How long did it take you to get from 500k to 1M?

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kurious
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How long did it take you to get from 500k to 1M?

Post by kurious »

Hello Bogleheads,

Earlier this year, we hit the 500k milestone with a combination of 60% VTI, 20% VXUS, 10% cash, and 10% apartment in a foreign nation. I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.

The first 500k has taken a lot of sweat, persistence, and discipline over the last eight years; three in school and five at work. It has got us to the point of Barista FIRE in our country of origin if we wanted to go down that path (not that we want to). The second 500k, if we get it, could mean FI for us in our country of origin.

As a result, some of my patience has been replaced by restlessness and dare I say, greed. I am taking steps to regain my sanity, stay focused at work, and enjoy life.

Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?

Thank you very much.

kurious
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Re: How long did it take you to get from 500k to 1M?

Post by Godot »

kurious wrote: Mon Aug 02, 2021 8:21 pm Hello Bogleheads,

Earlier this year, we hit the 500k milestone with a combination of 60% VTI, 20% VXUS, 10% cash, and 10% apartment in a foreign nation. I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.

The first 500k has taken a lot of sweat, persistence, and discipline over the last eight years; three in school and five at work. It has got us to the point of Barista FIRE in our country of origin if we wanted to go down that path (not that we want to). The second 500k, if we get it, could mean FI for us in our country of origin.

As a result, some of my patience has been replaced by restlessness and dare I say, greed. I am taking steps to regain my sanity, stay focused at work, and enjoy life.

Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?

Thank you very much.

kurious
Barista FIRE?
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Picasso
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Re: How long did it take you to get from 500k to 1M?

Post by Picasso »

Buy a Toyota Corolla
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kurious
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Re: How long did it take you to get from 500k to 1M?

Post by kurious »

Barista FIRE?
Yep! That's a thing
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baconavocado
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Re: How long did it take you to get from 500k to 1M?

Post by baconavocado »

I don't think you're going to get very useful answers because accumulating $500K 20-30 years ago is not going to be the same as today and the stock market has performed somewhat erratically over that time period. That said, my spreadsheet shows about 3 years.
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Re: How long did it take you to get from 500k to 1M?

Post by Money_Badger »

kurious wrote: Mon Aug 02, 2021 8:21 pm Hello Bogleheads,

Earlier this year, we hit the 500k milestone with a combination of 60% VTI, 20% VXUS, 10% cash, and 10% apartment in a foreign nation. I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.

The first 500k has taken a lot of sweat, persistence, and discipline over the last eight years; three in school and five at work. It has got us to the point of Barista FIRE in our country of origin if we wanted to go down that path (not that we want to). The second 500k, if we get it, could mean FI for us in our country of origin.

As a result, some of my patience has been replaced by restlessness and dare I say, greed. I am taking steps to regain my sanity, stay focused at work, and enjoy life.

Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?

Thank you very much.

kurious
So market dependent ... we've gone from 330 to 576 in less than 2.5 years, but most of that is market run up.

I feel like the markets will correct, but we still have a solid 10 years before I can think about retiring. I hope to have 1.5 mil at that point, not including DWs state pension.

The rule of 72 says you could double your money in 7 years at 10% return. I would say that's optimistic but the average ten year return is 9.2% and the last 10 years have netted 13%.

Stay the course, don't stress about the market, when it turns south, view it as a buy opportunity, and save, save, and save!
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kurious
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Re: How long did it take you to get from 500k to 1M?

Post by kurious »

Yeah, I know what you mean. Our NW has had a rapid ride up over the last couple of years because of the market. Our contributions, typically ~60k/year stayed constant but the market gave our NW a nice push. Frankly, I was surprised by how quickly it added to our accounts. We did stay disciplined through the flash corrections and did not make any changes.
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Re: How long did it take you to get from 500k to 1M?

