Author Topic: Fastest way for me to become a millionaire  (Read 3595 times)

minimalistgamer

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Fastest way for me to become a millionaire
« on: February 06, 2019, 08:47:50 PM »
Fastest way for me to become a millionaire

I currently have $208,388.32 invested in the following manner -

- 401k - FXAIX - $47,727.00
- 401k - FSSNX - $18,153.12
- 401k - FSMAX - $7,395.94
- Vanguard Brokerage - VTIAX - $7,499.49
- Vanguard Brokerage - VTSAX - $62,311.75
- Roth IRA 1 - VTSAX - $35,014.74
- Roth IRA 2 - VTSAX - $16,852.70
- HSA - VASGX - $1,371.15
- 401k - 2 - ZBGRIT - $8,926.46
- 401k - 2 - ZBGRNT - $3,135.97
- TOTAL - $208,388.32


I want to get to a million dollar net worth as quickly as I can.

Based on the math I did, if I invested $51,000 each year in the following manner -

- 401k - 1 - $19,000
- 401k - 2 - $14,000 (Wife’s 401k provider does not allow contributing more than 50% of the paycheck, and that comes up to around $14,000 per year)
- Two Roth IRA accounts - $12,000
- Taxable investment account - $6,000
- Total - $51,000

In 10 years, at 5% compound interest, I will have - $1,026,195.55.

This means, investing $4250 per month for a period of 10 years. I am committed to do this, but before I embark on this daunting task, I wanted your opinion on this. Is my math correct? Is there anything else I am missing? Your advice is much appreciated.

If there is anything else you need to know about my financial situation, please let me know. Thanks!

use2betrix

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Re: Fastest way for me to become a millionaire
« Reply #1 on: February 06, 2019, 09:08:29 PM »
When I plug your numbers into this calculator I get 1,352,000 in 10 years. What am I missing?

https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator

i_have_so_much_to_learn

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Re: Fastest way for me to become a millionaire
« Reply #2 on: February 06, 2019, 09:20:33 PM »
I calculated about 1 million after doing this for 10 years (see attachment).

This is a great idea. Keep in mind that local minimums and maximums will exist. If you check your numbers frequently, they may be higher or lower than what you've planned, but stay the course and take emotion out of it.

You might also consider buying up assets and decreasing liabilities.

Have you read "Rich Dad, Poor Dad"?

use2betrix

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Re: Fastest way for me to become a millionaire
« Reply #3 on: February 06, 2019, 09:28:32 PM »
I calculated about 1 million after doing this for 10 years (see attachment).

This is a great idea. Keep in mind that local minimums and maximums will exist. If you check your numbers frequently, they may be higher or lower than what you've planned, but stay the course and take emotion out of it.

You might also consider buying up assets and decreasing liabilities.

Have you read "Rich Dad, Poor Dad"?

Blah. Operator on my end. I somehow used 10%. Blahhhhh

minimalistgamer

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Re: Fastest way for me to become a millionaire
« Reply #4 on: February 07, 2019, 05:10:18 AM »
I calculated about 1 million after doing this for 10 years (see attachment).

This is a great idea. Keep in mind that local minimums and maximums will exist. If you check your numbers frequently, they may be higher or lower than what you've planned, but stay the course and take emotion out of it.

You might also consider buying up assets and decreasing liabilities.

Have you read "Rich Dad, Poor Dad"?

Thank you for your response.

I am not sure what you mean by local minimums and maximums.

I check the numbers once  a month. I will absolutely keep emotion out of it, and I will automate the finances to the extent that I can, so that I don't have to do much manually.

Yes, I did read Rich Dad, Poor Dad. Great book. So, I don't have liabilities, unless we are counting my paid off home as a liability.


Bird In Hand

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Re: Fastest way for me to become a millionaire
« Reply #5 on: February 07, 2019, 06:19:37 AM »
I am not sure what you mean by local minimums and maximums.

Peaks and valleys -- your account balances won't march steadily up at a 5% clip, but over longer periods of time it will hopefully work out to be 5-10%/yr on average.

Rather than assuming a flat 5%, the best way to look at this IMO is using FIRECalc/cFIRESim.  Here is a link to the FIRECalc data for your situation.  You can tweak the numbers on the 'Your Portfolio' tab to more closely resemble your situation, then click 'Submit' to see the results.  The attached image shows that your average ending balance over all 10 year periods in the stock market would have been ~$1,064k.  That's inflation adjusted (assuming 3% inflation).


Car Jack

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Re: Fastest way for me to become a millionaire
« Reply #6 on: February 07, 2019, 07:22:04 AM »
If you're willing to damn the volatility, put everything into total stock funds.  No bonds.  It'll move more along with the market but the return should be higher.

You mention what you're doing with your and your wife's jobs.  What are you doing with the money from your extra part time job and your wife's extra part time job?  If the goal truly is to get to a million dollars as quickly as possible, there isn't some magical passive thing you can invest in and get there.  You simply have to invest more.  An added benefit is that you'll likely hit the max social security number.....and won't have to pay taxes beyond that.  With the part time jobs, you'll end up overpaying and get it back with your tax refund.

