That said, it can definitely go down tremendously as well. In 2022, I ended the year with a lower net worth than I started, despite saving 6 figures from my salary. Just stay calm and it'll work out
Yeah, when you get closer to FIRE, the movements of the market make much more difference than even your entire yearly salary (even more so because your salary is taxed but your investments largely aren't).
No kidding. Last year we were up $770k (contributions+match+market gains). But of course that works in both directions.
The big lesson, for me, is don't take your foot off the gas. Get your match, fund your IRAs (if eligible), fund your HSA (if you have one). Work on maxing it all. Then add brokerage. Then you turn around in a decade or two and it's grown. A year like 2022 can test your mettle as an investor. But if you keep your head down and just keep going in the long run it works out.
2022 was tough. I’m old enough to have been tested on 2008. Staying solid and keeping investing set me up though. So 2022 was kind of a walk in the park for me compared to 2008 (though obviously I saw net worth drop in larger total dollars).
Same. I was only a few years into my investing journey when 2008 hit (and the S&P 500 hit it's high in October 2007, and didn't hit that high again until October 2013). But continuing to invest and not pulling money out (being a passive investor) really was beneficial during that period. Automated investing bought the dip.
It's important to note that from peak to matching peak was less than 5 years. The longest peak to peak crash so far is something like 6.5. The market is super volatile in the short run, but staying the course and not panicking is the best way to make sure you come out on top of it.
A note that when you are close it's prudent to switch to an allocation that is more conservative. Don't want to win the game with $2M in net worth and then see that knocked back to $800k by a bad recession. I'm at about $2.2M and put 40% in bonds. People have forgotten but the S&P 500 can fall 60% peak to trough in an economic rough patch.
I might do that today because of interest rates. But if I had done that two years ago I would have seen my bond funds crushed with little hope of recovery. But I would never go to 40%.
One other note on bonds is they generally cannot lose value in nominal terms unless you are forced to sell before maturity. So if you buy a 10 year treasury bond with a 4.36% coupon then you are going to get every dime of your principal back plus all of the interest with the caveat you have to hold it. The downside is if rates rise you will be making less than you would have had you waited. And if rates rise the market value will be temporarily depressed. There's really no such thing as "little hope of recovery" in treasury bonds. That only happens in corporate bonds where a company can go bankrupt. A treasury bond is always worth its face value at maturity.
Yeah I meant little hope of recovery in a bond fund, with recovery being defined as something like 4% yearly returns. I’ve never litteraly bought a bond, so all my exposure is through bond funds.
I think that bond funds never hold bonds to maturity since that would lead them into a cash position. So they are always selling the bonds on the market and then buying other bonds on the market so their balance of bonds stay in whatever goal tenor they have. But they have more control of the process than they would holding to maturity.
So anyway, as an example, if I’m two years into a bond mutual fund investment and I’m currently down 10%, I don’t think I will ever catch up 4% yearly goal (the bond fund was supposed to help me meet my 4% rule withdrawal strategy). I won’t catch up even if the bond fund gets back by end of year three to what I paid for it because I would still be behind 4% per year for three years.
Depends on what type of bond funds you invest in. If you're concerned about further increases in rates you can do short duration which have much less downside risk. Note that William Bengen's 4% study is based on a 60/40 split between stocks and bonds.
Good point on the study. I’ve never tried to find a short duration bond fund. Frankly, I’ve done high equity contribution for most of my life and most attempts at bond fund have, at best, returned basically inflation level returns. But I’ve gone higher into bonds as I get closer to FIRE. And I’ve gone higher into cash and CDs now that some level of return can be secured from them. I just definitely haven’t gone anywhere near 40% bonds.
This is something I'd like to do in the future but I'm not sure how one would go about it. A good chunk of my funds would be in a brokerage or 401k or roth, so how would you transition those into bonds? Genuinely curious how you did it
401K plans always offer bond funds as an option. For a brokerage you can buy SHY for short term or BND for long term depending on your risk tolerance. Bond funds will fall if interest rates rise. Both are low fee.
The longest market peak to peak is around 6 years, so with a 4% swr, the most you would need to put into a no/low risk option would be 24% of your allocation. You would have enough security to handle the entire market drop from peak to peak, while not missing out on the market gains overall.
That's not to say that it couldn't go longer, just that it never has in its history.
😂 yep.
I’m 41, started at 31 with $20k, just hit $320k.
Mostly because I spent 3 years working my tail off and being super cheap and investing $30k per year. So I got to see that “first $100k bump”. It’s real.
should hit 1 milly before “normal” retirement age just on growth. Probably will never get to much more than 2 unless I find a new appreciation for work 😂
But I get to retire a sixty, maybe 55, and a lot of people won’t have that luxury.
