33 - 1.4M Net Worth Drifting From Boglehead Strategy

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
YeahBuddy
Posts: 2505
Joined: Tue Oct 31, 2017 12:55 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by YeahBuddy »

smitcat wrote: Wed May 31, 2023 6:24 am
RobLyons wrote: Wed May 31, 2023 12:22 am
smitcat wrote: Tue May 30, 2023 7:40 am
RobLyons wrote: Mon May 29, 2023 4:05 pm
smitcat wrote: Mon May 29, 2023 9:06 am

"Many did well for a short period and then things came back to earth."
We wish that we started our own business's earlier than we actually did. While we were in our small businesses for 15+ years the earlier start would have been great. After selling a few years back the new owners are continuing to do really well.

That’s excellent. I could say the same thing about my current profession. But that’s all subjective. We know the statistics about small business success vs W2. Something like half of all small businesses fail within 5 years.

I guess whatever works for you is good!

I also share your sentiment that college is mostly a huge waste in this country. Big money grab with poor highschool guidance for decades. Recently I heard some news about free community college for residents. Can’t remember if that’s Boston or where but it’s a great start.
"Something like half of all small businesses fail within 5 years."
It would be great if you could spend some time at an SBA office (or SCORE or something similar) to know the real data and what it actually means.
Many of those business's did not fail they shut down - every one that is set up for a home flip or similar temporary business does this regularly. In addition to that any business that is sold (like our 3 a few years back) is also listed as discontinued. In our experience many of the small business that fail are due to substance abuse, divorce, large medical issues, etc.
We were both in corporate jobs for many years as well as in our own small business - we have seen both sides over many years.

"I also share your sentiment that college is mostly a huge waste in this country"
Sorry I did not say that, wrong person.

Well I'm unable to spend the time so is there a link you could provide to educate me? The exact wording is the businesses that "failed" and that's from investopedia and data from BLS.

And my mistake, OP stated he believes colleges are mostly a waste of money.
I remember you had asked about other job alternatives in other threads and it's not that time consuming to find out more about the options.
Most of what I learned was at the SBA but it was also easy to get better data when I was adjunct teaching a college course on 'entrepreneurship' at Stonybrook University. After I attended a number of meetings with many small business owners at the SBA it became very clear that small business was not nearly as difficult or competitive as one would think.

You remembered that? How long ago did I post that? Haha! I found it quite time consuming researching job alternatives. The best option was picking up more hours at my current job(s).

I feel there's a big disconnect here. And I don't mean to thread jack, just asking for clarification.
You're saying investopedia and BLS are incorrect and the correct information is insider information not available to the general public. Something like that? I'm not talking degree of difficulty or competition, but rather success rates. If BLS and investopedia are wrong, then there must be correct information somewhere that you could link.
Light weight baby!
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by smitcat »

RobLyons wrote: Thu Jun 01, 2023 5:22 am
smitcat wrote: Wed May 31, 2023 6:24 am
RobLyons wrote: Wed May 31, 2023 12:22 am
smitcat wrote: Tue May 30, 2023 7:40 am
RobLyons wrote: Mon May 29, 2023 4:05 pm


That’s excellent. I could say the same thing about my current profession. But that’s all subjective. We know the statistics about small business success vs W2. Something like half of all small businesses fail within 5 years.

I guess whatever works for you is good!

I also share your sentiment that college is mostly a huge waste in this country. Big money grab with poor highschool guidance for decades. Recently I heard some news about free community college for residents. Can’t remember if that’s Boston or where but it’s a great start.
"Something like half of all small businesses fail within 5 years."
It would be great if you could spend some time at an SBA office (or SCORE or something similar) to know the real data and what it actually means.
Many of those business's did not fail they shut down - every one that is set up for a home flip or similar temporary business does this regularly. In addition to that any business that is sold (like our 3 a few years back) is also listed as discontinued. In our experience many of the small business that fail are due to substance abuse, divorce, large medical issues, etc.
We were both in corporate jobs for many years as well as in our own small business - we have seen both sides over many years.

"I also share your sentiment that college is mostly a huge waste in this country"
Sorry I did not say that, wrong person.