Also having a hobby you find fun that brings in a little money can help a bit.  Personally, I scrap electronic junk for fun.  I've always loved taking things apart (I'm an engineer, so this is how I'm wired) and it's just a matter of throwing stuff in separate boxes and taking it to the e scrap yard when I'm in the area and walking away with a Benjamin or two.

minimalistgamer

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Re: Fastest way for me to become a millionaire
« Reply #7 on: February 08, 2019, 06:00:41 AM »

Peaks and valleys -- your account balances won't march steadily up at a 5% clip, but over longer periods of time it will hopefully work out to be 5-10%/yr on average.


Thank you. I will check it out. Of course, we cannot assume that we will ever get a steady growth (or even anything close to it), I felt an average of 5% ROI is acceptable to assume. That said, it could all just to hell...but I hope not! :)

If you're willing to damn the volatility, put everything into total stock funds.  No bonds.  It'll move more along with the market but the return should be higher.

You mention what you're doing with your and your wife's jobs.  What are you doing with the money from your extra part time job and your wife's extra part time job?  If the goal truly is to get to a million dollars as quickly as possible, there isn't some magical passive thing you can invest in and get there.  You simply have to invest more.  An added benefit is that you'll likely hit the max social security number.....and won't have to pay taxes beyond that.  With the part time jobs, you'll end up overpaying and get it back with your tax refund.

Also having a hobby you find fun that brings in a little money can help a bit.  Personally, I scrap electronic junk for fun.  I've always loved taking things apart (I'm an engineer, so this is how I'm wired) and it's just a matter of throwing stuff in separate boxes and taking it to the e scrap yard when I'm in the area and walking away with a Benjamin or two.

I am willing to face the volatility. I have enough cash reserves to last me a while if things go south, so I am willing to take the risk. I also have a paid off home, so the things I need to account for are maintenance, taxes and insurance, and this leaves me a lot more cash flow.

I do not have a part time job...I wonder if I should try to get one, or at the very least a money making hobby...

jojoguy

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Re: Fastest way for me to become a millionaire
« Reply #8 on: February 09, 2019, 10:41:12 AM »
You are doing similar to what I am doing. That is thanks to the many friends like @TexasRunner on here who have given some great advice. I have one question though: Why two Roth IRAs instead of traditional IRAs?

charis

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Re: Fastest way for me to become a millionaire
« Reply #9 on: February 09, 2019, 10:48:03 AM »
Same question about tIRAs. Also, I would recommend putting that last 6-7k in an HSA if you can, tax free. Do your 401ks have a match?

minimalistgamer

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Re: Fastest way for me to become a millionaire
« Reply #10 on: February 11, 2019, 04:43:18 AM »
You are doing similar to what I am doing. That is thanks to the many friends like @TexasRunner on here who have given some great advice. I have one question though: Why two Roth IRAs instead of traditional IRAs?

I am already maximizing my 401k, and contributing 50% of my wife's paycheck towards her 401k, therefore, I felt it was best to open a Roth IRA because that will give us some tax free growth. Is there anything wrong with this plan?

Same question about tIRAs. Also, I would recommend putting that last 6-7k in an HSA if you can, tax free. Do your 401ks have a match?

My wife does not have an HSA. She has an HRA through her employer. I do not get a 401k match. My wife gets a 6% match.

charis

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Re: Fastest way for me to become a millionaire
« Reply #11 on: February 11, 2019, 11:58:54 AM »
You are doing similar to what I am doing. That is thanks to the many friends like @TexasRunner on here who have given some great advice. I have one question though: Why two Roth IRAs instead of traditional IRAs?

I am already maximizing my 401k, and contributing 50% of my wife's paycheck towards her 401k, therefore, I felt it was best to open a Roth IRA because that will give us some tax free growth. Is there anything wrong with this plan?

Same question about tIRAs. Also, I would recommend putting that last 6-7k in an HSA if you can, tax free. Do your 401ks have a match?

My wife does not have an HSA. She has an HRA through her employer. I do not get a 401k match. My wife gets a 6% match.

Do you have access to an HSA?  If it's cost effective, I would switch to a family HSA next year if either of you can get one.  You can include the matching funds in your calculation.   I would use a tIRA if it's tax deductible and you expect your income to decrease in retirement.

jojoguy

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Re: Fastest way for me to become a millionaire
« Reply #12 on: February 12, 2019, 04:07:48 AM »
You are doing similar to what I am doing. That is thanks to the many friends like @TexasRunner on here who have given some great advice. I have one question though: Why two Roth IRAs instead of traditional IRAs?

I felt it was best to open a Roth IRA because that will give us some tax free growth. Is there anything wrong with this plan?



 https://www.madfientist.com/traditional-ira-vs-roth-ira/  <I love this guy's stuff!

Car Jack

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Re: Fastest way for me to become a millionaire
« Reply #13 on: February 12, 2019, 06:32:59 AM »
I do not have a part time job...I wonder if I should try to get one, or at the very least a money making hobby...