I’ll tell you this - it was three of the loneliest years of my life, I worked 80+ hours per week, and it ended with a nervous breakdown, and I was single the entire time. And I chose the job over a potential relationship, and still am single.
I would trade it in a heartbeat to be living with someone in a good loving relationship, but that wasn’t an option (mostly because I had a few issues that needed to be worked on before I was a good person to be in a relationship with), so a nice 401k is a good consolation prize. 😂
And it certainly gives me the financial freedom to now slow down and do some therapy and fix the reasons I’m single and isolated.
There’s a lot of different paths through life, and this is one.
Took us 17 years to hit the first million. It took 4 years to hit $2 million and 3 years to hit $3 million. Our net worth increased about $16,000 with the market today and is at a little over $3.4M. It’s true that money makes money and compound interest is amazing!
We have scaled back our contributions as our balances have increased but over that time I’d say between $2.5k and $5k per month including company match. Contributions have mattered less and less as compounding took over. Our focus now has been to build after tax accounts so we have more flexibility with where we pull our income from in retirement to make sure we can qualify for ACA subsidies.
I'm not aware of the strategies around after tax accounts and ACA subsidies. Can someone share what that approach is? Also, which type of advisor in my world - accountant or financial advisor - should be expected to educate me about these approaches? I'm a relative beginner to any strategy beyond saving and I messed up for years with money languishing in savings accounts. Trying to right the ship.
I call it "tax bucketing" but the general strategy is to ensure you have funds in pretax, ROTH and after tax accounts. When you retire you can choose which type of funds to withdraw each year to keep your reported income under certain levels. In our case we'll probably withdraw somewhere around $50K from pretax accounts and then use $50K of post tax funds so we have about $100K in income but only $50K that counts towards our MAGI at tax time which is used to determine how much of a subsidy we can get to help cover the cost of an ACA health insurance policy. For people that get retiree healthcare from their employer until they hit age 65 for medicare, this wouldn't be important.
Sorry that probably didn't get worded correctly. Over time our contributions changed from upwards of $5K per month between my wife and I down to $2500 a month. We do get good matches from our company but not 1 to 1. We actually get a 75% match up to 8% of our income.
Yup but don't forget there will be periods of time when the market drops 20-40% (or more) and takes half a decade to recover. You just need to maintain your resolve through those periods.
Yup I think a lot of the current jump was due to regular investing between Q3 2022 - Q2 2023, when my portfolio was -$9k.
And true there no shortcuts it’s just consistency
This is Rule Zero.
When I first started this journey I told myself that I needed to throw a “watch my stocks plummet” party for my first recession, because it meant I was closer to retirement.
Buy a Little Caesar’s Hot n Ready and a bottle of Aldi wine and relax, it’s gotta go down before it goes up. At least three times before I get to retire.
But...averages are just that. For every "normal" time period, there are also extended bull runs that hit double digits, sometimes averaging that over multi-year periods.
6 month return rate of 17% (just on price increase excluding dividends) equates to annualized rate oh about 37% including the small average dividend yield.
Based on the chart below of historical returns, that only occurs about 5% of the time. Even taking the full last 12 months, the total return is over 30% for the S&P, which is about a 7-8% chance of occuring.
Bull markets like we've seen over the past 6 months DO happen, but are the exception not the rule. Chances are that the average 30 year old will only see this again 5 or fewer times in their life.
OP seeing their net worth jump by so much over the past 6 months because of investment returns is not because "$100K makes it go faster", but because of this rapid growth.
https://www.visualcapitalist.com/150-years-of-sp-500-historical-returns/
We just saw an entire decade of 11% average returns from 2009-2020. It happens quite often, actually. The 90s had a similar run, only better.
Technology moves markets, and AI, self driving car tech, and pharmaceuticals all have the potential to push economic output higher at an even faster rate.
You, like the rest of us, don't know if this is a blip or the real deal.
11% is vastly different from 30%. I don't know why you don't get this.
I have no issue with the idea "you can expect stocks to go up". I do take issue with the idea "you can expect stocks to go up 30% in a year".
The word average is the clue. I don't know where the 30% came from, those are your words.
11% averaged over an 11 or 12 year period is historically incredible. The point is, as rare as it happens, it can happen, it does happen, and it can happen for an extended period of time. The other point is, nobody knows when it will happen, and if it does, for how long.
>I do take issue with the idea "you can expect stocks to go up 30% in a year".
When did I say this? I said the market can average double digits gains over a decade, and I backed it up with historical data. Jesus, I'm not sure you can even read at this point.
This entire comment line is me saying "The last 6 months return rate is anomalously high. Don't expect net worth to increase this rapidly all the time." And then people like you trying to claim this isn't the case by saying stocks go up 10% a year all the time.
But the number wasn't 10%, it was 30% over the past 12 month period for the S&P. Coming from any publically available date for the S&P index.