Post by reln »

kurious wrote: Mon Aug 02, 2021 8:21 pm Hello Bogleheads,

Earlier this year, we hit the 500k milestone with a combination of 60% VTI, 20% VXUS, 10% cash, and 10% apartment in a foreign nation. I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.

The first 500k has taken a lot of sweat, persistence, and discipline over the last eight years; three in school and five at work. It has got us to the point of Barista FIRE in our country of origin if we wanted to go down that path (not that we want to). The second 500k, if we get it, could mean FI for us in our country of origin.

As a result, some of my patience has been replaced by restlessness and dare I say, greed. I am taking steps to regain my sanity, stay focused at work, and enjoy life.

Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?

Thank you very much.

kurious
3 to 4 years.
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Re: How long did it take you to get from 500k to 1M?

Post by fortunefavored »

kurious wrote: Mon Aug 02, 2021 8:21 pm Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?
Don't hit 500K exactly at the peak in 2008, despite making double (or more) as much money in later years:

500K - 6 years
1M - 7 years

So I'd say the most important thing is luck. Ignore the noise, stay employed, invest through downturns. You get what you get.
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Re: How long did it take you to get from 500k to 1M?

Post by Lee_WSP »

You can run it through this simple calculator under a variety of assumptions.

https://www.investor.gov/financial-tool ... calculator

Otherwise you could try a Monte Carlo simulation for a range of possibilities.

https://www.portfoliovisualizer.com/mon ... simulation
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Re: How long did it take you to get from 500k to 1M?

Post by Bullma »

That is an interesting question. I just retired, and was looking back on how much I saved and how much I had in my 401K account. With minimal saving from each of my paycheck, to just get the max few percent of company matching, it took me almost 30 years to get to 500K in mid 2019. But it only took the last 2 years to double it to 1M.
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Re: How long did it take you to get from 500k to 1M?

Post by VanGar+Goyle »

Not that long. It took much longer to get the first 500k.
What you really want is to plot your net worth on log paper, to see if you are doubling every 7 to 10 years.
Of course when starting out, most of your gain in net worth is from savings/contributions,
so it is relatively easy to double from 30k to 60k ( I assume you mean dollars, not pesos or kilograms :)
Later most of your gain is from the investments themselves.
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Atilla
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Re: How long did it take you to get from 500k to 1M?

Post by Atilla »

It took between 4 and 5 years to get from $500K to $1 million - 2010 to 2015

$1 million to $2 million took another 5 years - 2015 to 2020.

No changes in tactics during this period.
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Re: How long did it take you to get from 500k to 1M?

Post by trevorshhh »

When I started posting here, in January 2019, my net worth was around $125k. My current net worth is $540k. In early 2019 I had a big promotion and since that time my wife has started working, the stock market has done quite well, the housing market in my area has exploded, and we've had relatively little lifestyle inflation. Most excess money is getting dumped into the market. All that to say, we had some luck on our side and every situation is different. However, we may be doing some "lifestyle inflationary" activities in the next 2 years like buying a nicer house so I don't expect it to grow at the same pace.
All in VTI, VXUS, BND and equivalents.
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Re: How long did it take you to get from 500k to 1M?

Post by smithers »

kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
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Re: How long did it take you to get from 500k to 1M?

Post by scrabbler1 »

If you count the value of my low-end co-op apartment I owned outright, it took me about 6 years (2001-2007). If you don't count it, it took me about 7 years (2003-2010). A lot of things happened in those overall 9 years, from the 2001-2002 economic downturn to the exploding value of my company stock from 2003-2007 to another economic downturn in 2008-2009. I also retired in late 20008, so my meager (part-time) wage income disappeared while the markets rebounded.
Last edited by scrabbler1 on Tue Aug 03, 2021 9:35 am, edited 1 time in total.
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Re: How long did it take you to get from 500k to 1M?

Post by marti038 »

About 2 years, but those years were 2019 & 2020. I'd expect it to take 4-6 "normal" years if you're also making contributions during that time.
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Re: How long did it take you to get from 500k to 1M?

