Author Topic: How Long to Re-Double Net Worth?  (Read 2648 times)

MyAlterEgoIsTaller

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How Long to Re-Double Net Worth?
« on: November 14, 2019, 01:15:48 PM »
June 27, 2016 was the day that I figured out my net worth in $, for the first time ever.  Today is the day that it reached twice that amount.  3 years, 4 months, and 19 days later.

I'm not judging myself on whether that's a good or bad amount of time. 
But I'm wondering whether it should take shorter or longer to re-double.  On the one hand it's a much huger amount - one that sounds difficult to me, so wouldn't that take a lot longer?  On the other hand I've got more money to make money with, and I'm a little smarter about money.
What do you think?  How long should or will it take?

TheAnonOne

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Re: How Long to Re-Double Net Worth?
« Reply #1 on: November 14, 2019, 01:25:10 PM »
June 27, 2016 was the day that I figured out my net worth in $, for the first time ever.  Today is the day that it reached twice that amount.  3 years, 4 months, and 19 days later.

I'm not judging myself on whether that's a good or bad amount of time. 
But I'm wondering whether it should take shorter or longer to re-double.  On the one hand it's a much huger amount - one that sounds difficult to me, so wouldn't that take a lot longer?  On the other hand I've got more money to make money with, and I'm a little smarter about money.
What do you think?  How long should or will it take?

Assuming all is equal it will take LONGER to double the next time.

This is because, again all being equal, your income will have a muted effect, in percentage terms, against your net worth.


If you wanted to go from $1000 to $2000 in VTSAX, you could probably do that through saving in a day, growth has nothing to do with it.

If you wanted to from $1,000,000 to $2,000,000 even making $250k a year it would take years, even with growth.

Eventually, you will double every decade or so, in line with regular stock market growth, slower if you lean conservative.

Laura33

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Re: How Long to Re-Double Net Worth?
« Reply #2 on: November 14, 2019, 01:31:48 PM »
Have you heard of the rule of 72?  Basically, rate of return x time in years to double = 72.  So if you get a 7.2% return, your money will double in 10 years; if you get a 10% return, it will double in 7.2 years.  Etc.

There are two things to consider.  First, if you are looking at something like "time to $X," the first $X takes forever, and the ensuing ones get faster and faster, because each $X becomes a smaller and smaller portion of your overall investments.  So for ex., say you have $100K and you get a 7% return, so it doubles in 10 years.  Well now, at that same rate, it would double again in another 10 years.  But at that point, you're doubling $200K into $400K -- NOT just adding another $100K on.  So it will take your money far, far less time to generate $100K than it did the first time, because you're working from a larger base.  However, the time to DOUBLE the current amount in the account stays the same, as long as the interest rate you receive is the same.

The second thing to consider is probably what is happening here:  I am assuming you're not just letting some existing money ride, but instead are adding to it over time.  So maybe that first $100K took you 10 years.  If you let it sit all on its own and get a 7% return, per the above, that money would double on its own in the next 10 years.  But you're not letting it sit -- you're still making additional contributions as well, and those are also growing.  So your $100K will become $200K much sooner than 10 years from now, because you're adding more money to help that growth along.

Make sense?  If you want anything more detailed, there are any number of calculators on the web that can tell you how long your money would take to grow from X to Y if you continue to contribute $Z each month.

Boll weevil

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Re: How Long to Re-Double Net Worth?
« Reply #3 on: November 14, 2019, 01:39:57 PM »
There are a lot of variables that go into increasing net worth... how much did you start with, what was your income, what did your assets do during that time, etc.

I do think that for your first few years, the growth of your net worth will be strongly dependent on how much you can save. In the later stages, it’s likely that the behavior of your stocks, funds, and/or real estate will become dominant.

As a result, there’s no real good or right answer for how long it should or will take.