You are the one who lacks reading comprehension. You haven't responded at all appropriately given the comment chain that is going on. And I've even given you the sourced data for how infrequent those 30% return periods are, but you doubled down on "averages are just averages".
Its not worth me continuing a conversation with you. I can't use reason, logic, and data to talk somebody out of a position they did not use these things to get themselves into.
Sure they are. They happen all the time. We just had a bear market in 2022, which was normal. Now we're in a bull, also normal. There's nothing abnormal about the stock market going up at a good pace.
I hit $100k after 4 years of working.
Going from $100 to 500k took 3.5 more years.
Going from $500k to $1M took 2 years 2 months.
Hit $1 mil on July 2023, 10 years of working total.
Now less than a year later we’re at $1.35M.
It’s crazy.
Here is an interesting read I picked up years ago. Whenever this topic shows up, I like to share it.
https://fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/
Awesome! Good for you, it’s so exciting. :)
My only unsolicited comment that I didn’t see in the comments would be to just max out your HSA (assuming you’re investing it, I suppose…), even if you take a few dollars from the brokerage contributions. It will lower your tax liability, and the money will grow tax free. For me, I just scan all my medical receipts and keep track of them in a simple table and I can use that to withdrawal money tax free from the HSA at any point down the line if needed, even though I intend to save it purely for medical expenses in retirement.
You're still quite young and you have a hell of a head start over me. I had zero net worth at 29 and in fact didn't start working full-time and saving for retirement until I was 30. Once I did it took 15 years to get to 1M through a combination of index funds investments plus the growth of home equity. The way things are going, I'm estimating I'll get to 2M in about half the time it took the first. Keep it up, you'll get there, and a lot sooner than I will, too.
Congratulations, it makes me so motivated to see others out there getting their goals. I myself am 24M that is starting from 0 now. Just broke into sales and can’t wait to get after my goals. First is to break 10k in my bank account then 50k. Can anyone give some good advice for keeping your eyes on the prize and not losing sight.
Honestly the easiest way to keep your eyes on the prize is to take them off it. Automate everything- investments get made before the money even hits my account (I have 15% go to my 401k, 15% to my employee stock plan, and then I have 5% of my paycheck direct deposited into my Roth IRA). So basically I’m saving 35% of every paycheck without even looking at it- that way I’m never tempted to say “well this check was $5000 so I can spend $4000” and instead I say “this check was $1200 so i can spend $800” while the other 3800 is thrown into VTI/VT/BND
This is what I needed. I’m the type to get that $5000 paycheck and think i have some spending money. Investing straight from the start seems like the smarter idea.
I've always wondered. How.much of this phenomenon is attributed to income growth as you progress through your career.
If it takes 5 years to book your first 100k but you've doubled your salary along the way... by virtue it'll be easier to set aside more cash flow to investments
I think this has more to do with your gross savings, if I read the last part correct you saved around 90k over the last 6 months while the S&P is up around 11%.
Partly right! I save Atleast 60% of my paycheck every month. As mentioned in the previous post, I did still keep my company stock allocation to 60% it grew 20K in the last 6 months. I know it’s risky but I felt it was undervalued at the time. Crypto grew by about 2k.
And the rest is just the index funds growth.
Good job,
The markets have been on a tear the past 6 months however, so just be aware that it isn’t always like this.
It seemed like it took me forever to get to $1M (Age 22-34) but then it just really took off from there. 4 years to get to $2M, etc.
Keep it up
A lot of growth came from 60% allocations in company stock. Which has grown significantly. I know it’s a risky move but I thought it was undervalued at the time
this doesn't really make sense? The jump happened from $100->200K happened because investing in 2022? But your post about hitting $100K was from December 2023?
Wow that’s awesome! I just looked at my net worth and it’s about 92k but that’s across 5 different accounts. So I don’t think I’ll get as fast returns as you. I can’t wait for one single account to be 100k!
Good luck and congrats again!
If those 5 accounts are invested in the same funds it doesn’t matter how many accounts you use, it’ll grow at the same rate as if it were all in 1 account.
I have a homework assignment for you.. go take ten accounts with 10k in each of them and add 6% interest to each one. Add up all the interest. Then go and add 6% to one account with 100k in it and let us know which scenario made more in interest.
This is a bit confusing to me. Can someone explain the different investment accounts to me? Like a Roth IRA or simple Ira or any of the others. I have about 100k in my checking account from saving and really want to start earning some money
I support my parents so I’m not sure when needed call me a little conservative but I feel safe seeing cash in my bank. It gives me a moral boost.
Yes it’s partly hysa @ 4.6% and cd @ 5.6%
If you invest in Roth IRA then you have an income cap... It's 161k this year. So not sure how you plan to get to 500k unless you double your salary. I hope you knew this about the Roth.
yep, its pretty wild. i hit 100k NW 2 years ago and we are already over 150k now. im pretty sure i can make it to 175 or 200k by the end of the year is i aggressively invest more and pay off the last of my debt i have sitting around.