Post by LittleMaggieMae »

This is so market dependent combined with with how much you are contributing each year.

But... having a Big Balance that starts pulling it's weight ALONG with one's contributions is helpful. (there's that idea of "Critical Mass" where your investments either throw off more than you are contributing or throw off your yearly expenses or some other important to you number. )


FWIW: my accounts have all had the biggest increases over the last 2 to 3 years. I don't keep very good track of when I hit "milestones".... mostly cause I hit a milestone and then the numbers drop a bit and then I hit the milestone again. sometimes it bounces a bit over the course of 3 or 6 months and then it starts bouncing over the milestone - when I mark down that I hit the milestone. :
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Re: How long did it take you to get from 500k to 1M?

Post by renega »

12 years for us. From 1998 to 2010 to go from 500K to 1M. Two recessions and two kids through college. Paid for college out of pocket and gave them their college savings accounts when they graduated.
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Re: How long did it take you to get from 500k to 1M?

Post by Ron Ronnerson »

Picasso wrote: Mon Aug 02, 2021 8:35 pm Buy a Toyota Corolla
The proof is in the pudding:

Age 32 (my wife and I are the same age): net worth reached $0
Age 40: net worth hit $500k. We took the sage advice and bought his & hers Corollas at this time.
Age 44: net worth crossed $1m
Age 46 (currently): net worth is $1.6m

Income is around $115k/year. I attribute the trajectory, in part, to the Corollas.
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Re: How long did it take you to get from 500k to 1M?

Post by LadyGeek »

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Re: How long did it take you to get from 500k to 1M?

Post by Quirkz »

To go from 0 to $500k too me 20 years of adult working.

To go from $500k to $1m took about 4. That said, I only hit it this May, and the market has been very strong lately.

Also, a good 10 of the first 20 years were almost totally wasted. I had about as much net worth at age 32 as I did at 22. Then I also had a rather large upswing in my career and salary at my mid-30s, so the numbers are all kind of skewed.

All of which is to say it's highly personal and market dependent. But on the other hand, it definitely speeds up, and you can count on that. My notes about my early net worth also show that it took me 9 years of saving to get my first $150k, but then only 4 years to get from there to $300k. Smaller numbers; same principle.
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Re: How long did it take you to get from 500k to 1M?

Post by nisiprius »

Twelve years.

Story similar to renega's.

Total of dollar numbers as listed on statements. It includes ongoing contributions and savings made during that time period. It does not include the value of our house. During the twelve-year period I bought some single premium immediate annuities and I include the present value of those annuities in the total; that is, if I had $X and use $Y of it to buy a single premium immediate annuity, my total remains $X.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: How long did it take you to get from 500k to 1M?

Post by tj »

smithers wrote: Tue Aug 03, 2021 9:25 am
kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
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Re: How long did it take you to get from 500k to 1M?

Post by 02nz »

tj wrote: Tue Aug 03, 2021 12:31 pm
smithers wrote: Tue Aug 03, 2021 9:25 am
kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
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Re: How long did it take you to get from 500k to 1M?

Post by tj »

02nz wrote: Tue Aug 03, 2021 12:33 pm
tj wrote: Tue Aug 03, 2021 12:31 pm
smithers wrote: Tue Aug 03, 2021 9:25 am
kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
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Re: How long did it take you to get from 500k to 1M?

Post by 02nz »

tj wrote: Tue Aug 03, 2021 12:34 pm
02nz wrote: Tue Aug 03, 2021 12:33 pm
tj wrote: Tue Aug 03, 2021 12:31 pm
smithers wrote: Tue Aug 03, 2021 9:25 am
kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
Huh? What does income have to do with it? My point is the same whether that person is retired with 0 income or is making $500K a year.
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Re: How long did it take you to get from 500k to 1M?

