The first million is the hardest

[Bigote]

Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

It took me until 2006 to cross 2MM.  I dipped below briefly during the crisis, but for the most part stayed between 2-3 until 2010.

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

So basically it took me 11 years to get to the 1st million, 5 years to the 2nd, 4 years to the 3rd, 2 years to the 4th, and 1 year to the 5th.

I'm defining net worth conservatively, I'm not including home equity but I did subtract mortgage debt for the years that I had it.


Any other 2 comma club members want to chime in?

[mpbaker22]

Where do you work and why are you still working (I assume you love your job)?  Most mustachians don't even need 1 Million;  I don't ever plan to hit that number.

[Bigote]

I'm fully retired now and have been semi-retired for several years.  True most here are shooting for 1MM or less but I'm pretty sure I've heard from other 2 comma club members. 

[Bigote]

I don't ever plan to hit that number.

Well, keep in mind safe withdrawal rates are designed for near worst-case scenarios.   If you experience average or good market years post retirement your stache will just grow and grow.   I never planned to go above 3MM.  It just happened. 

[mpbaker22]

I'm fully retired now and have been semi-retired for several years.  True most here are shooting for 1MM or less but I'm pretty sure I've heard from other 2 comma club members.

More on topic, of course the 2nd is easier than the 1st, 3rd easier than 2nd.  1,000,000 is infinitely higher than 0. 2,000,000 is 100% more than 1,000,000, etc.  Based on my returns since i started working Jan/2012, 1,000,000 would now be 1.5M on investments alone.

[catccc]

I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

[desk_jockey]

T. Boone Pickens: "The first billion is a helluva lot harder"

https://twitter.com/boonepickens/status/207984741260070914

[pac_NW]

I am finding the same pattern. It is amazing how quickly the stash grows as you go.  It does get more comforting. Yet, I have not been able to semi-retire yet because, I cannot quite pull the trigger.  Being a ninny about it!!  At what point in your stash-ness level did you semi-retire?

[dragoncar]

I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

Hopefully the second 500k is easier than the first 500k :)

[kkbmustang]

I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

Hopefully the second 500k is easier than the first 500k :)

Dude, word.

[Bigote]

At what point in your stash-ness level did you semi-retire?

Between 2-3.  Semi retirement for me was taking long breaks (year or so) from work, then diving back in full bore, rather than the more typical part time approach. 

[rocketman48097]

I will have to say that as someone that graduated with student loans and credit card debt, I am happily over 800k, in part by marrying another professional who was also a saver.  I know the first million is the hardest, but I must say I track our net worth on a spreadsheet and in my opinion, until the market crashes, this wealth creation stuff is getting easier and easier as the numbers go higher.

It's so nice knowing we have so much money in investments.  I have hinted to people every now and then that we are quite wealthy, and the fact is, no one actually believes me because I drive a 12 year old car (long paid for) and my wife drives an almost new 5 year old family Sedan.  Oh well, as Buffett would say, we measure our success on an internal scorecard, not an external one. 

[frugalecon]

It's so nice knowing we have so much money in investments.  I have hinted to people every now and then that we are quite wealthy, and the fact is, no one actually believes me because I drive a 12 year old car (long paid for) and my wife drives an almost new 5 year old family Sedan.  Oh well, as Buffett would say, we measure our success on an internal scorecard, not an external one.

This "hinting" seems risky. You have the perfect cover by appearing as someone of modest means. I made the mistake of responding truthfully once to a friend who asked how much I made, and his response was "With your salary, I know who I can borrow from when I am in trouble."

I would be terrified if my sisters knew my net worth. It would be a real drag to have to deal with that repeatedly.

[sol]

All of my spreadsheet projections look like the OP's path, with net worth growing like crazy once we no longer need it to. I find it slightly distressing and I expect it to keep me working longer than necessary.  One more year and I can buy a yacht! One more year and my grand kids also get free college. One more year and I can endow a scholarship. One more year and I can feed 1000 starving African families forever.  The payoff just goes up and up.