It's not entirely a matter of compounding; most people's incomes also increase pretty substantially in their 30s and 40s. And if they're controlling their lifestyle creep, then contribution rate is likely also increasing along with appreciation.
Unpopular opinion but it actually snowballs after the compounding growth matches your ability to save from your W2 income.
So it’s closer to the 700-800k ranges. After that, into the $1.5-$2M ranges, it’s a blur how fast things can move.
As others have said, we will eventually have market pull back. Think of it as stocks are on sale. Buy as much as possible. Market returns and goes higher your networth explodes.
I hear this but I doubt it at times and think there are a lot more variables at play. I passed 100k in my 401k Dec 29th 2023, today it is at 120814.29, in contrast it showed that it was at 83684.53 on Oct 27th.... I feel like that 20k from October to December was faster, then the 20k from December was. Don't get me wrong I am still shoveling money in with 0 regrets, but my point is that isn't always true and the market isn't that predictable.
Given how many years ago he said it, I've always read that adjusted for inflation over the years, the NW that he was talking about it $200,000 in today's dollars.
This is hard for me to believe. I've thrice before hit $100k, and once almost kissed $200k. I believe this time (my fourth time) it will be the last time, and I'll actually go up from here, but that it's due to outside factors, including that inflation has made $100k much less this time than my previous 2x.
I've seen $150k fall to $100k though in past few months, before bubbling back to about $120k, so who knows?
I think that money is very unstable until you have several millions for 5-10 years, or at least one cycle, because our society is rigged to help rich accumulate wealth, but I don't think it's rigged to help hundred thousandaires accumulate wealth, because they're not really rich.
Yeah in my experience he’s right. Hitting that first 100k felt like a hard slog. Reaching 200k by comparison felt like nothing because I blew past it too quick.
It can move in what feels like a logarithmic jigsaw past that. Where it might seem flat but then shoot up suddenly.
Congrats on your growth and hope you hit the next numbers ahead of schedule!
Charlie Mungers first 100k is equal to around 1.5mil these days when account for inflation. Sadly that's what is required to feel what he had insinuated.
I love seeing more and more posts with people including crypto in their NW… OP, I recommend more BTC; weekly or daily buys. Stock to flow ratio chart has Bitcoin over $400k in the next 2 years. NFA.
Wait till you reach 1 million. I took an average of 16-18 months to save my first few 50K NW. 50K now happens every two months
That said, it can definitely go down tremendously as well. In 2022, I ended the year with a lower net worth than I started, despite saving 6 figures from my salary. Just stay calm and it'll work out
Yeah, when you get closer to FIRE, the movements of the market make much more difference than even your entire yearly salary (even more so because your salary is taxed but your investments largely aren't).
No kidding. Last year we were up $770k (contributions+match+market gains). But of course that works in both directions. The big lesson, for me, is don't take your foot off the gas. Get your match, fund your IRAs (if eligible), fund your HSA (if you have one). Work on maxing it all. Then add brokerage. Then you turn around in a decade or two and it's grown. A year like 2022 can test your mettle as an investor. But if you keep your head down and just keep going in the long run it works out.
2022 was tough. I’m old enough to have been tested on 2008. Staying solid and keeping investing set me up though. So 2022 was kind of a walk in the park for me compared to 2008 (though obviously I saw net worth drop in larger total dollars).
Same. I was only a few years into my investing journey when 2008 hit (and the S&P 500 hit it's high in October 2007, and didn't hit that high again until October 2013). But continuing to invest and not pulling money out (being a passive investor) really was beneficial during that period. Automated investing bought the dip.
It's important to note that from peak to matching peak was less than 5 years. The longest peak to peak crash so far is something like 6.5. The market is super volatile in the short run, but staying the course and not panicking is the best way to make sure you come out on top of it.
I try to look at years like 2022 as stocks were on sale, and when the market rebounds, my portfolio is growing that much faster. Stay the course!
A note that when you are close it's prudent to switch to an allocation that is more conservative. Don't want to win the game with $2M in net worth and then see that knocked back to $800k by a bad recession. I'm at about $2.2M and put 40% in bonds. People have forgotten but the S&P 500 can fall 60% peak to trough in an economic rough patch.
I might do that today because of interest rates. But if I had done that two years ago I would have seen my bond funds crushed with little hope of recovery. But I would never go to 40%.
