Time to reach 1M and 2M milestones

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NYCguy
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Re: Time to reach 1M and 2M milestones

Post by NYCguy »

I always have saved at least 50% of my after-tax income.

It took
8 yrs $500k
12 yrs $1 million
14 yrs $2 million
And I have averaged a million each year thereafter.

The first was definitely the hardest and the most rewarding. $10 million was a bit of a shock for me. I now wonder if $20 million is a possibility.

For me the important part is to enjoy the journey. Life, financial or otherwise, is fragile.
If your out-go is greater than your income, your upkeep will be your DOWNFALL.
perfin
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Re: Time to reach 1M and 2M milestones

Post by perfin »

Broke $1M Q2 2011 (in my mid-thirties).

Broke $2M Q1 2014.

Currently worth ~$4.5M.
herennow
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Re: Time to reach 1M and 2M milestones

Post by herennow »

Great thread!

I notice a lot of folks going from 1m to 2m in abt 3-4 years. in the last four yrs, my portfolio has grown abt 30%. The mix is 75% US equities, 10% international, 10% bonds and 5% alternatives. I am curious what kind of portfolios got ppl from 1m to 2m in 3-4 years.

Someone also posted that after a point, either 500k or 1m, internal growth becomes the major driving force of portfolios. Was the growth from 1m to 2m a result of additional contributions or just market performance?
Downtown
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Re: Time to reach 1M and 2M milestones

Post by Downtown »

$0 to $1M = 19 years
$1M to $2M = 8 years
$2M to $3M = 2 years

Edit: these are net worth figures
Last edited by Downtown on Sun Apr 30, 2017 10:25 am, edited 1 time in total.
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randomizer
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Re: Time to reach 1M and 2M milestones

Post by randomizer »

$0 to $1m about 4 years.

Then we bought a house, so investible assets currently down to about 740k. I anticipate getting back to $1m within a year, but after that our savings rate is going to dive (current high paying job has an expiration date on it) so it is not clear that we'll ever get to $2m, at least not through contributions (might get there through investment returns though if we don't touch the portfolio).
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NYCguy
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Re: Time to reach 1M and 2M milestones

Post by NYCguy »

herennow wrote:Great thread!

I notice a lot of folks going from 1m to 2m in abt 3-4 years. in the last four yrs, my portfolio has grown abt 30%. The mix is 75% US equities, 10% international, 10% bonds and 5% alternatives. I am curious what kind of portfolios got ppl from 1m to 2m in 3-4 years.

Someone also posted that after a point, either 500k or 1m, internal growth becomes the major driving force of portfolios. Was the growth from 1m to 2m a result of additional contributions or just market performance?
I don't think asset allocation or internal growth is the driver behind getting someone from $1 million-$2 million in a shorter time period. Think about it in terms of what rate of return is necessary to double an investment over a period of time: 7% takes 10 years, 10% takes seven years, 20% takes 4 years.

I think investment returns as the primary driver of an increase in net worth happens for two reasons: one has invested a level amount from earnings for a long period of time such as 25 or 30 years so that the power of compounding exceeds the level amount invested from earnings or one has suffered a significant decrease in the amount of earnings available to be invested such as from a alary decrease or retirement.

If you have increasing amounts to invest from earnings it is diificult for the investment returns to become the primary driver of NW even with an aggressive asset allocation, but that is a good problem to have.
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hulburt1
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Re: Time to reach 1M and 2M milestones

Post by hulburt1 »

1m=35 years
2m=5 years. bought Facebook up $400000
Billyboy
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Re: Time to reach 1M and 2M milestones

Post by Billyboy »

Of course it takes a lot of effort and perseverance no matter what your income is; however, if you have those qualities, the more you make the quicker you'll reach the 1M and 2M milestones. As for me, I didn't have the high salary. In fact, the most I ever made was $75+ my last 2 yrs. of a 35yr career with the same company. So it took me a bit longer. I reached 1M at age 55, retired at 61 and reached 2M at about 64 or 65. Until a couple of yrs prior to retiring I was 100% in equities (mostly Vanguard mutual funds, w/2-3 individual stocks) then I started to reallocate into the Total Bond Fund and the Short Term Bond Fund. My current allocation is about 60% Equities and 40% Fixed.
After all this B.S. :? 1M=35 yrs. 2M=10 more yrs, 3M=12 more yrs.
Have been taking RMD's :annoyed for almost 3 yrs. yet financial assets are still growing. :sharebeer
Last edited by Billyboy on Sun Dec 20, 2020 10:56 pm, edited 1 time in total.
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House Blend
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Re: Time to reach 1M and 2M milestones

Post by House Blend »

Not going to reread the whole thread, but I'm surprised that there's any controversy over the factors that influence how long it takes for an investment portfolio to go from X to 2X:

1) savings rate, measured in units of X per year (simplest would be a constant rate),
2) asset allocation, and
3) when the market chooses to deliver good returns.