Well I'm unable to spend the time so is there a link you could provide to educate me? The exact wording is the businesses that "failed" and that's from investopedia and data from BLS.

And my mistake, OP stated he believes colleges are mostly a waste of money.
I remember you had asked about other job alternatives in other threads and it's not that time consuming to find out more about the options.
Most of what I learned was at the SBA but it was also easy to get better data when I was adjunct teaching a college course on 'entrepreneurship' at Stonybrook University. After I attended a number of meetings with many small business owners at the SBA it became very clear that small business was not nearly as difficult or competitive as one would think.

You remembered that? How long ago did I post that? Haha! I found it quite time consuming researching job alternatives. The best option was picking up more hours at my current job(s).

I feel there's a big disconnect here. And I don't mean to thread jack, just asking for clarification.
You're saying investopedia and BLS are incorrect and the correct information is insider information not available to the general public. Something like that? I'm not talking degree of difficulty or competition, but rather success rates. If BLS and investopedia are wrong, then there must be correct information somewhere that you could link.
"I found it quite time consuming researching job alternatives. The best option was picking up more hours at my current job(s)."
I remember that as in that post I suggested things like getting extra certs as my daughter and friends have done.
In the past we researched numerous jobs but many more potential business ventures, maybe 20 or more in some detail and it did not take that long at all.

"You're saying investopedia and BLS are incorrect and the correct information is insider information not available to the general public"
It is not inside information at all - just need to visit your local public SBA that serves the small business community fueled with your tax dollars.

"I'm not talking degree of difficulty or competition, but rather success rates"
When you own a small business and 'shut it down' they send you a short survey - the questions on the survey do not cover many/most of the reasons for a shut down. Many shut-downs are planned before a specific business even starts - intention to sell, flipping a home, a stand alone event, etc.

"then there must be correct information somewhere that you could link"
You could start here with a research summary of SBA fact from 2015 - more than 55% of shutdowns due to personal reasons like selling the business, retiring, etc. (some needed to be written in as they do not ask)....
/https://www.sba.gov/sites/default/files ... y_2018.pdf

Really worthwhile to spend a couple of hours at an SBA office to get a real feel for this if you are at all interested.
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by DoctorE »

Great thread.
Lots of good advice has already been posted so hopefully OP takes heed.

In context OP, I was in your shoes about 15y ago. I started a business, it was wildly successful and would do it over again, at that time!
Now, after I cashed-out, no way would I do it again!

My suggestions would be:
- go for it on the business side
- don't make the mistake of confusing a business and investing. Separate things, requiring completely separate skills and mind set
- take risk on the business side, but don't put it all on red
- invest in a stock heavy diversified bogle style portfolio, have an emergency fund and use 5-10% 'play money' this will allow you to make silly decisions like stock picking, give some of the 5-10% to a wealth manager if you think they can outperform and you can compare everything to your personal benchmark of a simple passive portfolio
- don't use leverage
- as for rentals, if that's your thing, start with one and see how you like it for a couple of years while you juggle your business. I personally tried it with my vacation place and hated it. Can't wait to get rid of it ! Others make millions in real estate but don't confuse it with passive investing.

The rest who think $10M is not 'that much $', y'all watching too much Succession and Instagram fake crypto lambo driving 'millionaires'. Read The Millionaire Next Door to understand what is wealth in America. The stats are absolutely correct and the averages are way more since they include the other declines:
Top 10% of US household net worth (ex. primary home) = 1M USD
Top 5% of US starting threshold household net worth (ex. primary home) = 2M USD
Top 1% of US starting threshold household net worth = 11M+ USD
Top 0.5% of US starting threshold household net worth = 15M+ USD
Top 0.1% of US starting threshold household net worth = 45M+ USD
Top 0.01% of US starting threshold household net worth = 100M+ USD

Top 1% US yearly household gross income = 475k USD/Year min. 1.2M USD/Year avg.
Top 0.5% US yearly household gross income = 600k USD/Year min. 2.0M USD/Year avg.
Top 0.1% US yearly household gross income = 2.0M USD/year min. 4.7M USD/Year avg.
Top 0.01% US yearly household gross income = 12.5M USD/year min. 35M USD/Year avg.
And you can cut these numbers in half for Canada and in more for EU (UK, Germany, France). Central London is an extreme outlier, it's like going to the Hamptons in the summer and thinking the whole country lives like that.
Top 0.5% of CA household net worth = 10M+ CAD
Top 0.2% of CA household net worth = 20M+ CAD
Top 0.1% of CA household net worth = 34M+ CAD

Top 1% household CA min 252kCAD/year $512kCAD/year avg.
Top 0.1% household CA min 789kCAD/year $1.7MCAD/year avg.
Top 0.01% household CA min 2.8M CAD/year $5.9M CAD/year avg.