Between the choices, a "real" part time job is going to bring in money faster because you end up working more paying hours.  When I first graduated college, I started working in my first engineering job.  About 60 days later, just as company paid hotel stays were ending, I bought my first house with my fiance and a boost from my parents for the down payment.  But I didn't just rely on my income and my wife's income to pay the bills.  I worked some nights and weekends at a gas station.  It wasn't a lot of money, but it was low stress.  When there were no customers, I'd clean and wax my car.  The cool thing with a part time job like this is that you don't rely on the money.  So if you can't work a shift they want you to work and threaten you that your job is threatened if you don't work the shift, you can simply not show up.  Who cares if they fire you?  It's sort of practice for when you do FIRE and take jobs just to have enough income to fill your Roth account.

jojoguy

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Re: Fastest way for me to become a millionaire
« Reply #14 on: February 13, 2019, 05:02:19 AM »
I do not have a part time job...I wonder if I should try to get one, or at the very least a money making hobby...

Between the choices, a "real" part time job is going to bring in money faster because you end up working more paying hours.  When I first graduated college, I started working in my first engineering job.  About 60 days later, just as company paid hotel stays were ending, I bought my first house with my fiance and a boost from my parents for the down payment.  But I didn't just rely on my income and my wife's income to pay the bills.  I worked some nights and weekends at a gas station.  It wasn't a lot of money, but it was low stress.  When there were no customers, I'd clean and wax my car.  The cool thing with a part time job like this is that you don't rely on the money.  So if you can't work a shift they want you to work and threaten you that your job is threatened if you don't work the shift, you can simply not show up.  Who cares if they fire you?  It's sort of practice for when you do FIRE and take jobs just to have enough income to fill your Roth account.

That idea has been hitting me lately too. I`m kind of poking around looking for an easy but steady part-time job just to fund one of my retirement accounts.

talltexan

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Re: Fastest way for me to become a millionaire
« Reply #15 on: February 20, 2019, 08:18:06 AM »
I notice that your holdings are focused on VTSAX.

Consider exploring a tilt to Small Cap and Small Cap Value. You can add some % points to your return each year, while keeping risk roughly constant.

I've learned more about this via Paul Merriman. Within my taxable account, I use IJS to buy an index in this asset class.

sol

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Re: Fastest way for me to become a millionaire
« Reply #16 on: February 24, 2019, 08:20:15 AM »
It's a good plan in isolation, but hard to evaluate without some idea of your income.  If you're earning $200k per year and only investing $50k of it, then getting to a million dollars in ten years isn't going to help you very much.  You'd still be a long way from retirement because you'd be spending too much for that million to support for very long.

As a rule of thumb, this community recommends targeting 50% of your income for savings.  70% or more, if you're a high earner, because that's the kind of savings rate that leads to truly early retirements.  Remember that the greatest progress towards your retirement goal comes from learning to spend a dollar less, not save a dollar more.  A dollar saved helps too, but learning to live on a dollar less translates into an entire lifetime of reduced withdrawals from your nest egg, and that's worth a lot more.  Reducing your fixed costs makes all the difference in the world.

Depending on your income and tax situation, you might consider that many people on this forum have accelerated their FIRE plans by buying real estate.  In my case, each time I moved and bought a new house I turned the old one into a rental property, and my renters started paying down my mortgage for me in addition to providing me a little bit of cash each month.  You can buy on leverage (with a mortgage) and have someone else (your renter) pay the borrowing costs, and then there are significant tax breaks involved with owning rental properties, at least in the short term.  Some people here own 10 or 20 rental properties, and have made it their primary pathway to retirement.

nirodha

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Re: Fastest way for me to become a millionaire
« Reply #17 on: February 24, 2019, 07:33:03 PM »
I'd think a little more about how you want to keep score.

Should you adjust for inflation? Today's millionaire has higher spending power than the future's millionaire. I set a goal of a million in 2002, that bar inflation adjusted is 1.4 million now.

Should you discount pre-tax dollars in your 401k? They are not the same as cash in hand.

Will you count the value of a residence? Expected social security benefits? Your collectible beanie babies?

talltexan

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Re: Fastest way for me to become a millionaire
« Reply #18 on: February 25, 2019, 08:22:17 AM »
Truth.

Roth IRA money is worth more than the same amount of money in a tax-deferred account. It's also harder to get.

BlueHouse

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Re: Fastest way for me to become a millionaire
« Reply #19 on: March 09, 2019, 11:01:14 AM »

I recommend joining this thread.  It helps keep you on track monthly for a yearly savings goal

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/save-50k-single-100k-couple-in-2019

CorpRaider

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Re: Fastest way for me to become a millionaire
« Reply #20 on: March 20, 2019, 07:07:03 AM »
I feel like someone has to channel the ghost of boarder42 here: "How much equity do you have in your personal residence?  A potentially big, obvious lever to increase your portfolio growth might be to free up the capital trapped in your personal residence (perhaps via a sale or cash our refi with the longest term you can get) and invest it in productive assets."
« Last Edit: March 20, 2019, 07:19:50 AM by CorpRaider »

letsdoit

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Re: Fastest way for me to become a millionaire
« Reply #21 on: April 17, 2019, 09:23:47 AM »
thank you everyone for this review of the foundations