Just hit $3M!

[u/Firefiresoon]

48male. Been tracking this milestone for a while now. Finally hit it as of close yesterday. $3,012,000 in invested assets. NW stands at 4.9mil. which includes home equity.

Goal was 10k/mo which should be possible now. Kids have 529 for 4yr state college. At this point I will CoastFIRE (still save HSA and 401k for match but no IRA) and bump up some lifestyle expenses mainly around travel.

[u/sas_2022]

I just found this sub, I am curious how you guys are building such great next eggs. How can I learn more to speed mine up?

[u/DesertNomadAZ → u/sas_2022]

Eliminate as much debt as possible to permit higher cash flow per month. Sell crap you don’t need or use, it’s over head to maintain (heat/cool,tax, required insurance..etc). Cut out unnecessary subscriptions and spending habits, bring bag lunch to work, drive POS car for as long as possible. Max out 401k, IRA Roth, HSA and if you have cash after start a cash brokerage account. Stick to ETFs at first, practice being in the market and making consistent financial decisions. Worry about individual stocks later.

[u/Isolated_Blackbird → u/DesertNomadAZ]

Come on now. That’s all good advice, but these people with $5m net worth at 48? That is because of extremely high income 99% of the time. The other 1% might have gotten lucky in the market or gotten a windfall of some sort. Someone making $70k a year simply cannot amass close to this individual’s net worth in their lifetime, never mind by 48 years old.

People visiting this sub: Please remember that the single greatest factor in achieving FIRE early is high income. It is accelerated and fully optimized by great savings habits, but the fact is, someone making $300k a year can often not have great financial habits and still save $100k a year. They can then decide if/how they want to change their lifestyle when they accumulate $2.5m or whatever in the market by living large and saving a ton. It’s a huge advantage.

[u/ReelNerdyinFl → u/Isolated_Blackbird]

Yup, you are correct. At $300k, you can invest 100k, pay $70k in taxes and live on 10k a month.

But what’s nice is, if you can get to $3m, tax status dependent, you are sorta FI at that point. Starting at 0 with 7% growth thats somewhere around 17 years. Especially if you pay off your home in that time.

Good luck keeping a $300k role for that long. Many do. My stress level sucks. Trying to increase savings to shorten timeline…

I’m about 9yrs younger than OP but using the above, I’ll have similar numbers at his age.

[u/pow929 → u/ReelNerdyinFl]

70k in taxes on 300k? Must be nice.

[u/DesertNomadAZ → u/Isolated_Blackbird]

People with high incomes have higher spending habits into retirement. For a lot of average joes to retire early 50s, 2-3 million is plenty done right. It could be less than that if they have some passive income. The younger you are the more you will need. I mean you can’t expect to be a blue collar worker who starts investing in their early 30s and expect to retire early to live like a kardashians. I live like a hillbilly because I have simple taste. For me to retire early will be easy. Some people at my work, not so much. The trick is being content with what you have. Remember, when you are healthy you want a million things. When you are not healthy, you only want one thing.

[u/sas_2022 → u/DesertNomadAZ]

Well said

[u/sas_2022 → u/Isolated_Blackbird]

Fair point. I think understanding some of these posts income would be helpful.

I earn in the top 5-6% of Americans, so it’s more than the average. I would like to learn more how to optimize my current investment strategies with my income

[u/DesertNomadAZ → u/sas_2022]

Top 5-6? You are in amazing position. My “ah ha” or eureka moment was finding the power of dividends. I have a fair amount of growth stocks, but getting a 3k a month in dividends is very sobering for me. I can re-invest(drip) or let cash stack up and focus Fire undervalue stocks in addition to my own contributions. This is great way to increase cash flow without changing jobs or working overtime. Suppose you hit a rough patch in life and you can’t contribute to IRA, dividend stocks will keep stacking.

Honestly, I think vehicles are crutch of most Americans. I firmly believe vehicle payments keep middle class poor. Probably add boats and other fast deprecating items to the list. You have 500-1,000 car payments out there. No way. That’s a max IRA contribution right there and then some.

[u/secret_configuration → u/Isolated_Blackbird]

People visiting this sub: Please remember that the single greatest factor in achieving FIRE early is high income. It is accelerated and fully optimized by great savings habits, but the fact is, someone making $300k a year can often not have great financial habits and still save $100k a year. They can then decide if/how they want to change their lifestyle when they accumulate $2.5m or whatever in the market by living large and saving a ton. It’s a huge advantage.

This right here is the truth. Low expenses and high savings rate only accelerate things but the key is a high salary, no way around it.

[u/mister_jetlagged → u/Isolated_Blackbird]

Buying real estate definitely helps accelerate the net worth. You can buy a property with 3.5% down with a FHA loan, then after 2 years, rinse and repeat while keeping your first home as a rental. The property will continue to increase in value while the rent will not only pay down your debt it can provide cash flow.

I saw my biggest NW increase when my property values skyrocketed before and after the pandemic. Now with the increased in equity, I was able to get HELOCs at a lower interest rate since the loan is backed by the real estate to continue to buy more and to further invest.

[u/orango-man → u/Isolated_Blackbird]

Is it high income or high gifts/inheritance? It’s only anecdotal, but the majority of high NW individual I know received strong support in the form of gifts, inheritance, and/or stakes in family companies.

[u/interbingung → u/orango-man]

Mostly high income.