Not many folks hit $2M for the first time in 2002, or 2008.

The thread could have been less exclusionary and had a higher signal to noise ratio by leaving the specificity of $1M out of it, and eliminating issue #3 by specifying a common right endpoint. That is,

"How long ago was your portfolio half of the size that it was on <Some Recent Date>?"

I'm also surprised there's any mystery about what it takes for investment gains, rather than new contributions, to drive portfolio growth. It's simply a matter of new contributions being small relative to expected returns. It has nothing to do with absolute portfolio size, whether it's $500, $500K, or $500M.
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zaboomafoozarg
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Re: Time to reach 1M and 2M milestones

Post by zaboomafoozarg »

Luke Duke wrote:
sanfran2015 wrote:Assuming 5% return on a 1M portfolio - you would need to contribute $50k for contributions to match market returns.

My guess is for majority of people, contributions outpace portfolio returns at least up to $1.5M.
You think that the majority of people are saving $75K/yr?
Certainly not all people, but it wouldn't surprise me if the majority of frequently-posting Bogleheads who aren't retired were saving $75k a year.
ThinkingRunner
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Re: Time to reach 1M and 2M milestones

Post by ThinkingRunner »

Mid-30s couple - later career starts due to spending many years in advanced degree programs.

1M - 5.5 years (HHI ranged from 160K - 275K per year during this period, 50-55% gross savings rate)
2M - 3 years (HHI ranged from 400K - 600K per year during this period, 40-45% gross savings rate)

Maxed out all retirement accounts since the beginning of our careers, and also started aggressive taxable investing within a couple of years. AA is currently 70-30.

Absolute savings increased significantly in the latter 3-year period, but savings rate declined a bit due to high tax rate (30% effective), house purchase, and peak childcare cost years. Expect savings rate to climb back up to 50% when kids age out of daycare in the near future.

Currently at ~2.3M. Assuming no surprises and modest returns, tracking 3M in another 1.5-2 years.
radiowave
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Re: Time to reach 1M and 2M milestones

Post by radiowave »

I was playing with back testing ( https://www.portfoliovisualizer.com/bac ... sisResults)) and if I invested each year starting the year I graduated from high school in 1975 I would have made my first million as follows (assumes 100% domestic stock portfolio):

1000/yr 2014
2000/yr 2013
4000/yr 2012

I also played with the idea if I took a job in Saudi Arabia as a nurse back in the late 80's which was 100k tax free and stayed for 3 years I would have 300k at 1989, first million in 1997 and value today would be 4.5M. I knew a few nurses back then who went over for a couple years with the intent of putting that money away for retirement . . . I see now why that was a good strategy.

We could play what if all day but interesting to see how choices earlier in life can pay off later in life.
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2tall4economy
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Re: Time to reach 1M and 2M milestones

Post by 2tall4economy »

While there are many factors, I believe the single most important thing is that reaching $1M takes a disciplined lifestyle approach over many years, so while it takes a while to get that first one, you've set up all of the building blocks so that the next one is simply a matter of time vs change in execution.

This was certainly the case for me.

13.5 years from the time I finished school until $1M
3 years to hit $2M
I expect $3M will be achieved in 2 years and roughly $500K per year after that until I choose to retire, at which point it drops to $250k/yr.

YMMV. Numbers above exclude home/car equity.
Last edited by 2tall4economy on Mon May 01, 2017 3:19 pm, edited 1 time in total.
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JDCarpenter
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Re: Time to reach 1M and 2M milestones

Post by JDCarpenter »

We took a long time to get to 2, despite high income and 100% equity allocation; was longer from one to two than from end of DW's training to the former.

1 million (for the first time, at least) 1999 (benefited on the way up from a very nonpassive, undiversified investing speculation approach).
...
[lots of personal/family/job stuff impinging on finances, in addition to markets....]
...

2 mill 2010 or '11; thus, we took our entire 40s to surmount this hurdle.