[galaxie]

All of my spreadsheet projections look like the OP's path, with net worth growing like crazy once we no longer need it to. I find it slightly distressing and I expect it to keep me working longer than necessary.  One more year and I can buy a yacht! One more year and my grand kids also get free college. One more year and I can endow a scholarship. One more year and I can feed 1000 starving African families forever.  The payoff just goes up and up.

Eventually, the payoff will be huge whether you're working or not.  Bonus!

[little stache]

So, how do you factor in a "fixed pension" into this net worth calculation. Would it be valued at what you would need to get similar amount on a 4% withdrawal or do you drop it from the assessment?  Do you drop the house since it is not a liquid asset? Do you not a count the tax advantaged funds since they don't help you retire "early"?  There is a million and then there is a MILLION. I am long way from MILLION in liquid assets I can use when and however I want.

If I count the money available when I am 55, I am there. Does not feel so special really.

[RootofGood]

Hi from another dual comma enhanced 'stashe.  I pretty much called it quits right after I hit a million.  That was "enough".

With a withdrawal rate under 3%, there is a good likelihood our NW will keep rising over time.  A decade of 8.5% per annum investment returns will see us cross the 2 MM mark, for example. 

[Baylor3217]

Impressive speed. What industry are you in?  Wage slave?  Stock options?

Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

It took me until 2006 to cross 2MM.  I dipped below briefly during the crisis, but for the most part stayed between 2-3 until 2010.

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

So basically it took me 11 years to get to the 1st million, 5 years to the 2nd, 4 years to the 3rd, 2 years to the 4th, and 1 year to the 5th.

I'm defining net worth conservatively, I'm not including home equity but I did subtract mortgage debt for the years that I had it.


Any other 2 comma club members want to chime in?

[SnackDog]

The magic of compounding, guys; just graph it up.  Once you have $4MM, a good year in the stock market can give you another million.  It's funny how it always seems to be a bit of a hockey stick forecast with the great figures just a few more years ahead.  And the funny thing for us is that the numbers are just numbers.  I won't retire particularly early because work is too fun and when I do retire, we won't spend 4% because it will just be a ridiculous amount of money to spend in a year.

[Baylor3217]

The magic of compounding, guys; just graph it up.  Once you have $4MM, a good year in the stock market can give you another million.  It's funny how it always seems to be a bit of a hockey stick forecast with the great figures just a few more years ahead.  And the funny thing for us is that the numbers are just numbers.  I won't retire particularly early because work is too fun and when I do retire, we won't spend 4% because it will just be a ridiculous amount of money to spend in a year.

The challenge for most is that to "have" $4MM (even if you never invested and didn't lose a nominal dollar) would require you to next $100,000 per year for 40 years.  Most never make 6 figures and certainly don't sustain it for 40 years.  Of course, to net $100,000 requires earning significantly more than $100,000.

I agree completely with your statement above, but the number of people that attain that kind of wealth is in a very small percentage.  Fortunately, that much wealth is not required to be FI.

[Bigote]

Impressive speed. What industry are you in?  Wage slave?  Stock options?

Today I'm in the leisure industry.  :)

My career was variously in investment banking and consulting.   

[Another Reader]

Or leverage and tax advantages, i.e. real estate.  I don't remember that second comma, because the home equity was included in the tally for a long time before and after that.  The trajectory looked like 8 figures was doable until the real estate market fell apart.   Who knows, it may still happen.  However, I may be too old to care if and when it does!

In the end, it's more about the income the assets generate than the assets themselves.  If you are old school like I am, you don't spend the assets themselves, just the income they generate.  If you are clipping equity dividend coupons, $5M only gets you around $150k at a 3 percent average yield and no tax shelter.  Real estate generates more and offers some shelter from those greedy spendthrifts in Washington and Sacramento.  Of course if you are Mitt Romney or Bigote you probably have access to even better income generators and tax shelters....

[chasesfish]

I'm aiming for two commas, primarily because I'm not sure about getting the spending below 40k with as much as I travel, and almost all of my NW is in retirement accounts, which are just a little more painful to access.