UK
Top 1% min £3.6M net wealth = $4.4M USD net wealth
Top 1% gross individual income - £180k gross / $215k gross - £120k net / $145k net
Top 0.5% min £236,000 individual income / $285k gross / $180k net
Top 0.1% min £650,000 individual income / $785k gross / $475k net

France
Top 1% of household net worth = 4.5M+ EUR avg.
Top 0.1% of household net worth = 15M+ EUR avg.
Top 0.01% of household net worth = 55M+ EUR avg.

Top 1% yearly household gross income = 175k EUR/Year min. 375k EUR/Year avg
Top 0.1% yearly household gross income = 550k EUR/year min. 1.25M EUR/Year avg
Top 0.01% yearly household gross income = 2M EUR/year min. 4.5M EUR/Year avg
And to really put things in perspective:

Compare, say a radiologist on $1M/year W2 income with $2M savings, paying 45-50% tax, spending $250k and putting away $250k a year increased for inflation in a portfolio. The radiologist will almost never catch up with a $10M portfolio withdrawing $250k adjusted for inflation every year! Maybe an odd period in the early 70s, the radiologist would have an advantage due to the inflation adjustments....
Leesbro63
Posts: 10643
Joined: Mon Nov 08, 2010 3:36 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Leesbro63 »

DoctorE wrote: Thu Jun 01, 2023 10:45 am The rest who think $10M is not 'that much $', y'all watching too much Succession and Instagram fake crypto lambo driving 'millionaires'. Read The Millionaire Next Door to understand what is wealth in America. The stats are absolutely correct and the averages are way more since they include the other declines:

Top 10% of US household net worth (ex. primary home) = 1M USD
Top 5% of US starting threshold household net worth (ex. primary home) = 2M USD
Top 1% of US starting threshold household net worth = 11M+ USD
Top 0.5% of US starting threshold household net worth = 15M+ USD
Top 0.1% of US starting threshold household net worth = 45M+ USD
Top 0.01% of US starting threshold household net worth = 100M+ USD
Where are these numbers from? You reference "The Millionaire Next Door", which, indeed, was a good read in 1997. I'm sure that much of it, probably most, still applies today. But I'm also sure that the world has changed dramatically since 1997 and a lot of that self-made auto dealer or carpet store owner stuff can't be done today. That being said, are these "absolutely correct" numbers from that book, from 1997? I'm guessing not, but it's not clear where they are from and there is still a contradiction in that, for instance, the two other numbers for ".1%" discussed in this thread were $25M and $38M. "Your" number is $45M. Can you reconcile all of this?
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by DoctorE »

Leesbro63 wrote: Thu Jun 01, 2023 10:51 am Where are these numbers from? You reference "The Millionaire Next Door", which, indeed, was a good read in 1997. I'm sure that much of it, probably most, still applies today. But I'm also sure that the world has changed dramatically since 1997 and a lot of that self-made auto dealer or carpet store owner stuff can't be done today. That being said, are these "absolutely correct" numbers from that book, from 1997? I'm guessing not, but it's not clear where they are from and there is still a contradiction in that, for instance, the two other numbers for ".1%" discussed in this thread were $25M and $38M. "Your" number is $45M. Can you reconcile all of this?
Those numbers are from various research I have made over the years. I don't have a specific reference except maybe Survey of Consumer Finances ~2019 & https://dqydj.com/top-one-percent-united-states/ & https://dqydj.com/average-median-top-ne ... rcentiles/. Give or take ~20-25% more in 2023.
adave
Posts: 567
Joined: Thu Sep 13, 2007 7:17 pm
Location: Houston

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by adave »

As someone in the medical field, there are almost no Radiologists making $1M year, unless they are working 95% of the year doing insane volumes of work.