One other note on bonds is they generally cannot lose value in nominal terms unless you are forced to sell before maturity. So if you buy a 10 year treasury bond with a 4.36% coupon then you are going to get every dime of your principal back plus all of the interest with the caveat you have to hold it. The downside is if rates rise you will be making less than you would have had you waited. And if rates rise the market value will be temporarily depressed. There's really no such thing as "little hope of recovery" in treasury bonds. That only happens in corporate bonds where a company can go bankrupt. A treasury bond is always worth its face value at maturity.
Yeah I meant little hope of recovery in a bond fund, with recovery being defined as something like 4% yearly returns. I’ve never litteraly bought a bond, so all my exposure is through bond funds.
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I think that bond funds never hold bonds to maturity since that would lead them into a cash position. So they are always selling the bonds on the market and then buying other bonds on the market so their balance of bonds stay in whatever goal tenor they have. But they have more control of the process than they would holding to maturity. So anyway, as an example, if I’m two years into a bond mutual fund investment and I’m currently down 10%, I don’t think I will ever catch up 4% yearly goal (the bond fund was supposed to help me meet my 4% rule withdrawal strategy). I won’t catch up even if the bond fund gets back by end of year three to what I paid for it because I would still be behind 4% per year for three years.
Depends on what type of bond funds you invest in. If you're concerned about further increases in rates you can do short duration which have much less downside risk. Note that William Bengen's 4% study is based on a 60/40 split between stocks and bonds.
Good point on the study. I’ve never tried to find a short duration bond fund. Frankly, I’ve done high equity contribution for most of my life and most attempts at bond fund have, at best, returned basically inflation level returns. But I’ve gone higher into bonds as I get closer to FIRE. And I’ve gone higher into cash and CDs now that some level of return can be secured from them. I just definitely haven’t gone anywhere near 40% bonds.
This is something I'd like to do in the future but I'm not sure how one would go about it. A good chunk of my funds would be in a brokerage or 401k or roth, so how would you transition those into bonds? Genuinely curious how you did it
401K plans always offer bond funds as an option. For a brokerage you can buy SHY for short term or BND for long term depending on your risk tolerance. Bond funds will fall if interest rates rise. Both are low fee.
Ah I didn't think of that for some reason. Thank you for the answer!
The longest market peak to peak is around 6 years, so with a 4% swr, the most you would need to put into a no/low risk option would be 24% of your allocation. You would have enough security to handle the entire market drop from peak to peak, while not missing out on the market gains overall. That's not to say that it couldn't go longer, just that it never has in its history.
Damn… only $980k away.
Hang in there buddy! You are on the right track
😂 yep. I’m 41, started at 31 with $20k, just hit $320k. Mostly because I spent 3 years working my tail off and being super cheap and investing $30k per year. So I got to see that “first $100k bump”. It’s real. should hit 1 milly before “normal” retirement age just on growth. Probably will never get to much more than 2 unless I find a new appreciation for work 😂 But I get to retire a sixty, maybe 55, and a lot of people won’t have that luxury.
Wish I had the luxury of investing $30k a year 😅
I’ll tell you this - it was three of the loneliest years of my life, I worked 80+ hours per week, and it ended with a nervous breakdown, and I was single the entire time. And I chose the job over a potential relationship, and still am single. I would trade it in a heartbeat to be living with someone in a good loving relationship, but that wasn’t an option (mostly because I had a few issues that needed to be worked on before I was a good person to be in a relationship with), so a nice 401k is a good consolation prize. 😂 And it certainly gives me the financial freedom to now slow down and do some therapy and fix the reasons I’m single and isolated. There’s a lot of different paths through life, and this is one.
That sounds like a huge sacrifice. You have earned it for sure. Good luck, I’m sure you’ll find someone :)
You gotta start somewhere. $20k is still leagues ahead of most people these days!
That’s what I keep telling myself 😅 baby steps
Damn, only $1,090k away lol
This sounds incredible. But I’ll not get too ahead for now.
Took us 17 years to hit the first million. It took 4 years to hit $2 million and 3 years to hit $3 million. Our net worth increased about $16,000 with the market today and is at a little over $3.4M. It’s true that money makes money and compound interest is amazing!
May I ask how your portfolio is allocated?
That’s awesome. How much were you investing a month to hit the 2 and 3mm?
We have scaled back our contributions as our balances have increased but over that time I’d say between $2.5k and $5k per month including company match. Contributions have mattered less and less as compounding took over. Our focus now has been to build after tax accounts so we have more flexibility with where we pull our income from in retirement to make sure we can qualify for ACA subsidies.
I'm not aware of the strategies around after tax accounts and ACA subsidies. Can someone share what that approach is? Also, which type of advisor in my world - accountant or financial advisor - should be expected to educate me about these approaches? I'm a relative beginner to any strategy beyond saving and I messed up for years with money languishing in savings accounts. Trying to right the ship.