Post by tj »

02nz wrote: Tue Aug 03, 2021 12:37 pm
tj wrote: Tue Aug 03, 2021 12:34 pm
02nz wrote: Tue Aug 03, 2021 12:33 pm
tj wrote: Tue Aug 03, 2021 12:31 pm
smithers wrote: Tue Aug 03, 2021 9:25 am

You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
Huh? What does income have to do with it?
If you sell $500k of your investments to buy a house, you lose all the income said investments were producing. A house does not produce income unless you rent it out.

Inlcluding a house that you live in in your net worth when you aren't planning to sell it (and thus have it be available to spend) just seems silly.
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Re: How long did it take you to get from 500k to 1M?

Post by 02nz »

tj wrote: Tue Aug 03, 2021 12:39 pm
02nz wrote: Tue Aug 03, 2021 12:37 pm
tj wrote: Tue Aug 03, 2021 12:34 pm
02nz wrote: Tue Aug 03, 2021 12:33 pm
tj wrote: Tue Aug 03, 2021 12:31 pm

Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
Huh? What does income have to do with it?
If you sell $500k of your investments to buy a house, you lose all the income said investments were producing. A house does not produce income unless you rent it out.

Inlcluding a house that you live in in your net worth when you aren't planning to sell it (and thus have it be available to spend) just seems silly.
Look up imputed rental income. It's a thing and is counted in our GDP.
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Re: How long did it take you to get from 500k to 1M?

Post by HomerJ »

How much do you save a year?

Pretty important data point.

Someone who saves $60k a year will get there faster than someone who saves $20k a year.
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Re: How long did it take you to get from 500k to 1M?

Post by cflannagan »

We hit 500k NW at some point around 2012 or 2013. We're currently at nearly $1.7M net worth. I think we hit $1M NW at some point early 2018 but not 100% sure.

This is with us maximizing our IRAs, 401k, HSA, etc every year though. Still hard at work maximizing our savings.
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Re: How long did it take you to get from 500k to 1M?

Post by trevorshhh »

tj wrote: Tue Aug 03, 2021 12:31 pm
smithers wrote: Tue Aug 03, 2021 9:25 am
kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
You should definitely include any real estate equity in your net worth. There are some on this forum who make emotional arguments for why it shouldn't be included, but they're in the minority (at least I hope they are-- they're definitely not right :D).
Unless you plan to sell it, how is it useful to include it?
I personally keep on my net worth spreadsheet three values: total net worth, net worth without house in the consideration at all, and net worth if I have to pay back my mortgage and my house was worth 0. My worst case is the last one in some sort of catastrophic event. I also in my spreadsheet base my house value on the average of several indicators for value (including Zestimate) and then take 90% of that value, so it's definitely on the conservative side. Although now I'm waiting to see how well my next door neighbor's house does as it is very similar to mine and is listed for much higher than I estimate my house to be worth.
All in VTI, VXUS, BND and equivalents.
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Re: How long did it take you to get from 500k to 1M?

Post by tj »

I guess, for me, the only useful net worth metric is my "spendable net worth". What base of assets can I use for the 4% rule? homes are assets, but they have unpredictable expenses. I can liquidate it but there's no guarantee that I get what I paid for it when I do. It doesn't seem helpful for me to include it in my net worth, but certainly it can reduce my expenses in some years versus renting.
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Re: How long did it take you to get from 500k to 1M?

Post by Vulcan »

kurious wrote: Mon Aug 02, 2021 8:21 pm Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?
3 yrs (2017-2020) of continued savings and favorable market returns.

Including or excluding home equity only changes the answer by a few months since we live in a LCOL area.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: How long did it take you to get from 500k to 1M?

Post by HomerJ »

Net worth definitely includes home equity.

Trying to decide if you have enough to retire should exclude home equity (unless you plan to downsize in retirement to get some that equity out).

A paid off house in retirement is already accounted for because your retirement expenses are lower (with no mortgage or rent payments).
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Re: How long did it take you to get from 500k to 1M?