I’d say a range of $400k to 700k more typical for a Radiologist.
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by DoctorE »

adave wrote: Thu Jun 01, 2023 11:17 am As someone in the medical field, there are almost no Radiologists making $1M year, unless they are working 95% of the year doing insane volumes of work.

I’d say a range of $400k to 700k more typical for a Radiologist.
Just an example to prove a point... replace with surgeon, banker, lawyer whatever.
Topic Author
broncocountry25
Posts: 352
Joined: Thu May 18, 2017 11:49 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by broncocountry25 »

The best thing Bogleheads has done (outside learning the basics of finances) is show me that you can get addicted to the process of just saving to save. I don't care about being in the top .01% I believe strongly that money has diminishing returns. I also don't care about driving a used Camry for 20 years to have an additional xxx,xxx when I am 70. I want to live now and be smart for later.

In college I saw one of those compound interest charts that shows a person that saves till 30 and stops and then someone who starts at 30 and stops at 65. Was amazing that the one who stopped at 30 had so much more later in life. That is why I hit it hard early, now I have to be rational and challenge my thinking going forward.

I think I know the following:
-I will not stay in a job just for the pay.
-I want to "front load" some sort of accounts for my kids to do college, start their lives, or buy a home whatever may be most important to them.
-Bogleheads and finance forums are the outliers and the rest of the world is not as obsessed about "retirement".
-60+ is not guaranteed to anyone.
-I love finances and business and would like to attempt starting something for myself one day.
-I don't know everything and that is why I come to forums to get feedback from others.
rockstar
Posts: 6326
Joined: Mon Feb 03, 2020 5:51 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by rockstar »

broncocountry25 wrote: Thu Jun 01, 2023 2:15 pm The best thing Bogleheads has done (outside learning the basics of finances) is show me that you can get addicted to the process of just saving to save. I don't care about being in the top .01% I believe strongly that money has diminishing returns. I also don't care about driving a used Camry for 20 years to have an additional xxx,xxx when I am 70. I want to live now and be smart for later.

In college I saw one of those compound interest charts that shows a person that saves till 30 and stops and then someone who starts at 30 and stops at 65. Was amazing that the one who stopped at 30 had so much more later in life. That is why I hit it hard early, now I have to be rational and challenge my thinking going forward.

I think I know the following:
-I will not stay in a job just for the pay.
-I want to "front load" some sort of accounts for my kids to do college, start their lives, or buy a home whatever may be most important to them.
-Bogleheads and finance forums are the outliers and the rest of the world is not as obsessed about "retirement".
-60+ is not guaranteed to anyone.
-I love finances and business and would like to attempt starting something for myself one day.
-I don't know everything and that is why I come to forums to get feedback from others.
You have to figure out how much is enough for you. I make far more than I spend. I save because I don’t have anything to spend the excess on, and I’m not charitable since I don’t like most humans. I have found I’m most happy when I hike and live in a place, where it doesn’t rain a lot. That’s not expensive. I pay enough to stay out of the high crime areas and buy big enough to have a backyard big enough to play fetch with my dog without having to go to a dog park.

But I do get new vehicles every ten years. Earlier if I made a bad choice. I bought an OLED TV because it looks so much better. And I’ll pay up for good trail runners. I also pay up to eat to avoid highly processed foods.

I also have no idea how long I’ll live. My first roommate died from COVID in his 40s. And I know other people that died in their 50s. I only know one person to make it to their 90s before dying.

Figure out your enough budget and enjoy life. You can probably coast FIRE if you’re not a big spender.
international001
Posts: 2748
Joined: Thu Feb 15, 2018 6:31 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

carminered2019 wrote: Mon May 29, 2023 7:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:21 pm Yeah I guess I am looking for BH's who were on "the track" and decided to take a risk and change their course to pursue business for themselves.
My W-2 income avg. 120K for 25 years and was able to build a 10M NW after 25 years, 5M in stock portfolio and 5M in real estate. Take risk when you are young is ok and don’t regret it.
Congrats for wining the lottery
You could not have done that if you invested all your income on the past 25 year investing in SP500
international001
Posts: 2748
Joined: Thu Feb 15, 2018 6:31 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

