 Million, yet, using the 4% rule/$40K a year, as a barometer, it still requires frugal living if you expect it to last a lifetime.  You'll have a hard time being in an Assisted Living facility on 40K a year.  And if both members of a couple make it that long, forget it on $40K.  But, hopefully the assets will be growing and keeping pace as one ages, so the 4% will meet the requirements.   

Here's my inner skeptic: I think the term HNW basically means to the financial world that this person might need a financial adviser or an investment banker.  As noted above, it's a marketing term. 

[dogboyslim]

This is the difference between looking at wealth and looking at income.  I feel its difficult to classify anyone with >$1 MM as anything BUT a high net worth individual.  You may or may not be living only off the assets, but just by sitting on our butts we can generate more income than 40% of the household population in the US.  I struggle with a concept that says this is the same as someone with no or zero net worth and a similar income.  They are in no way the same thing.

[Bateaux]

I'm still waiting on the secret handshake of the HNW club.  So far I very much feel like an outsider.   It took us a long time to get here.   Maybe it was so gradual we didn't notice.

I'm looking at homes in Florida to retire to in the 200 to 300k range.  I remember that being so much money to me once.  We gained that much in NW in the last year.  I guess it's real.

[EscapeVelocity2020]

I'm still waiting on the secret handshake of the HNW club.  So far I very much feel like an outsider.

Well, if it helps, I feel like Ted Cruz gave me a secret handshake now that I can use some of our burgeoning 529 funds for my daughter's private schooling in Texas.  Funds that have appreciated nicely since 2003 are able to be spent tax free up to 10k.  And I feel pretty good about spending them now before the market craps out!

[Bateaux]

For some reason we can exchange this magic creation of numbers for real things.  I mean, we didn't have to trade hours for these dollars. 

[Car Jack]

The Ken Fisher ad that splashes across the top of Marketwatch for me uses $500k as their number.  I think it's just a number to fish out clients who want to feel like big shots being high net worth and using "their guy" to manage their weath.

"Private Client" was mentioned and I know Fidelity gives you this designation if your account is over $1M.  With this, you get a Private Client manager which means that when you call Fidelity for a generic question, you have to tell them "no, I don't want to be transferred to my private client manager because it'll land in his voicemail and I won't hear for 3 days what the answer to my simple question is".  On the good side, it means that you get turbo tax for free.  There's a trick to get not only online but downloaded versions.  I did it this year just to see if I could get it.  I was able to.

I work in a 3 building business complex.  One building is chock full of Wealth Management firms.  The question "Where are all the customers' yachts?" comes to mind.  In the parking lot, I see on my lunchtime walk every day: Maserati Quattroporte, Maserati Ghibli, BMW i8, Audi S5, Porsche 911 turbo S, Mercedes E300 4 matic, Jaguar sedan (I forgot what they're called....something R).  Makes me chuckle that they're "managing" to turn the wealth of their clients into their own to waste on big dollar cars (and I'm a car guy).

[dogboyslim]

I give these guys more of a pass on the high dollar cars.  Don't think about this group, think about normal people.  Are they more going to trust giving all their money to the person driving the early 2000's Honda civic, or the person driving the known expensive car?

I think Lexus/Audi A6 is sufficient for that purpose though, so I don't give a complete pass.  Still, I want a DB9.  I will NEVER buy one, but I want one!

Also, Vanguard calls us Flagship clients.  If I get to $5M, I get to be a Flagship Select Client!

[itchyfeet]

My broker used to classify me as a premium client, then I became a platinum client. I’ll have to change brokers to become a private client I suppose. I want to level up 😁

[Bateaux]

We've been trying to dump an Ameriprise account for over a month.  They keep dragging it out.  Going straight to VTSAX the minute they allow the transfer.

[Secretly Saving]

"Private Client" was mentioned and I know Fidelity gives you this designation if your account is over $1M.  With this, you get a Private Client manager which means that when you call Fidelity for a generic question, you have to tell them "no, I don't want to be transferred to my private client manager because it'll land in his voicemail and I won't hear for 3 days what the answer to my simple question is".  On the good side, it means that you get turbo tax for free.  There's a trick to get not only online but downloaded versions.  I did it this year just to see if I could get it.  I was able to.

What's the trick?

[Exflyboy]

I give these guys more of a pass on the high dollar cars.  Don't think about this group, think about normal people.  Are they more going to trust giving all their money to the person driving the early 2000's Honda civic, or the person driving the known expensive car?

I think Lexus/Audi A6 is sufficient for that purpose though, so I don't give a complete pass.  Still, I want a DB9.  I will NEVER buy one, but I want one!

Also, Vanguard calls us Flagship clients.  If I get to $5M, I get to be a Flagship Select Client!

In order to get to one of these favoured status's I'd have to move all my money to one place.. But heck if I combine mine and my Wife's accounts just at Vanguard we are over $1M there.. Rest of the 401k's are spread about so that keeps us incognito..:)

[Dicey]

We have a mortgage with Chase, plus our checking and savings. There is a LOT of cash there right now, because we are actively searching for our next real estate project. They consistently bug us about becoming Private Clients. Yes, I may have enough to meet their minimum, but I'll be damned if I'm going to have them manage my money. And it kind of pisses me off that they won't count the mortgage for qualifying purposes.

Oh, well. We're somehow managing to live a pretty happy life without being Chase Private Clients, lol!