Milestones have come much more quickly since then; in addition to markets, our kids graduated college, we added another large income, etc.
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goblue100
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Re: Time to reach 1M and 2M milestones

Post by goblue100 »

I'm starting to feel like an underachiever. :x
I've been saving / investing for 34 years. My net worth is 1 million including home equity, reached last year. Invested assets are ~880,000.

My biggest "sin" was only putting 6% in my 401k for the first 20 years, and doing little outside of the 401k. I have never actually maxed it out, but have been very close the last 10 years. No real complaints, but if I had another $400,000k on hand that retirement class might be sooner than later.
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retireearly
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Re: Time to reach 1M and 2M milestones

Post by retireearly »

Married, two kids, both incomes around 100K for total of 200k. Saved almost as much money 10-15 year ago when salaries were 1/2 since there were kids, smaller house, etc

Hit 100K June 05 (took 10 year after college grad - paying loans off, moving into first house, etc, made that first 100k look like Mt. Everest!
200k just 18 months later (Dec 06) and then again permanently in summer of 09.
500K July 2010. Good lesson for those in 20s or 30s that you should be buying future corrections - buy when everyone wants to sell!
1M June 2014
April 2017 1.3M

*I don't expect the same kind of growth we've seen the last 8 years, so I don't expect to see 2M for another 10-11 years (assuming 4.5$ nominal equity and 2% bond).
Age:45, about to be single for first time since 1995. Kids 8/13. Current AA 70/30, Desired stock AA 50/50, overweight EM, Int SC and US SCV.
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AnalogKid22
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Re: Time to reach 1M and 2M milestones

Post by AnalogKid22 »

I'm 39 and only at about 750K. I've been saving like crazy since I became a working professional in 2000, but, aside from 401K contributions and some ESPPs, all of which I've rolled into Vanguard, I've kept all my savings in a bank account. I only started with Vanguard, moving all investment money into a 3 fund portfolio (75/25), a few years ago, when I finally learned about indexing. Had I been contributing all my savings to this 3 fund portfolio since 2000, especially with the huge bull market the last 8 years, I'd be well over 1 million and probably close to 2 million.

I contribute over half my annual salary and hope to retire in 10 years, before age 50, or even sooner, but, according to Bogle, returns are supposed to be quite low the next 10 years.
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Re: Time to reach 1M and 2M milestones

Post by 2tall4economy »

herennow wrote:Great thread!

I notice a lot of folks going from 1m to 2m in abt 3-4 years. in the last four yrs, my portfolio has grown abt 30%. The mix is 75% US equities, 10% international, 10% bonds and 5% alternatives. I am curious what kind of portfolios got ppl from 1m to 2m in 3-4 years.

Someone also posted that after a point, either 500k or 1m, internal growth becomes the major driving force of portfolios. Was the growth from 1m to 2m a result of additional contributions or just market performance?
I'm 50% equities and 50% rental properties (no bonds / no emergency fund because I have lots of roth contributions). I contribute about 50% of my income each year (depending on how you count rental income and the rental mortgages).

While i'd love to believe that at some point portfolio earnings makes my contributions irrelevant, I just don't see it. Probably because I have healthy compensation and started investing slightly later than some (~30ish).

It gets to a point in my mid-40s where my w2 contributions are surpassed by my portfolio income, ie the mix goes from 51/49 to 49/51, but there is no where in my working life where I expect my contributions will make less than 10% of my overall gain in a given year.
Last edited by 2tall4economy on Mon May 01, 2017 3:16 pm, edited 1 time in total.
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2tall4economy
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Re: Time to reach 1M and 2M milestones

Post by 2tall4economy »

The Planner wrote:Currently working in the Gulf. I have the option to move from the UAE to Saudi in a few months. If I do move, I'll be able to invest 150k annually. This being the case and considering my current net worth, I'd hit 1M in 4.5 years. Not sure if moving to Saudi would be worth it though. Currently 32 years old. Wife is 33. If I stay in the UAE, I would hit 1M in 10 years.
Having worked in Asia and the middle east - make the move. The money you earn you can sock away and get well ahead of your peers in the same field / seniority. The crappy thing is you need to make sure you take into account the fact that the US tax system still taxes you on Saudi income, which pretty much no one else does - so when they tell you it's tax free, it's really not (if you are a US citizen). Still good though.