Leesbro63 wrote: Thu Jun 01, 2023 10:51 am
DoctorE wrote: Thu Jun 01, 2023 10:45 am The rest who think $10M is not 'that much $', y'all watching too much Succession and Instagram fake crypto lambo driving 'millionaires'. Read The Millionaire Next Door to understand what is wealth in America. The stats are absolutely correct and the averages are way more since they include the other declines:

Top 10% of US household net worth (ex. primary home) = 1M USD
Top 5% of US starting threshold household net worth (ex. primary home) = 2M USD
Top 1% of US starting threshold household net worth = 11M+ USD
Top 0.5% of US starting threshold household net worth = 15M+ USD
Top 0.1% of US starting threshold household net worth = 45M+ USD
Top 0.01% of US starting threshold household net worth = 100M+ USD
Where are these numbers from? You reference "The Millionaire Next Door", which, indeed, was a good read in 1997. I'm sure that much of it, probably most, still applies today. But I'm also sure that the world has changed dramatically since 1997 and a lot of that self-made auto dealer or carpet store owner stuff can't be done today. That being said, are these "absolutely correct" numbers from that book, from 1997? I'm guessing not, but it's not clear where they are from and there is still a contradiction in that, for instance, the two other numbers for ".1%" discussed in this thread were $25M and $38M. "Your" number is $45M. Can you reconcile all of this?
1% -> 10M seems right (https://www.kiplinger.com/personal-fina ... e-you-rich)

But since wealth is about accumulation, it means nothing without age considerations
er999
Posts: 1343
Joined: Wed Nov 05, 2008 10:00 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by er999 »

international001 wrote: Fri Jun 02, 2023 6:39 pm
carminered2019 wrote: Mon May 29, 2023 7:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:21 pm Yeah I guess I am looking for BH's who were on "the track" and decided to take a risk and change their course to pursue business for themselves.
My W-2 income avg. 120K for 25 years and was able to build a 10M NW after 25 years, 5M in stock portfolio and 5M in real estate. Take risk when you are young is ok and don’t regret it.
Congrats for wining the lottery
You could not have done that if you invested all your income on the past 25 year investing in SP500
It’s possible. Start date 1998. Invest $60k / year in 1998 dollars, (rare but possible if you’re frugal on $120k salary), inflation adjusted each year in vanguard s&p 500 fund and you’d have 6.8 million. I was originally skeptical and was going to post the same as you until running the numbers. Combine that with a well time house purchase + rentals and believable.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by smitcat »

er999 wrote: Fri Jun 02, 2023 10:25 pm
international001 wrote: Fri Jun 02, 2023 6:39 pm
carminered2019 wrote: Mon May 29, 2023 7:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:21 pm Yeah I guess I am looking for BH's who were on "the track" and decided to take a risk and change their course to pursue business for themselves.
My W-2 income avg. 120K for 25 years and was able to build a 10M NW after 25 years, 5M in stock portfolio and 5M in real estate. Take risk when you are young is ok and don’t regret it.
Congrats for wining the lottery
You could not have done that if you invested all your income on the past 25 year investing in SP500
It’s possible. Start date 1998. Invest $60k / year in 1998 dollars, (rare but possible if you’re frugal on $120k salary), inflation adjusted each year in vanguard s&p 500 fund and you’d have 6.8 million. I was originally skeptical and was going to post the same as you until running the numbers. Combine that with a well time house purchase + rentals and believable.
FWIW - the median household income was $38,885 in 1998.

https://www.census.gov/library/publicat ... 2438%2C885.
carminered2019
Posts: 1939
Joined: Fri Jun 21, 2019 7:06 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by carminered2019 »

international001 wrote: Fri Jun 02, 2023 6:39 pm
carminered2019 wrote: Mon May 29, 2023 7:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:21 pm Yeah I guess I am looking for BH's who were on "the track" and decided to take a risk and change their course to pursue business for themselves.
My W-2 income avg. 120K for 25 years and was able to build a 10M NW after 25 years, 5M in stock portfolio and 5M in real estate. Take risk when you are young is ok and don’t regret it.
Congrats for wining the lottery
You could not have done that if you invested all your income on the past 25 year investing in SP500
I am not sure but my 401K got up to $1,055,000 maxing out every year from 1995-2020 so the avg. contribution for the 25 years was about 13K per year.
unwitting_gulag
Posts: 666
Joined: Mon Dec 05, 2016 3:37 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by unwitting_gulag »