Post by Ron Ronnerson »

tj wrote: Tue Aug 03, 2021 12:56 pm I guess, for me, the only useful net worth metric is my "spendable net worth". What base of assets can I use for the 4% rule? homes are assets, but they have unpredictable expenses. I can liquidate it but there's no guarantee that I get what I paid for it when I do. It doesn't seem helpful for me to include it in my net worth, but certainly it can reduce my expenses in some years versus renting.
I think it's fine to come up with different metrics that work for your own situation but the regular, old "net worth" has a specific definition and it includes the house. By the way, the equity in a home can be spendable. In fact, I recently did a cash-out refi with the goal of spending the equity in my house on non-housing related expenses. I took out $150k from the home and went on a two-week vacation to Hawaii with the proceeds last month and have also invested part of the money in a taxable account.

Sure, home prices can fluctuate but that can happen to stocks too. Think of a situation where two people have no cash or investments but one of them owns a home worth a ton of money. That home isn't just a home. It's options. The person could sell the home and retire to a LCOL area (Oklahoma, Vietnam, etc.).
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Re: How long did it take you to get from 500k to 1M?

Post by dboeger1 »

02nz wrote: Tue Aug 03, 2021 12:41 pm
tj wrote: Tue Aug 03, 2021 12:39 pm
02nz wrote: Tue Aug 03, 2021 12:37 pm
tj wrote: Tue Aug 03, 2021 12:34 pm
02nz wrote: Tue Aug 03, 2021 12:33 pm

Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
Huh? What does income have to do with it?
If you sell $500k of your investments to buy a house, you lose all the income said investments were producing. A house does not produce income unless you rent it out.

Inlcluding a house that you live in in your net worth when you aren't planning to sell it (and thus have it be available to spend) just seems silly.
Look up imputed rental income. It's a thing and is counted in our GDP.
Not only are imputed rent and the possibility of paying off a mortgage and permanently lowering cost of living hugely important, but there are ways of accessing home equity that don't involve ending up on the street during one's lifetime. This includes reverse mortgages, HELOCs, relocating to cheaper areas, etc. It makes no logical sense to equate owning a $1m home to renting just because both people have the same liquid portfolio sizes. The person with the home is clearly and objectively $1m wealthier and has the ability to convert that home wealth to money by adopting the renter's lifestyle and converting the asset. In OP's case, it sounds like they're considering relocating to a cheaper country of origin, so it really makes no sense to ignore the value that is tied up in their current home.

As for OP's question, we have not yet hit $1m, but I totally get the impatience. While I can respect that most average non-Bogleheads spend several decades of their life working and that the ability to aim for early retirement is quite a privilege, there is also a certain challenge to saving such high percentages of income when everyone around you seems to be spending more, especially if it feels like you're really cutting expenses to the bone. For the past several years, my wife and I have also been super savers in pursuit of FIRE, and she would often say things like, "We can't buy that because we're poor." It would make me really uncomfortable because I've been poor (I'm pretty sure she has too, which is odd), and we are absolutely not poor to be able to save like we do, but I also understood why she felt that way, because we were really aggressively deferring gratification while our peers were sharing their luxury vacations and fancy cars. That can really wear on you over time. However, it's important to stay grounded in reality and recognize that it's highly unusual to retire young. If you wake up every morning stressing out about reaching your FIRE number, your work is going to feel like a drag, and you're not going to enjoy your life in the interim.

At the end of the day, the time it takes to reach $1m is so highly dependent on market returns and other factors, there is no apples-to-apples comparison. For example, in our case, we were just shy of about $400k before the pandemic. Then my wife got a huge unexpected increase to her income, which made it easier for us to qualify for a home and increase our savings. We decided to buy a home while interest rates were low and the market was still uncertain. Our timing ended up being perfect, as we snatched up a below-market home which boosted our net worth by about $100k within a few short months due to all the recent market craziness. We also got some money from my in-laws, and then my wife's income increased again since the start of the pandemic. With all of those wonderful surprises and continuing to save during a choppy but overall up market, we're now around $850k less than 2 years later, which blows my mind. However, what I've noticed is that over the past 2 months or so, we've pretty much been stuck in a very narrow band, unlike the months leading up to that where our net worth just seemed to explode. And it has been testing my patience. Every day, I check our net worth, and it bugs me that it barely seems to budge, or as soon as it goes up, it just drops back down again.