[acroy]

Very nice growth. I'm at about the 500k mark, but it is getting interesting how fast it's starting to go up. Laid on top of a graph of the national debt, the curve looks similar ;)

[catccc]

I'm very excited about that easy 2nd million.  I'm only at 440K right now, but you know, it's going to be hard to get to that 1st million...

Hopefully the second 500k is easier than the first 500k :)

Dude, word.

ditto.  I should track the speed of that 2nd 500K.  After I hit the first 500K.  Scheduled for early next year.

[yahui168]

Two income household. Started work in 1999 and reached 1MM in 2012 counting home equity. So 13 years to reach 1MM. It was hard. Could've done better but could've done a lot worse.

[kmm]

Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

You were much faster than me! I started working in 1991 but didn't hit $1M until 2010. Though I didn't start saving in earnest until 1999 after paying off my student loans.

Things are going more quickly now though, I passed $1.5M earlier this year.

[SnackDog]

First million took my whole life. Second million only four more years. The magic of compounding, in part.

[luigi49]

First million took my whole life. Second million only four more years. The magic of compounding, in part.

Could you provide data how in 4 years it becomes 2 million?  Thanks

[RootofGood]

First million took my whole life. Second million only four more years. The magic of compounding, in part.

Could you provide data how in 4 years it becomes 2 million?  Thanks

The stock market doubling between 2009 and 2013 probably?  Plus new contributions.

[iris lily]

Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

Due to the crazed stock market this year we may hit multi-m status on Jan.1. We are giggling about it, but when I step back and consider it, it's only a figure on paper. A figure that I don't trust given the aforementioned crazed market. And a figure that can disappear in the breeze as did some of it back in '08.

[Dicey]

IMHO, this is why it pays in the long run to let the (cheap fixed) mortgage ride and stuff the savings vehicles full. We saved our first million and then after it continued to accumulate, sold our house and paid cash for a new one that better suits our present needs. Now we have a million plus, an almost as expensive house, too many paid-for cars and a pension coming in ten years.

It is incredibly awesome not to worry about money any more. We don't spend like fools, but we don't want for anything either. We sleep incredibly well at night. I'm RE, but husband loves his job. He works limited, well-defined hours with lots of vacation and holidays. The job comes with unbelievable medical benefits and is only three blocks from our new house.

All those years of saving and avoiding consumer debt were absolutely worth it.

[Stackfault]

I thought I was doing well until I saw the original post.  Very impressive! 

l also started work in 1990. The first million (including home equity) took me 17 years, attained at the age of 40.  Looks like the second will take 8-10 years, only 2-4 years away.  I haven't made any big mistakes but I have missed some opportunities in the market by moving to cash and paying off my house while the bulls continued to run.  I've made six figures since my late 30’s while my wife stayed home with our kids.  Our spending is good in some areas but awful in others (paying cash for base model used cars but spending $1000/month for groceries, fast food, and dining out). 

Maybe I'm an example of what happens when you get it partially right.

[fmzip]

I too feel that I got it partially right!

After years of investing/gambling in the market, I finally gave in to having my cousin manage my money. Although his fees are high, I feel I am guarded from a large downside risk of a market. I am still on the fence watching the market soar with my mediocre returns this year.

Our next worth at 47/49 is $830K including home equity. We have a modest home of about $225K with a small mortgage of $45K. Although I have 2 BMW's both are 2001's, one I bought new and the other in 2005. I used to drive a new car every few years, got a little wiser. We have no credit card debt, no loans and max both 401K's.

We've burned a lot of cash over time. No regrets really but nw that I've seen the light, I can see we can do much much better.

I can't imagine making the returns posted above at our age. 25-50% returns per year??? I don't have the stomach for that kind of gambling.

AGI last year was $178K

[deWitt]

I don't think that it's the case that people are making 25-50% returns per year. There might be some good years where you achieve that, but I don't think anyone is claiming to make much more than a 10% compound annual growth rate. People around here tend to have somewhat aggressive asset allocations, but we tend to stay pretty grounded in low cost index funds or ETFs--very much the opposite of gambling.

I think what you're seeing is that people keep their expenses constant even as they make more money--so that they're able to contribute more than ever before. On top of that they're seeing a ~7% compound annual growth rate over long periods of time, with some bad years and some stellar years when they get up in the 25-50% range that you mentioned earlier.