And Saudi is relatively safer that most middle east countries for Americans (Dubai excepted), and the expat compounds are like mini-resorts.
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sanfran2015
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Re: Time to reach 1M and 2M milestones

Post by sanfran2015 »

The time to get from $1M to $2M seems too quick - 3-5 years for most folks who replied.
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TheTimeLord
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Re: Time to reach 1M and 2M milestones

Post by TheTimeLord »

Just to put this thread into perspective.

Image

https://dqydj.com/net-worth-in-the-unit ... -centiles/
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thepianoman
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Re: Time to reach 1M and 2M milestones

Post by thepianoman »

If we are measuring in net worth, I hit the 1M mark 5 years after graduating college. 2 years later (just this year) I hit the 2M mark. I was lucky to find a lot of success in my work in the past 3 years that allowed me to grow this figure quickly. I wish I found this forum sooner, for me almost all the gain was due to money earned rather than investment gains. Hopefully now the investments will start to do more of the heavy lifting.
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sanfran2015
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Re: Time to reach 1M and 2M milestones

Post by sanfran2015 »

thepianoman wrote:If we are measuring in net worth, I hit the 1M mark 5 years after graduating college. 2 years later (just this year) I hit the 2M mark. I was lucky to find a lot of success in my work in the past 3 years that allowed me to grow this figure quickly. I wish I found this forum sooner, for me almost all the gain was due to money earned rather than investment gains. Hopefully now the investments will start to do more of the heavy lifting.
Thats really quick for straight out of college! Congrats :)
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sanfran2015
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Re: Time to reach 1M and 2M milestones

Post by sanfran2015 »

TheTimeLord wrote:Just to put this thread into perspective.

Image

https://dqydj.com/net-worth-in-the-unit ... -centiles/
For folks who have a net worth of >$2M, you are in the top 5% of Americans!
aj44
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Re: Time to reach 1M and 2M milestones

Post by aj44 »

Should be to 1 mil at 40.
Last edited by aj44 on Sun Feb 25, 2018 11:06 pm, edited 1 time in total.
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vitaflo
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Re: Time to reach 1M and 2M milestones

Post by vitaflo »

randomguy wrote: As far as how long it takes, it is pretty much all market timing once your contribution is small relative to portfolio size (i.e. someone saving 20k with a 1 million dollar portfolio). The guy in 1995 with a 80/20 portfolio would have double his money in 3 years. The 2000 guy would have taken 14 years.
I'm the 2000 guy. Started at zero in 2000 and got to 1m 15 years later. While the market doubled during that time, 75% of my 1m came from contributions. Most likely because pay increased over time as did contributions, so more recent contributions take up a larger part of my portfolio and have had less time to compound.
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Trophy_Husband
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Re: Time to reach 1M and 2M milestones

Post by Trophy_Husband »

I started investing the day I got my first real paycheck post college in 1992.

One tech bubble bust, a "lost decade" and the a Great Recession later, we had a portfolio value of $1M in 2013. 21 yrs after starting.

At that point I thought I was doing pretty well and feeling like I needed some affirmation of my stunning achievement. So I started perusing the internet and came across this forum. After reading several posts, it became clear that my stunning achievement wasn't that stunning. And worse, I had probably done significant damage to my returns by using high load, actively managed funds with some whole life insurance mixed in to further sink my portfolio. :oops:

So after a lot more reading, in 2013 I began moving money to Vanguard, switched to term life insurance and began using index funds for our tax advantaged retirement accounts. Essentially I became a Boglehead.

Now, 4 yrs after stumbling across this forum, and my first post asking for advice, we have crossed the $2M threshold. Think of that, in one fifth the time, following the Boglehead philosophy (along with market timing and compounding) we've been able to double our portfolio.

For us, the first $1M was hard. Made harder by my ignorance and susceptibility to bad advice. The second Million, was much easier in no small part due to what I've learned by reading the posts here.
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Re: Time to reach 1M and 2M milestones

Post by ryman554 »

sanfran2015 wrote:
For folks who have a net worth of >$2M, you are in the top 5% of Americans!
Not quite. Unless you had that net worth 4 years ago. Markets have been substantially higher over these four years, so I expect the 5% NW requirement to also be substantially higher when the new SCF numbers come out. Anybody know when that will be?
CurlyDave
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Re: Time to reach 1M and 2M milestones

Post by CurlyDave »

LeisureLee wrote:For us it took about half as long to get from $1M to $2M as it took to get the first $1M. The existing balance growing by itself was a significant factor, but our incomes rose and our savings rate also grew over that time. It also seems a lot faster because once you get used to the saving habit and you know you're getting closer to "done" every month, you stop looking as often. =)
This is the real truth for me.

