$500k! That elusive half-millionaire status is achieved! I targeted crossing this milestone in my 20’s but didn’t surpass the threshold until this week. Regardless, I’m pretty proud of being a half-millionaire at 30 years of age.
As encouragement to others, I have never exceeded the six figure salary threshold with my yearly engineering wages ranging between $60k-$90k over my eight year career. In fact, my total net earnings to date are less than my current net worth!
Also, I haven’t been an exemplary investor, far from it. As an investor, I assumed that as a savvy 22 year old armed with a computer, I could dominate the stock market with my stock picking abilities. Well, after countless bankrupt stock picks (Washington Mutual, Peabody Energy), fraudulent foreign companies with cooked books (a Chinese company farming seafood), chasing hot commodity gold and mining stocks all the way to bankruptcy (Yukon Nevada Gold, Cano Petroleum), and hot IPO’s (Lending Club plummeting from $30 per share to $5 per share), I’ve mostly learned my lesson. Frankly, I’ve been a terrible investor even with some good investments sprinkled in such as Visa’s IPO for a 500% return.
My investing atrocities have probably cost me at least another $100,000+ contribution to my current net worth tally compared to sinking the funds in an index fund to trend along with the stock market’s violent gains since starting my career in 2008.
I’ve since wised up to the passive indexed investing ways after reading Vanguard founder John Bogle’s literature plus JL Collins’ excellent stock series http://jlcollinsnh.com/stock-series/. My current allocation is approximately 70% indexed with the remainder divided between cash, lending club, and the holdovers from my stock picking portfolio.
I’ve carried excess cash to be conservative while typically having $40k-$70k cash in this net worth accumulation phase over the past 8 years. This certainly bogged down my performance and gains over the past eight years.
Despite not classifying as a high income earner, being an awful investor, and being too conservative for my age range, I’ve managed to surpass a milestone of a half million net worth in eight years that some never see after toiling 40+ years in their careers.
This is a testament to the power of frugality and the mantra of it’s not what you earn, but what you keep. The things I have done right include managing housing costs by living with roommates or finding frugal housing solutions. This allowed me to average less than $450 per month on housing over the course of my career near a major metropolitan area and invest the surplus.
My other smartest financial decision was avoiding car payments; instead, I paid $1,500 and $5,500 respectively for my two fuel efficient vehicles purchased during my career. Meanwhile, my friends and engineering co-workers purchased (or I should say financed) $50,000 plus tricked out diesel trucks, cash-sucking Beamers and Benz sports cars. They were baffled by my vehicle choice, making fun of it incessantly and I would as well in a self-deprecating manner. But I was laughing all the way to the bank using those savings to build my net worth snowball.
This also speaks to the power of compounding and investment gain adding to the net worth snowball since even with my investing ineptitude, investment gains account for over $100,000 of my net worth.
|YEAR||GROSS INCOME||NET INCOME @20% tax avg||SPENDING||SAVINGS||YEAR END NET WORTH|
|2008||$ 26,148||$ 20,918||$ 10,000||$ 10,918||$ 35,000|
|2009||$ 65,740||$ 52,592||$ 14,000||$ 38,592||$ 90,000|
|2010||$ 70,291||$ 56,233||$ 15,000||$ 41,233||$ 150,000|
|2011||$ 71,854||$ 57,483||$ 20,700||$ 36,783||$ 202,580|
|2012||$ 79,349||$ 63,479||$ 24,305||$ 39,174||$ 265,785|
|2013||$ 93,140||$ 74,512||$ 17,713||$ 56,799||$ 365,662|
|2014||$ 75,520||$ 60,416||$ 23,625||$ 36,791||$ 405,155|
|2015||$ 90,987||$ 72,790||$ 19,804||$ 52,986||$ 437,898|
|2016||$ 44,616||$ 35,693||$ 10,000||$ 25,693||$ 500,857|
|$ 617,645||$ 494,116||$ 155,147||$ 338,969||$ 500,857|
Here’s a little snapshot of my timeline en route to the end goal of financial independence with a pit stop here at this $500k milestone.
June 2008 (22 years old)- Graduate In-state university with bachelor’s degree. Net worth of roughly $15k from working in high school, college, and scholarships allowing me to prevent student loans.
$100k milestone February 2010- (23 years old)- Great timing to enter the investing game as I started investing in the trough of the recession with the Dow Jones Industrial Average (DJIA) dipping from 15,000 points to under 7,000 on up to 10,000 points in May 2010.
$200k milestone March 2011- (24 years old)- Hit $200k milestone just over a year after surpassing $100k. This was a great period for investing again with the DJIA climbing north of 12,000 for over a 20% year over year gain.
$300k milestone May 2013- (26 years old)- Eclipse $300k mark. This was my longest $100k interval to date at over 2 years. May 2013 left the DJIA north of 15,000 points. I also saved my greatest yearly amounts over this timeframe. My personal stock picking hit a very rough patch after a heavy emphasis on gold and commodity stocks brought a tumble. At this point, I started shifting away from the stock picking to more of an index focused approach. Prior to that point, my retirement accounts were indexed and personal investing accounts were my stock picks.
$400k milestone June 2014- (28 years old)- $400k with DJIA= 16,500
$500k July 2016- (30 years old)- $500k At DJIA 17,700
I want to share the message with everyone that you don’t need to be perfect to accomplish great things financially. I’ve made huge mistakes along the way and still remain on track for financial independence in my early 30’s. By being persistent and different from the crowd, you can achieve amazing things.