BTDretire

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Re: How Long to Re-Double Net Worth?
« Reply #4 on: November 15, 2019, 07:30:34 AM »
With my net worth statement in front of me, the dates 12-31-11 to 12-31-17 I doubled, so it was 6 years. But, we went from 1M to 2M, so monthly savings had less influence than if it was a lower amount. It was mostly stock market gains.
That was a fun ride! It was a joy checking my net worth every three months.

neil

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Re: How Long to Re-Double Net Worth?
« Reply #5 on: November 15, 2019, 12:46:08 PM »
Agree with the power of saving reducing over time, but it's also important to realize returns are pretty noisy and can impact the "time" it takes.  It's important to keep in mind if you're saving more and your net worth is going down, you do physically own more physical investments and falling in valuation from time to time is part of the process.  I also definitely outpaced inflation with saving so that still helped keep the process accelerated.

If I work backward from today, this is how long it took for me:
- 4 yr 3 mo <-- high return
- 3 yr 4 mo
- 2 yr 5 mo
- 3 yr 7 mo  <-- low return (possibly negative, even)
- 1 yr 11 mo

habanero

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Re: How Long to Re-Double Net Worth?
« Reply #6 on: November 15, 2019, 12:58:02 PM »
One of the things I find most annoying with some FIRE blogging is confusing expected returns with guaranteed returns. "I can retire in X years" is based on a lot of assumptions, and where X is reasonably short, in real life returns can be close to zero or even negative over a decade. What will end up relevant for someone looking a decade into the future is what actually happens in that specific decade, not what's expected to happen or what has historically on average happened during a decade.

For any given timeframe actual results can vary wildly. With powerful saving and low expenses you are extremely likely to eventually get there, but it might take quite a few years longer (or shorter) than originally anticipated. And markets taking a massive nosedive can be noise in a very long time-series, but it sure ain't noise if it happens in your own relevant timeframe and the recovery takes a long time.

10 years from now returns can be anything and are probably unlikely to be anything like the last decade which happens to start very close to the very bottom during the financial crisis, from which the recovery was pretty quick (as was the market crash). The .com bubble took 2.5 years to reach the bottom and 7 years later the financial crisis bottomed out.

The odds are well skewed in your favour long-term, but that's not the same as it turn out very good in your particular timeframe. It also can turn out very good relative to expectations, but the downside matters more than the upside - especially once you start living off your nest egg. If you have "enough" then it's more important not to loose a lot of money than making a lot of money.

YttriumNitrate

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Re: How Long to Re-Double Net Worth?
« Reply #7 on: November 15, 2019, 01:02:58 PM »
Luckily, Fidelity keeps track of these sort of things since I certainly don't.

Feb-03 == Start
Sep-03 == First double
Jun-05 == Second Double
Feb-07 == Third double
Nov-09 == Fourth Double
Nov-12 == Fifth Double
Feb-17 == Sixth Double
???   ===  Seventh Double

It does look like each successive double has taken longer.

EDIT: The post-2009 dates should probably be moved up a smidgen to account for real estate equity.
« Last Edit: November 15, 2019, 01:06:56 PM by YttriumNitrate »

MyAlterEgoIsTaller

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Re: How Long to Re-Double Net Worth?
« Reply #8 on: November 15, 2019, 01:07:08 PM »
Thanks for all the responses.  I understand the math of why it should take longer the next time, and the unpredictability of returns, and that there are a lot of factors...   I'd kind of like to imagine that it's just a matter of competing valiantly against my past self, and coming up with a strategy and working hard at it - which does work up to a point, for some things, like making my electric bill lower every year - but I can see how for this, as the money grows, eventually the factors that affect it more are the ones that are less in my direct control.

DadJokes

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Re: How Long to Re-Double Net Worth?
« Reply #9 on: November 15, 2019, 01:47:27 PM »
All of our doubles going back to the start of my investing life:

1st: 2 months
2nd: 4 months
3rd: 8 months
4th: 1 year, 3 months
5th: 2 years, 11 months
6th: 2 years, 2 months
7th: 1 year, 7 months
8th: 5 months
9th: ? (1 year projected)

My recent ones have been pretty fast, but that's only because I didn't discover MMM until a year ago.