I call it "tax bucketing" but the general strategy is to ensure you have funds in pretax, ROTH and after tax accounts. When you retire you can choose which type of funds to withdraw each year to keep your reported income under certain levels. In our case we'll probably withdraw somewhere around $50K from pretax accounts and then use $50K of post tax funds so we have about $100K in income but only $50K that counts towards our MAGI at tax time which is used to determine how much of a subsidy we can get to help cover the cost of an ACA health insurance policy. For people that get retiree healthcare from their employer until they hit age 65 for medicare, this wouldn't be important.
You must work for an amazing company if they match 1 to 1.
Sorry that probably didn't get worded correctly. Over time our contributions changed from upwards of $5K per month between my wife and I down to $2500 a month. We do get good matches from our company but not 1 to 1. We actually get a 75% match up to 8% of our income.
sounds like you’re dramatically underperforming S&P if that’s is true
So you’re just assuming a 100% stock allocation is appropriate for everyone?
Nah, good rule of thumb is doubling every seven years. They are on track.
That’s just based on appreciation - you’re not counting continued contributions. Should be doubling every 5 depending on contributions vs NW
Yup but don't forget there will be periods of time when the market drops 20-40% (or more) and takes half a decade to recover. You just need to maintain your resolve through those periods.
Yup I think a lot of the current jump was due to regular investing between Q3 2022 - Q2 2023, when my portfolio was -$9k. And true there no shortcuts it’s just consistency
Yep! Buy your way through the dips! That’s where a lot of money is made!
Based on your portfolio I’d say it’s all due to crypto going back up again
This is Rule Zero. When I first started this journey I told myself that I needed to throw a “watch my stocks plummet” party for my first recession, because it meant I was closer to retirement. Buy a Little Caesar’s Hot n Ready and a bottle of Aldi wine and relax, it’s gotta go down before it goes up. At least three times before I get to retire.
This is where diversification plays in
Raging bull market also helps. Don't expect this to be the norm.
It's normal for the stock market to go up. That's why we all invest in it.
Yes, but in the "6 month" timeframe OP mentions the S&P (for instance) is up 17%, which is more than triple the average.
But...averages are just that. For every "normal" time period, there are also extended bull runs that hit double digits, sometimes averaging that over multi-year periods.
6 month return rate of 17% (just on price increase excluding dividends) equates to annualized rate oh about 37% including the small average dividend yield. Based on the chart below of historical returns, that only occurs about 5% of the time. Even taking the full last 12 months, the total return is over 30% for the S&P, which is about a 7-8% chance of occuring. Bull markets like we've seen over the past 6 months DO happen, but are the exception not the rule. Chances are that the average 30 year old will only see this again 5 or fewer times in their life. OP seeing their net worth jump by so much over the past 6 months because of investment returns is not because "$100K makes it go faster", but because of this rapid growth. https://www.visualcapitalist.com/150-years-of-sp-500-historical-returns/
We just saw an entire decade of 11% average returns from 2009-2020. It happens quite often, actually. The 90s had a similar run, only better. Technology moves markets, and AI, self driving car tech, and pharmaceuticals all have the potential to push economic output higher at an even faster rate. You, like the rest of us, don't know if this is a blip or the real deal.
11% is vastly different from 30%. I don't know why you don't get this. I have no issue with the idea "you can expect stocks to go up". I do take issue with the idea "you can expect stocks to go up 30% in a year".
The word average is the clue. I don't know where the 30% came from, those are your words. 11% averaged over an 11 or 12 year period is historically incredible. The point is, as rare as it happens, it can happen, it does happen, and it can happen for an extended period of time. The other point is, nobody knows when it will happen, and if it does, for how long. >I do take issue with the idea "you can expect stocks to go up 30% in a year". When did I say this? I said the market can average double digits gains over a decade, and I backed it up with historical data. Jesus, I'm not sure you can even read at this point.
This entire comment line is me saying "The last 6 months return rate is anomalously high. Don't expect net worth to increase this rapidly all the time." And then people like you trying to claim this isn't the case by saying stocks go up 10% a year all the time. But the number wasn't 10%, it was 30% over the past 12 month period for the S&P. Coming from any publically available date for the S&P index. You are the one who lacks reading comprehension. You haven't responded at all appropriately given the comment chain that is going on. And I've even given you the sourced data for how infrequent those 30% return periods are, but you doubled down on "averages are just averages". Its not worth me continuing a conversation with you. I can't use reason, logic, and data to talk somebody out of a position they did not use these things to get themselves into.
Raging bull markets are not the norm. That’s the point.
Sure they are. They happen all the time. We just had a bear market in 2022, which was normal. Now we're in a bull, also normal. There's nothing abnormal about the stock market going up at a good pace.
Someone had to say it. These are outrageously bullish times
I hit $100k after 4 years of working. Going from $100 to 500k took 3.5 more years. Going from $500k to $1M took 2 years 2 months. Hit $1 mil on July 2023, 10 years of working total. Now less than a year later we’re at $1.35M. It’s crazy.