I got into he savings habit early, way back then it was called "living below your means" (LBYM). Once that was established, I was satisfied by smaller expenditures, cheaper vehicles, low cost entertainment, etc. But, salary was still low and it took a long time to build up a portfolio, As time went on, salary increased, but the habits of lower cost living stuck around. This had two effects. Contributions increased since living expenses didn't go up as fast was my salary, and the portfolio started to take on a life of its own, where gains became as important as contributions, and then exceeded them.

The other issue for me is that I had and still have rental real estate. It difficult to value exactly, unlike stocks or bonds. So, if I exclude home equity in our primary residence, I really don't know when I hit the magic number.

Overall the second million was about half as long as the first.

* * * * * * * * * *

There is a another way to look at the progress of one's portfolio. When I started investing the milestones I had in portfolio value were $10k increments. Somewhere around $100k total, the milestones changed to $25k increments. Then they became $100k, and now are in the $250k range.
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Re: Time to reach 1M and 2M milestones

Post by nova1968 »

There appears to be a lot of variation in what defines a million dollar networth. At age 55 I have 850K in equitable assets as a single guy, Short of the 1M milestone but how does that compare to a couple who claim to be worth 1.5M. If I get married to my GF who has few hundred K does that place me in the 1M milestones club?
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Re: Time to reach 1M and 2M milestones

Post by nova1968 »

ryman554 wrote:
sanfran2015 wrote:
For folks who have a net worth of >$2M, you are in the top 5% of Americans!
Not quite. Unless you had that net worth 4 years ago. Markets have been substantially higher over these four years, so I expect the 5% NW requirement to also be substantially higher when the new SCF numbers come out. Anybody know when that will be?
Maybe among BHs but I believe around 5% of house holds have 1M networth, take away the California housing market and its far less.
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CyclingDuo
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Re: Time to reach 1M and 2M milestones

Post by CyclingDuo »

nova1968 wrote:There appears to be a lot of variation in what defines a million dollar networth. At age 55 I have 850K in equitable assets as a single guy, Short of the 1M milestone but how does that compare to a couple who claim to be worth 1.5M. If I get married to my GF who has few hundred K does that place me in the 1M milestones club?
It appears as most are considering it as Household Income, and therefore Household M Milestones. If you got married to your GF, then yes. (This answer purposely skips things like pre-nuptials, common law marriages, etc...)
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JDCarpenter
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Re: Time to reach 1M and 2M milestones

Post by JDCarpenter »

CyclingDuo wrote:
nova1968 wrote:There appears to be a lot of variation in what defines a million dollar networth. At age 55 I have 850K in equitable assets as a single guy, Short of the 1M milestone but how does that compare to a couple who claim to be worth 1.5M. If I get married to my GF who has few hundred K does that place me in the 1M milestones club?
It appears as most are considering it as Household Income, and therefore Household M Milestones. If you got married to your GF, then yes. (This answer purposely skips things like pre-nuptials, common law marriages, etc...)
Agree. In my estimation, it would place nova and his now-GF in the "club" as a couple/household. Given that our affairs have been intertwined for nearly 40 years, that's the way I answer financial questions. OTOH, if I somehow had to give "net worth" for me "without my wife," I'd probably split it in half. (Different for "income." We default to household income--but break out individually when, for example, filling out mortgage application--that is easy with wage income, but not if we were business partners.... As for "expenses," there really is no way for either of us to answer that except as a household--those are not amenable to dividing up given our finances/choices....)
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lthenderson
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Re: Time to reach 1M and 2M milestones

Post by lthenderson »

10 years for the 1rst million
5 years for the 2nd million

Since I have no need to touch the money yet in the near future, the asset allocation has remained the same.
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Re: Time to reach 1M and 2M milestones

Post by arsenalfan »

NW of bank accounts (exclude real estate equity/cars/crap):

Graduating Medical School to $1M: 7 years
$1M to $2M: 3 years
deltaneutral83
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Re: Time to reach 1M and 2M milestones

Post by deltaneutral83 »

sanfran2015 wrote:The time to get from $1M to $2M seems too quick - 3-5 years for most folks who replied.
I just went to the S&P return since March 2009 (the low) and US equities returned 17.45% a year (with div's reinvested). So if you escaped the mess with $500k in US equities, it would be worth approx $2M without contributing a dime and letting it ride/compound. It's fascinating to think about given that there's been 10x more coverage on things like TARP, flash crash, Steve Jobs' death, Govt shutdown(s), Brexit etc etc since 2009.