Logically, I know that markets don't just go up in a straight line, and the higher our net worth gets, the more exposed to market fluctuations we are. I should not be at all surprised by a 50% market drop that takes years to recover from. That's a very concerning possibility with a high allocation to stocks. Therefore, it's really not appropriate for me to extrapolate gaining $450k net worth in under 2 years into perpetuity. That happened because of a combination of very specific circumstances that went in our favor in the short term. If I could, I'd say we'll hit $1m within a year, but realistically, I don't think that's going to happen. I don't think we'll see the same market returns, we won't buy another house at a below-market price any time soon, we won't get more family money, and we most likely won't see huge unexpected raises again either. With a kid on the way, our expenses will probably go up too. All of that says very little about what you are likely to achieve. There's just no direct comparison between people's circumstances and means to save.

Stay the course. We'll get there eventually. Try to enjoy life in the meantime, because you won't get this time back regardless of the date you hit your number. I'm not in love with my career either and looking to change at some point, but I can certainly find ways to cope better on my way to FIRE.
hi_there
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Re: How long did it take you to get from 500k to 1M?

Post by hi_there »

tj wrote: Tue Aug 03, 2021 12:39 pm
02nz wrote: Tue Aug 03, 2021 12:37 pm
tj wrote: Tue Aug 03, 2021 12:34 pm
02nz wrote: Tue Aug 03, 2021 12:33 pm
tj wrote: Tue Aug 03, 2021 12:31 pm

Unless you plan to sell it, how is it useful to include it?
Someone who was renting, with a net worth of $1M, who then bought a $500K house with cash, definitely did not see their net worth drop by half.
No? They eliminated their rent cost, but they also massive lowered their income.
Huh? What does income have to do with it?
If you sell $500k of your investments to buy a house, you lose all the income said investments were producing. A house does not produce income unless you rent it out.

Inlcluding a house that you live in in your net worth when you aren't planning to sell it (and thus have it be available to spend) just seems silly.
I don't think it's silly to include a house in net worth. Even if you don't plan to move, you can sell the house if you have to. Maybe you have a personal financial emergency - better to have a house to sell than not. Maybe you lived in the Bay Area and your $1 million house 20 years ago is now $5 million, so you decide to move.

The loss of income argument isn't great either. Let's say you are convinced to hold $500k in cash, therefore forgoing income you might have earned from investments. Do you also subtract this from your net worth?

The rental income loss argument is further perplexing, as you now don't have to pay rent to a landlord. This benefit is clearly an asset on your personal balance sheet.

Maybe you might want to discount your home value for personal accounting purposes. However, saying the house has zero net worth implications seems very anti-reality.
ponyboy
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Re: How long did it take you to get from 500k to 1M?

Post by ponyboy »

Around 5.5 years to get from $500k to $1M in investments/savings.

To get from $1M to $1.5M took around 2 years (present day) in investments/savings.

If you're cheating and including your home, I guess we went from $1M to $2M in 2 years.
jharkin
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Re: How long did it take you to get from 500k to 1M?

Post by jharkin »

kurious wrote: Mon Aug 02, 2021 8:21 pm I know we aren't supposed to count a residence in NW, but I did so anyway to jack up my numbers.
Says who? equity is an asset just like any other. If you die and your estate liquidates it has value.

I track two numbers - total (or estate) NW, and liquid (financial assets that can buy stuff) NW.

The first 100k felt impossible and took a decade. 100-500 took 9 years or so. 500-1m was fast, barely 4 years. 1-2mil may take even less than that, as the gains start snowballing.
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alpenglow
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Re: How long did it take you to get from 500k to 1M?