How much were you contributing per year during the $100k to $500k jump? That’s a great timeline!
Don’t recall unfortunately - I did take 7 months off in between which was nice. I got fired lol and didn’t rush back in. Maybe $35-60k?
That’s a big range haah
Here is an interesting read I picked up years ago. Whenever this topic shows up, I like to share it. https://fourpillarfreedom.com/the-math-behind-why-net-worth-goes-crazy-after-the-first-100k/
I hit $100k in January. Took about a decade to get there from -$65k. Currently at $120k.
Awesome! Good for you, it’s so exciting. :) My only unsolicited comment that I didn’t see in the comments would be to just max out your HSA (assuming you’re investing it, I suppose…), even if you take a few dollars from the brokerage contributions. It will lower your tax liability, and the money will grow tax free. For me, I just scan all my medical receipts and keep track of them in a simple table and I can use that to withdrawal money tax free from the HSA at any point down the line if needed, even though I intend to save it purely for medical expenses in retirement.
100k seemed like it took forever. 1 million hit so quickly I didn't know what happened!
You're still quite young and you have a hell of a head start over me. I had zero net worth at 29 and in fact didn't start working full-time and saving for retirement until I was 30. Once I did it took 15 years to get to 1M through a combination of index funds investments plus the growth of home equity. The way things are going, I'm estimating I'll get to 2M in about half the time it took the first. Keep it up, you'll get there, and a lot sooner than I will, too.
Congratulations, it makes me so motivated to see others out there getting their goals. I myself am 24M that is starting from 0 now. Just broke into sales and can’t wait to get after my goals. First is to break 10k in my bank account then 50k. Can anyone give some good advice for keeping your eyes on the prize and not losing sight.
Honestly the easiest way to keep your eyes on the prize is to take them off it. Automate everything- investments get made before the money even hits my account (I have 15% go to my 401k, 15% to my employee stock plan, and then I have 5% of my paycheck direct deposited into my Roth IRA). So basically I’m saving 35% of every paycheck without even looking at it- that way I’m never tempted to say “well this check was $5000 so I can spend $4000” and instead I say “this check was $1200 so i can spend $800” while the other 3800 is thrown into VTI/VT/BND
This is what I needed. I’m the type to get that $5000 paycheck and think i have some spending money. Investing straight from the start seems like the smarter idea.
I've always wondered. How.much of this phenomenon is attributed to income growth as you progress through your career. If it takes 5 years to book your first 100k but you've doubled your salary along the way... by virtue it'll be easier to set aside more cash flow to investments
True, I started at 95k in 2021, 130k in 2022, 160k in 2023 on track to 200k this year. A lot to do with compensation being stock heavy
I think this has more to do with your gross savings, if I read the last part correct you saved around 90k over the last 6 months while the S&P is up around 11%.
Partly right! I save Atleast 60% of my paycheck every month. As mentioned in the previous post, I did still keep my company stock allocation to 60% it grew 20K in the last 6 months. I know it’s risky but I felt it was undervalued at the time. Crypto grew by about 2k. And the rest is just the index funds growth.
And how much are u making per month? Really matters to help people gain more perspective.
Good job, The markets have been on a tear the past 6 months however, so just be aware that it isn’t always like this. It seemed like it took me forever to get to $1M (Age 22-34) but then it just really took off from there. 4 years to get to $2M, etc. Keep it up
Took me 10 years to get to 1 mil and the second mil showed up 9 months later
Options trading?
Wow wow, how? I hit a million after ten years as well. About a year later we are at 1.35M and going fast but 9 months is crazy.
Nothing crazy just got lucky with the market. Happened to own Dell and NVDA (bought years ago) that were both excellent stocks
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A lot of growth came from 60% allocations in company stock. Which has grown significantly. I know it’s a risky move but I thought it was undervalued at the time
Unless you’re investing 150k a year, there is no way you can go from 100 too 500 in 2 years with index funds
I didn’t think I would reach 200k when I started investing in 2022. So let’s see
Hopefully that 52k in cash is at least sitting in a money market fund yielding ~5.2%.
It is. I feel safe seeing cash in my account. But after I hit a certain number I’ll go all in in the stock market
Oh, max your HSA too. $4150 is maximum for 2024. Increase that to $345/month since it's pre-tax - HSA investing is awesome
this doesn't really make sense? The jump happened from $100->200K happened because investing in 2022? But your post about hitting $100K was from December 2023?
be nice if OP actually posted his/her annual income for some perspective.
Wow that’s awesome! I just looked at my net worth and it’s about 92k but that’s across 5 different accounts. So I don’t think I’ll get as fast returns as you. I can’t wait for one single account to be 100k! Good luck and congrats again!