Certainly wouldn't expect net worths to essentially double ($1M to $2M) any time soon unless it's from contributions. Could easily see the $2M net worths dip back down for a time and then come back up.
NW of bank accounts (exclude real estate equity/cars/crap):

Graduating Medical School to $1M: 7 years
$1M to $2M: 3 years
That is phenomenal if you had average med school debt.
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Re: Time to reach 1M and 2M milestones

Post by marti038 »

This has been a very interesting thread. Thank you all for posting.

We hit $500k in net worth a year or so ago I guess. I wasn't really tracking it closely to be honest.

Taking out home equity (about $135k), we are currently sitting at $487k which we started working on in 2007. We have saved roughly 15%-20% of our income in that timeframe. My wife stepped away from work for about 5 years to stay at home with our kiddos. She has just returned to work a couple of months ago. We should hit $500k in June.

I have a nerdy spreadsheet forecasting our savings from now until we both reach 100 (as if). Currently, I expect us to reach $1M in about 7 years which would be 17 total, but this doesn't assume any increase in income and a return on investment of 7.5% over that time period. We are also likely to ratchet up the savings rate, so we'll probably hit it sooner than we expect.
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Re: Time to reach 1M and 2M milestones

Post by inbox788 »

herennow wrote:I am curious what kind of portfolios got ppl from 1m to 2m in 3-4 years.

Someone also posted that after a point, either 500k or 1m, internal growth becomes the major driving force of portfolios. Was the growth from 1m to 2m a result of additional contributions or just market performance?
Don't know whether it applies, but the stars have aligned for some folks who may have begun working around 1990 (in their 20's) and around 2010 were able to accumulate around $1M in net worth. They were now middle aged, and making peak salary and savings. Some may have had kids and college expenses, but beginning to fade. They also had sufficient investments in the market that has done very well in the latest bull market now about 8 years going. With a few double digit gain years and hefty additions, both big contributors to net worth. In the early years, investment gains were minor and going forward, new additions are less likely to make as big a difference.
deltaneutral83 wrote:
NW of bank accounts (exclude real estate equity/cars/crap):

Graduating Medical School to $1M: 7 years
$1M to $2M: 3 years
That is phenomenal if you had average med school debt.
Not to mention residency with relatively low income. What percentage of doctors make $1M income in the 7 years after medical school, let alone savings or net worth.
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TierArtz
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Re: Time to reach 1M and 2M milestones

Post by TierArtz »

1M in 20 years, while serving in the Army after college (1987 to 2007).
2M in 6 more years, while investing (mostly index funds) through the recession (2007 to 2013).
Subsequent to 2M, internal growth is increasing the total at roughly 3X the rate of additional contributions.
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CyclingDuo
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Re: Time to reach 1M and 2M milestones

Post by CyclingDuo »

inbox788 wrote:What percentage of doctors make $1M income in the 7 years after medical school, let alone savings or net worth.
Depends on what they were invested in during that time frame in terms of the savings from their income growing.
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
ryman554
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Re: Time to reach 1M and 2M milestones

Post by ryman554 »

nova1968 wrote:
ryman554 wrote:
sanfran2015 wrote:
For folks who have a net worth of >$2M, you are in the top 5% of Americans!
Not quite. Unless you had that net worth 4 years ago. Markets have been substantially higher over these four years, so I expect the 5% NW requirement to also be substantially higher when the new SCF numbers come out. Anybody know when that will be?
Maybe among BHs but I believe around 5% of house holds have 1M networth, take away the California housing market and its far less.
No, the data sanfran2015 commented on was from the 2013 study of consumer finances, about as wide a study of the "health" of american households as there is. Back in 2013, it took ~$1.87M to get into the 95% percentile of household net worth, loosely defined as assets - debts. It's a very good report, you should read it.

Back in 2013, not quite 10% (~9.5%) of all households reported a 1M net worth.

Boglehead or not, that's what the data says for all Americans.

I believe that the NW have shifted higher over the past four years due to market and housing run-ups from 2013-2016, and will find it safe to say that a 1M net worth now does not qualify you for the 90% percentile any longer, let alone to be in the top 5%. I also find it likely (but not certain) that even a 2M net worth would not qualify you for the top 5% percentile, either.