[fmzip]

The OP stated

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

If he/she didn't make 25% return 2012-2013, how much was contributed?? I'm assuming that's aggressive investing,  not in the 7-8%

[fmzip]

^^^^^Thanks for sharing

Glad to see you aren't gambling in the market to make those kind of gains

[MgoSam]

This has got me thinking about how long it should take me. Anyone here capable of helping me calculate this? My investments are all with index funds at Vanguard, I currently have $230,000 there and am contributing $480 per week, or about $25,000 a year.

Ideally, I would love to retire once I hit 1M. I think I could.

[fmzip]

at 2083 per month with 7% annual interest, 12 years

http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

[MgoSam]

at 2083 per month with 7% annual interest, 12 years

http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

Thanks!

[fmzip]

After years of investing/gambling in the market, I finally gave in to having my cousin manage my money. Although his fees are high, I feel I am guarded from a large downside risk of a market. I am still on the fence watching the market soar with my mediocre returns this year.

I'm not sure why you keep pointing out that other people are "gambling in the market."  So are you.  You may be guarded from the downside (though I have my doubts about that), but you are also missing out on the upside.  Why is your cousin's high-fee, "low risk" approach better than a good asset allocation and a solid emergency fund?  If you have the cash on hand, you can score big in a market downturn -- you are buying at sale prices when everyone else is selling in a panic.  That is exactly what we did in 2008-09 and is one of the main reasons behind our amazing net worth growth in the past 5 years.

I'm not sure why you are saying that I keep pointing something out? This is just my second day on the forum.

With a 25% return in one year from 4-5 million, I thought the OP was solely invested in stocks which was not the case.

I used to gamble big in the market. Puts and calls, options that would expire to zero, investing in things "I thought" were good. Thing I came to realize, I was gambling. I was not schooled on the topic of money management, and I felt the average Joe investor like myself ultimately gets burned

I lost faith in my ability to manage my own money, I've lost more than I've ever made. Paying someone else to do it doesn't sit well either but I feel like I am caught between a rock and hard place. I just hate to see people get slammed by being 100% in anything. The market will crash and until you get burned, some people think 25% annual returns are normal.

You are absolutely right, I buy on the dips all the time. I send chunks of money into my 401K on the days the market slides. That's about the extent of my investing strategy for now. My net worth stands at $823K and I can only imagine how nice life would be if I ever got some sizeable returns! I am on the fence of managing it again as I watch the market soar but I can't stomach losing a big chunk of my portfolio again. At age 47/49, we want to retire soon, time is not on our side to get too crazy IMHO

[2527]

This has got me thinking about how long it should take me. Anyone here capable of helping me calculate this? My investments are all with index funds at Vanguard, I currently have $230,000 there and am contributing $480 per week, or about $25,000 a year.

Ideally, I would love to retire once I hit 1M. I think I could.

Sit down with paper and a calculator.  230,000*1.08+25,000 is what you will have after one year (on average).  Take that number, multiply it by 1.08 and add 25,000.  That is the end of year two.  Do this till you hit $1M.  The 1.08 represents an average stock market return.  Use a lower or higher number, whatever you think is accurate.  Of course, the market doesn't return a fixed amount every year, but this will produce an estimate, and for long term projections, it produces an OK ballpark result.  I bet it will take about 13 years.

You can do this in a more elegant way with Excel, if you have some experience with it. 

Enjoy! 

[fmzip]

This has got me thinking about how long it should take me. Anyone here capable of helping me calculate this? My investments are all with index funds at Vanguard, I currently have $230,000 there and am contributing $480 per week, or about $25,000 a year.

Ideally, I would love to retire once I hit 1M. I think I could.

Sit down with paper and a calculator.  230,000*1.08+25,000 is what you will have after one year (on average).  Take that number, multiply it by 1.08 and add 25,000.  That is the end of year two.  Do this till you hit $1M.  The 1.08 represents an average stock market return.  Use a lower or higher number, whatever you think is accurate.  Of course, the market doesn't return a fixed amount every year, but this will produce an estimate, and for long term projections, it produces an OK ballpark result.  I bet it will take about 13 years.