Post by alpenglow »

Unfortunately, my spreadsheet doesn't go back far enough, so this isn't quite so useful. Whatever the case, we went from $640k to $1m in 41 months. $1m to $2m in 72 months.
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HomerJ
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Re: How long did it take you to get from 500k to 1M?

Post by HomerJ »

Ron Ronnerson wrote: Tue Aug 03, 2021 1:25 pmBy the way, the equity in a home can be spendable. In fact, I recently did a cash-out refi with the goal of spending the equity in my house on non-housing related expenses. I took out $150k from the home and went on a two-week vacation to Hawaii with the proceeds last month and have also invested part of the money in a taxable account.
You have to pay that money back. Now your monthly expenses are higher.
That home isn't just a home. It's options. The person could sell the home and retire to a LCOL area (Oklahoma, Vietnam, etc.).
Yes, downsizing options are definitely something to keep in mind when doing the calculations. That's definitely a good way to free up equity for spending in retirement.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Ron Ronnerson
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Re: How long did it take you to get from 500k to 1M?

Post by Ron Ronnerson »

HomerJ wrote: Tue Aug 03, 2021 2:30 pm
Ron Ronnerson wrote: Tue Aug 03, 2021 1:25 pmBy the way, the equity in a home can be spendable. In fact, I recently did a cash-out refi with the goal of spending the equity in my house on non-housing related expenses. I took out $150k from the home and went on a two-week vacation to Hawaii with the proceeds last month and have also invested part of the money in a taxable account.
You have to pay that money back. Now your monthly expenses are higher.
My point is just that the equity in a house can sometimes be accessible without necessarily needing to sell it. It’s better to have equity in a home than not because it provides options and people shouldn’t just ignore the equity as if it isn’t there. In my case, the equity is proving to be very useful due to my specific circumstances.
namajones
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Re: How long did it take you to get from 500k to 1M?

Post by namajones »

Better question to me is how you lock in gains so that you don't go from 1M to 500k while retaining some upside.

Or better yet, how did you get from 500k to 1M from 2007 to March of 2009?

Timeframe means everything.
mnnice
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Re: How long did it take you to get from 500k to 1M?

Post by mnnice »

fortunefavored wrote: Mon Aug 02, 2021 9:45 pm
kurious wrote: Mon Aug 02, 2021 8:21 pm Having said that, how long did it take you to go from 500k to 1M? Did you do anything differently to expedite or slow down this process? What difference did it make?
Don't hit 500K exactly at the peak in 2008, despite making double (or more) as much money in later years:

500K - 6 years
1M - 7 years

So I'd say the most important thing is luck. Ignore the noise, stay employed, invest through downturns. You get what you get.
I think we were almost to a million the last 50-75 k took 6 years. I think from 500k to 950k the first time took maybe 2.

Life is not a straight line.
retire2022
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Re: How long did it take you to get from 500k to 1M?

Post by retire2022 »

In my pretax 457 plan it went from 500k 3/2013 to one million to 11/2017.

The current balance is 1.755 million as of last night.
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rocket354
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Re: How long did it take you to get from 500k to 1M?

Post by rocket354 »

26 months. I hit 500k in April, 2019, and hit a million in June, 2021.

I did not do anything differently. I've been investing in index funds and rental properties and continued to do so. Most of that gain was in the last 6-8 months as the real estate market went bonkers, and the stock market continued strong.

I fully expect the path from 1.0 to 1.5 to take longer, simply because I don't expect either the RE or stock markets to continue as they have. But I will continue investing and, fingers crossed, will get there eventually.

For your purposes, if you are trying to gauge timelines, it's really impossible. The last few years have shown great returns, overall. There are some periods (2000-2010, for example) that do not. But don't fret. Even if it takes you considerably longer than 26 months to go from 500k - 1.0MM, it might be a very brief ride from, say, 1.0MM to 1.5 or 2.0. The market is like that.
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