[wannabe-stache]

i wasn't tracking NW until May 2017 and it's up an unreal amount in that time frame.  started at $2.1M, ended the year at $2.8M.

With some year end bonus payments expected this month, at this pace (putting aside market volatility) i would bet anything we're at $3.0M by mid Feb if not sooner. it's unreal how it grows even from day to day.

Calling myself to task for that statement. i cursed us all.

but, we've continued down the savings path and with the recent runup, we are at $2.985M.  $15K to go, which of course could become $100K to go in a flash as February pointed out.

[webguy]

Can I join your thread?  We just hit 2M yesterday! And with the friendly market today we're up another 15k already!  I'm carrying over our progress from the race to 2M thread if that's OK as I like keeping track of it this way.

I'd like to join to help motivate me. Currently at $540k and hope to hit the big 1M in the next couple of years.

I made it to $748k! Keep saving everybody!!

I made it to $988k and was getting excited... and then taxes hit! Looks like it'll be another few months yet :(

I finally did it!! Crawled over the line to $1,000,330 today!  Feels pretty surreal. Never thought I'd actually be worth a million dollars. Now I guess I keep on saving towards the next million!

Currently at $1.11m.  Don't really have a goal number at this point. I love running my own business so just tryna ride it out as long as possible and "make hay while the sun shines" as they say.

Passed the half way point!  Somehow we have $1.535m. Not sure how long the next 0.465 will take but I'll report back if we get there!

It took a little longer than I’d hoped due to the market being a douchebag lately but we Just hit 2 million today! We’re officially multi-millionaires I guess! I crunched the numbers and I think our “fat fire” number is around 2.5-3M so I’ll probably keep trucking away till we hit that, then I’m not sure what I’ll do.

[markbike528CBX]

@webguy , once you are in , you are in forever, only upward ...and beyond! are ways to exit.

[bluebelle]

just popped in to say I've enjoyed the first 10 days of March far more than the first 10 days of Feb.

[jdfergason]

@webguy congratulations!  Looking through your posts it seems you have started a successful software business?  Would you mind sharing what kind of software you make and how you sell it?  Would love to hear your story!  I am addicted to successful entrepreneurial stories :)

[Car Jack]

"Private Client" was mentioned and I know Fidelity gives you this designation if your account is over $1M.  With this, you get a Private Client manager which means that when you call Fidelity for a generic question, you have to tell them "no, I don't want to be transferred to my private client manager because it'll land in his voicemail and I won't hear for 3 days what the answer to my simple question is".  On the good side, it means that you get turbo tax for free.  There's a trick to get not only online but downloaded versions.  I did it this year just to see if I could get it.  I was able to.

What's the trick?

I can't remember, but I remember going in and you have the choice to order a number of options.  The online is free.  I think I clicked the downloadable version and 3 or 4 options came up....one of them being free.  I could be off on how I got it......maybe there was a charge but then a minus equal amount on checkout.  Didn't take me more than 2 minutes screwing around to get it.

[JoJoP]

Can I join your thread?  We just hit 2M yesterday! And with the friendly market today we're up another 15k already!  I'm carrying over our progress from the race to 2M thread if that's OK as I like keeping track of it this way.

I'd like to join to help motivate me. Currently at $540k and hope to hit the big 1M in the next couple of years.

I made it to $748k! Keep saving everybody!!

I made it to $988k and was getting excited... and then taxes hit! Looks like it'll be another few months yet :(

I finally did it!! Crawled over the line to $1,000,330 today!  Feels pretty surreal. Never thought I'd actually be worth a million dollars. Now I guess I keep on saving towards the next million!

Currently at $1.11m.  Don't really have a goal number at this point. I love running my own business so just tryna ride it out as long as possible and "make hay while the sun shines" as they say.

Passed the half way point!  Somehow we have $1.535m. Not sure how long the next 0.465 will take but I'll report back if we get there!

It took a little longer than I’d hoped due to the market being a douchebag lately but we Just hit 2 million today! We’re officially multi-millionaires I guess! I crunched the numbers and I think our “fat fire” number is around 2.5-3M so I’ll probably keep trucking away till we hit that, then I’m not sure what I’ll do.

Hi webguy, welcome!  I like looking at the dates of your quotes... you really flew through that second million quickly.   Congrats and welcome to the thread.  It's kind of a lifetime status thread.  Once you hit these numbers,  you just hang around with us from now on.

[soccerluvof4]

Was in the middle of these parameters, crept across the finish line only to get punched back down. Feel like a whack a mole! Currently excluding paid for house around the 3/4 mark after being hit by the market downward move. Being 3 years fire'd though a lot more positive!

[wannabe-stache]

Finally made it after April bonus payments came through. Including home equity were at $3.1M. I will say that it’s a very “ho hum” feeling to cross the threshold. Maybe it will be more exciting when we are at $3M of investments.

[honeyfill]

still hanging in there at 2.45 million. took a big hit in Jan/Feb in the market and in paying off the kitchen remodel but on the road to recovery now.  Still planning on June 1 retirement!!

[Bateaux]

still hanging in there at 2.45 million. took a big hit in Jan/Feb in the market and in paying off the kitchen remodel but on the road to recovery now.  Still planning on June 1 retirement!!

At least you're well above the 2M dollar hump.  We came within $31k before the market turned.  Now we're over $90k short.  When the time comes I'm sure we'll flynright past the 2M mark.  Good luck!  June is so very close now.