You can do this in a more elegant way with Excel, if you have some experience with it. 

Enjoy!

His question was already answered:

at 2083 per month with 7% annual interest, 12 years

http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

[fmzip]

Glad we cleared that up :)

I'd like to ditch my cousin, just need to gain some confidence in building a balanced portfolio. What is this "FIRE" target you speak of and is that bogle forum on this site?

Thanks for the input and vote of confidence, much appreciated!

[Bigote]

The OP stated

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

If he/she didn't make 25% return 2012-2013, how much was contributed?? I'm assuming that's aggressive investing,  not in the 7-8%

Actually I added over a million in one day by downsizing my primary residence.   (See the 'making a $2MM deposit in your checking account' thread). 

In general, though, my gains were a mix of large contributions and decent - not preternatural - gains.   I've been a Boglehead investor since the dot com crash. 

[fmzip]

Thanks for clarifying.

I just started looking at the Boglehead forum as well. Very tempted to start handling my money again as I know it's costing me too much to have in managed for me

[Exflyboy]

Started saving when I emigrated to the US in '97 when I took out a 160k mortgage... then started paying that off which took 7 years.

So roughly I was at zero net worth in 97 +7 = 2004.

Not sure when I hit 1M.. 18months ago I took a package from my previous employer that stuffed $106K into my 401k.

So looks like my first (and only) million took 10 years

 Now at just shy of $1.25M, not including the house.

Of course this is funny money.. I have a large exposure to stock ETF's and we know a significant pullback is coming and probably soon.

Can't bring myself to pull out of the market though and have about $50k in cash ready to buy on a big dip.

Still planning to retire next April.. Just hope the big crash doesn't happen right before I quit..:)

Frank

[Mazzinator]

Thanks for clarifying.

I just started looking at the Boglehead forum as well. Very tempted to start handling my money again as I know it's costing me too much to have in managed for me

Hello and welcome!

I'd suggest starting a new post in Investor Alley or Ask a mustachian. You don't need to show your numbers, you can use percentages, if you don't feel comfortable.

From what I've seen on here, it takes most people about a yr to fully understand the ideals here (and personal finance in general) So, I would say, take a few months to "study" before making any drastic changes. And especially if you don't feel you can control yourself. Know thyself!!

These folks on here are plenty generous (of their time and knowledge) and would LOVE to help you out and answer basic and complex questions.

Good luck!!!

ETA: this thread is a mega inspiration to me! One day..one day..

[isleofthorns]

Am I alone in finding the whole "double comma" thing just a little crass?

As regards the topic, I would think it fairly obvious that the first million is likely the hardest for most who've achieved that or more. Similarly, further down the scale, I'm sure there are plenty more folk with negative or no assets and modest incomes would view a few thousand as a veritable mount Everest of targets!

My impression from this forum is one of above average earning professionals, able to save and grow their net worth, year-on-year, often in considerable leaps and bounds. Whilst everyone can benefit from taking steps to improve their finances, there is a large proportion of the population for whom a million USD is not realistic or feasible.

Seeing the 100k thread got me thinking about the million dollar thresholds.

I started working in 1990.   I crossed a million in net worth in 2001. 

It took me until 2006 to cross 2MM.  I dipped below briefly during the crisis, but for the most part stayed between 2-3 until 2010.

I hit 3MM in 2010.

I hit 4MM in 2012.   

I hit 5MM in 2013.

So basically it took me 11 years to get to the 1st million, 5 years to the 2nd, 4 years to the 3rd, 2 years to the 4th, and 1 year to the 5th.

I'm defining net worth conservatively, I'm not including home equity but I did subtract mortgage debt for the years that I had it.


Any other 2 comma club members want to chime in?

[Bigote]

It is certainly off limits as dinner party conversation goes but it is entirely ok in the 'share your badassity' forum on MMM.   This is a site where we can talk about accomplishments in saving, cutting spending, exercise, efficient living, or anything else that makes up the Mustachian lifestyle.