Goalposts have been moved, indeed.
Snowjob
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Re: Time to reach 1M and 2M milestones

Post by Snowjob »

deltaneutral83 wrote: ...I just went to the S&P return since March 2009 (the low) and US equities returned 17.45% a year (with div's reinvested). So if you escaped the mess with $500k in US equities, it would be worth approx $2M without contributing a dime and letting it ride/compound...
The trick is having 500k in equities at the bottom !
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Re: Time to reach 1M and 2M milestones

Post by nova1968 »

ryman554 wrote:
nova1968 wrote:
ryman554 wrote:
sanfran2015 wrote:
For folks who have a net worth of >$2M, you are in the top 5% of Americans!
Not quite. Unless you had that net worth 4 years ago. Markets have been substantially higher over these four years, so I expect the 5% NW requirement to also be substantially higher when the new SCF numbers come out. Anybody know when that will be?
Maybe among BHs but I believe around 5% of house holds have 1M networth, take away the California housing market and its far less.
No, the data sanfran2015 commented on was from the 2013 study of consumer finances, about as wide a study of the "health" of american households as there is. Back in 2013, it took ~$1.87M to get into the 95% percentile of household net worth, loosely defined as assets - debts. It's a very good report, you should read it.

Back in 2013, not quite 10% (~9.5%) of all households reported a 1M net worth.

Boglehead or not, that's what the data says for all Americans.

I believe that the NW have shifted higher over the past four years due to market and housing run-ups from 2013-2016, and will find it safe to say that a 1M net worth now does not qualify you for the 90% percentile any longer, let alone to be in the top 5%. I also find it likely (but not certain) that even a 2M net worth would not qualify you for the top 5% percentile, either.

Goalposts have been moved, indeed.
As you stated net worth is loosely defined, My interpretation of net worth is investible assets of the individual. For example the U.S Government Thrift Savings Plan (TSP) has 3000 participants out of 6,000,000 with a million dollars in assets, which is a fraction of one percent. According to the loosely defined study someone who bought a studio apartment in San Francisco in 1960, paid it off, makes minimum wage and has no investible assets is in the 2M milestone club. Another example is a couple living with their parents and grand parents in a trailer which is a household of 6, If the trailer is worth 150K and each family member has 150K they are categorized into the 1m milestone club.
The Forbes 400 lists individual net worth not household NW.
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Re: Time to reach 1M and 2M milestones

Post by ryman554 »

nova1968 wrote:
As you stated net worth is loosely defined, My interpretation of net worth is investible assets of the individual. For example the U.S Government Thrift Savings Plan (TSP) has 3000 participants out of 6,000,000 with a million dollars in assets, which is a fraction of one percent. According to the loosely defined study someone who bought a studio apartment in San Francisco in 1960, paid it off, makes minimum wage and has no investible assets is in the 2M milestone club. Another example is a couple living with their parents and grand parents in a trailer which is a household of 6, If the trailer is worth 150K and each family member has 150K they are categorized into the 1m milestone club.
The Forbes 400 lists individual net worth not household NW.
That is not the definition of net worth, as used by economists. There is one accepted definition of net worth, meaning, again being loose with words, but not with definition: "what you own minus what you owe". I see your examples, and see nothing wrong with them, even if they are "corner cases", which is why percentiles are used. Read the study, it breaks down the relative "contribution" between investments and housing and you can find all the answers you wish.

I don't care about the Forbes 400 list, but there are rational reasons to compute net worth per capita vs. per household. Per capita is mainly for a "who is richest" vs. per household indicating "family" wealth. That very debate has been had here, and since expenses increase sub-linearly (logarithmically?) with household size, per household seems to be the accepted view here, but certainly not the only view.

I would also ask, if you did not mean to include non-liquid assets, such as houses, why you would comment on the housing market in California in your initial response when estimating 5%?

Regardless, there is no question that, under your narrower definition, and the initial theme of this thread, there are less folks with 1M in liquid assets vs. 1M total net worth. Again, many many threads have covered this exact debate, and the theme seems to be that it is indeed more useful to track "liquid assets" to track retirement milestones unless one plans to sell the house immediately upon retirement and downsize. Net worth not being the best gauge of financial independence.

As for milestones? 1M in net worth AND 1M in investible assets are both worth celebrating. I just hope I hit the latter before I hit 2M in the former..
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Re: Time to reach 1M and 2M milestones

Post by jasg »

wassabi wrote: Fri Apr 28, 2017 2:43 pm
jasg wrote:- At the end of 1989, at age 40, I had about $80k invested, 75% retirement funds.
(This was after 7 years at a 'real' job and was 1.5x my salary.)