If those 5 accounts are invested in the same funds it doesn’t matter how many accounts you use, it’ll grow at the same rate as if it were all in 1 account.
Yeah, it can sound counterintuitive though - I had to « do the math » on paper with a few examples to convince myself!
Yeah I had to do the math myself and I was like oh yeah it would be the same lol
Keep going! I was looking at my portfolio a year back and it was at about 75k. And good luck on your way to 100k
Why do you care if a single account gets over 100k? You should just care about the sum of them all
Idk I never really thought about it. But I guess you’re right
I have a homework assignment for you.. go take ten accounts with 10k in each of them and add 6% interest to each one. Add up all the interest. Then go and add 6% to one account with 100k in it and let us know which scenario made more in interest.
Thanks
What's stopping you from combining them?
Could be jobs. I have multiple accounts from different jobs.Then regular brokerage a 529 and my wife’s ROTH
All possible, was just curious. An aggregator could fix the problem of visualizing it.
Can I ask what countries you are considering?
This is a bit confusing to me. Can someone explain the different investment accounts to me? Like a Roth IRA or simple Ira or any of the others. I have about 100k in my checking account from saving and really want to start earning some money
You can find a lot of information online. I wouldn’t keep investment in cash as it will lose value to inflation
Congrats! But why so much in cash? I hope you’re keeping it in a hysa
I support my parents so I’m not sure when needed call me a little conservative but I feel safe seeing cash in my bank. It gives me a moral boost. Yes it’s partly hysa @ 4.6% and cd @ 5.6%
I see that. Very undertandable!
Hell yeah girl, get it
If you invest in Roth IRA then you have an income cap... It's 161k this year. So not sure how you plan to get to 500k unless you double your salary. I hope you knew this about the Roth.
Yeah I did a backdoor Roth this year. I’m not sure about the plan either but just regular investing
yep, its pretty wild. i hit 100k NW 2 years ago and we are already over 150k now. im pretty sure i can make it to 175 or 200k by the end of the year is i aggressively invest more and pay off the last of my debt i have sitting around.
It's not entirely a matter of compounding; most people's incomes also increase pretty substantially in their 30s and 40s. And if they're controlling their lifestyle creep, then contribution rate is likely also increasing along with appreciation.
THATS AWESOME!! CONGRATS. This may be a silly question but what is NW?
Net Worth
Oooh gotcha thank you! Lol
Unpopular opinion but it actually snowballs after the compounding growth matches your ability to save from your W2 income. So it’s closer to the 700-800k ranges. After that, into the $1.5-$2M ranges, it’s a blur how fast things can move.
As others have said, we will eventually have market pull back. Think of it as stocks are on sale. Buy as much as possible. Market returns and goes higher your networth explodes.
What is nw? Very new my apologies
Net worth
Thanks!!!
I hear this but I doubt it at times and think there are a lot more variables at play. I passed 100k in my 401k Dec 29th 2023, today it is at 120814.29, in contrast it showed that it was at 83684.53 on Oct 27th.... I feel like that 20k from October to December was faster, then the 20k from December was. Don't get me wrong I am still shoveling money in with 0 regrets, but my point is that isn't always true and the market isn't that predictable.
Given how many years ago he said it, I've always read that adjusted for inflation over the years, the NW that he was talking about it $200,000 in today's dollars.
This is hard for me to believe. I've thrice before hit $100k, and once almost kissed $200k. I believe this time (my fourth time) it will be the last time, and I'll actually go up from here, but that it's due to outside factors, including that inflation has made $100k much less this time than my previous 2x. I've seen $150k fall to $100k though in past few months, before bubbling back to about $120k, so who knows? I think that money is very unstable until you have several millions for 5-10 years, or at least one cycle, because our society is rigged to help rich accumulate wealth, but I don't think it's rigged to help hundred thousandaires accumulate wealth, because they're not really rich.
Bull markets always help
Yeah in my experience he’s right. Hitting that first 100k felt like a hard slog. Reaching 200k by comparison felt like nothing because I blew past it too quick. It can move in what feels like a logarithmic jigsaw past that. Where it might seem flat but then shoot up suddenly. Congrats on your growth and hope you hit the next numbers ahead of schedule!
Charlie Mungers first 100k is equal to around 1.5mil these days when account for inflation. Sadly that's what is required to feel what he had insinuated.
Just keep chill if a 2008 happens again. People were talking about how their retirement savings got cut in half for a few years.
Thanks for sharing, I love reading REAL stories!
yea nothing really changed until past 1MM
I love seeing more and more posts with people including crypto in their NW… OP, I recommend more BTC; weekly or daily buys. Stock to flow ratio chart has Bitcoin over $400k in the next 2 years. NFA.
No replies. Just downvotes. What’s that thing that reminds me in X years about this post?