- At the end of 1999, at age 50, I had a million invested. 78% retirement funds.

- 2007, $1.6M (lost $700k by March 2009 but held firm)

- At the end of 2009, at age 60, $1.4M invested, 77% retirement funds.
(In April, five weeks after the market low, I was laid off and decided to retire.)

A few days ago, after 8 years of retirement I hit the $2M mark in retirement funds alone.

Thanks for posting this info - very useful. Do you recall the asset allocation(s) you had during these periods? It looks like you retired and presumably lived off your retirement funds, but still enjoyed very nice growth in your portfolio.
Sorry, between 40 & 60, I was not following any particular AA scheme. I was predominantly in equities - probably 90% or more. I just bought solid stocks & funds and forgot about them. At age 60 and retirement in 2009, I cut back to 70/30 and started transitioning to all index funds.

Since then, I have been spending down non-retirement funds.

I finally got rid of the last of my non-index fund holdings last fall and am at 50/50 overall. However, I have diversified into TIAA and TREA and Traditional (fully liquid) which is now 40% of my portfolio. The other 60% is in a 3-fund portfolio with an AA of 80/20 (It is larger than what I had when I started retirement 8 years ago.)

Basically, I took enough of my winnings off the table to cover the next 10 years but still am aggressive with the rest...
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Re: Time to reach 1M and 2M milestones

Post by JBTX »

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Last edited by JBTX on Sat Aug 04, 2018 3:03 pm, edited 1 time in total.
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Re: Time to reach 1M and 2M milestones

Post by Portfolio7 »

It took 23 years of investing to reach $1M of investable assets - which, if you count my vested cash pension sitting in ST Treasuries, we did this year at age 50. First year we invested about $2K; that grew to around $15K/year within a couple years. In all the years since, we averaged very near that same cash figure, varying +/- $3K. Along the way we took hits in 2001-2003 and 2008, but recovered in 2-3 years in each case.

20 odd years ago I estimated we'd have $2M at about age 57, and could retire if we wanted. With a lot of planning and a healthy dose of luck, we seem pretty much on target - but the other side of the coin is that my eventual pension was slashed 90%, potential SS payout may be short 30%, and frankly my employer seems to grow a little shakier every year. So, the ground shifted. Now I'm looking for a more secure job, and we're thinking age 62 (+/- a couple years) and $3M.

So, growth of investable assets is important. But so is savings rate, job stability, company benefits.
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Re: Time to reach 1M and 2M milestones

Post by davidsorensen32 »

12 years to reach $1M
+5 years to reach $2M
sanfran2015 wrote: Sun May 17, 2015 5:25 pm Hi all,
For those folks who are in the two comma club, I am wondering if you could chime in with how long it took you to reach 1M and 2M milestones.
They say the first $1M is the hardest. Is that really true? If so, time to go from $1M to $2M should be much shorter than time to get to $1M.

Has there been a poll done on this kind of question?

Thanks.
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Re: Time to reach 1M and 2M milestones

Post by Dottie57 »

wjo wrote: Mon May 18, 2015 12:06 am
sanfran2015 wrote:
livesoft wrote:
FinanceGeek wrote:In reality, once people hit a certain level of wealth they don't compound at the same rates they have in the past.
I have to write that my experience shows the portfolio did not slow down. One reason is that one cannot really contribute a significant new fraction to the portfolio when it is large. The gains are mostly just internal from investment returns and not from new contributions.
Assuming a $1M portfolio with 60/40 AA
(1) Annual interest+dividend of 2% --> 20k
(2) Annual growth of stock portion of 5% (of 600k) --> 30k
(3) Total returns -->50k

So if your additional annual contributions has to be >>50k to be a meaningful contribution of your growth. Is this valid?
No, you certainly don't need >>$50k for additional contributions to be a meaningful contribution to growth of your corpus. In this example, just contributing $50k/yr (not >>$50k) means your contributions equals your growth - so still significant.

If instead, say, you contributed $25k/year, in 10 years that would be $250k in contributions plus whatever growth on those contributions. That would be 1/4 of the $1 million at the start of the period, so not insignificant.

It has taken me 29 years to get to 1.044m in retirement accounts. Max contributions when I started putting $ into 401k was about 9k so max amount has doubled.
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Re: Time to reach 1M and 2M milestones

Post by cashmoney »

I was working on making my second million by the age of 30 after failing to make my first million.
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