DoctorE wrote: Thu Jun 01, 2023 10:45 am The rest who think $10M is not 'that much $', y'all watching too much Succession and Instagram fake crypto lambo driving 'millionaires'. Read The Millionaire Next Door to understand what is wealth in America.
Not to derail this thread, but I respectfully aver, that the meaning of "wealth" is subjective. In America's marquee cities - NYC, LA, SF for example - a very modest house in a questionable neighborhood is around $1M right now. A good but unpretentious house in an upper middle class neighborhood is $2M. $10M buys five such houses. Nice to have, to be sure. But is that... wealth?

By my entirely subjective reckoning, wealth means an ascendancy above the normal cadence of things, where the person in question, doesn't merely afford luxuries with ease, but is able to wield power and influence to a notable degree. Endow professorships. Have university buildings, hospital wings, art galleries and so on, named after one. Endow foundations that become household names. In other words, $10M .. in 1870 dollars. That level of wealth, one supposes, can not be built by BH methods, even on a medical doctor's salary, over the course of one human lifetime. Instead, something spectacular would have to be done, and done successfully. Do we feel lucky?
DoctorE
Posts: 178
Joined: Thu Feb 13, 2014 2:11 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by DoctorE »

unwitting_gulag wrote: Mon Jun 05, 2023 2:37 am
DoctorE wrote: Thu Jun 01, 2023 10:45 am The rest who think $10M is not 'that much $', y'all watching too much Succession and Instagram fake crypto lambo driving 'millionaires'. Read The Millionaire Next Door to understand what is wealth in America.
Not to derail this thread, but I respectfully aver, that the meaning of "wealth" is subjective. In America's marquee cities - NYC, LA, SF for example - a very modest house in a questionable neighborhood is around $1M right now. A good but unpretentious house in an upper middle class neighborhood is $2M. $10M buys five such houses. Nice to have, to be sure. But is that... wealth?

By my entirely subjective reckoning, wealth means an ascendancy above the normal cadence of things, where the person in question, doesn't merely afford luxuries with ease, but is able to wield power and influence to a notable degree. Endow professorships. Have university buildings, hospital wings, art galleries and so on, named after one. Endow foundations that become household names. In other words, $10M .. in 1870 dollars. That level of wealth, one supposes, can not be built by BH methods, even on a medical doctor's salary, over the course of one human lifetime. Instead, something spectacular would have to be done, and done successfully. Do we feel lucky?
Sure, wealth is subjective. To some it's living off coupons and dividends on a farm in the middle of nowhere with animals and for others is having a penthouse on Park Avenue and a hospital wing named after your family.

$10M in 1870 is $250M in today's money. Top 0.01% of the US. 16,000 households.
international001
Posts: 2748
Joined: Thu Feb 15, 2018 6:31 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

er999 wrote: Fri Jun 02, 2023 10:25 pm
international001 wrote: Fri Jun 02, 2023 6:39 pm
carminered2019 wrote: Mon May 29, 2023 7:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:21 pm Yeah I guess I am looking for BH's who were on "the track" and decided to take a risk and change their course to pursue business for themselves.
My W-2 income avg. 120K for 25 years and was able to build a 10M NW after 25 years, 5M in stock portfolio and 5M in real estate. Take risk when you are young is ok and don’t regret it.
Congrats for wining the lottery
You could not have done that if you invested all your income on the past 25 year investing in SP500
It’s possible. Start date 1998. Invest $60k / year in 1998 dollars, (rare but possible if you’re frugal on $120k salary), inflation adjusted each year in vanguard s&p 500 fund and you’d have 6.8 million. I was originally skeptical and was going to post the same as you until running the numbers. Combine that with a well time house purchase + rentals and believable.
I guess you need more precision on the how ;-)
I think you did the same PV test that I did. Consider that 120k is the one in 1998. It will increase later with inflation, so much higher.
Perhaps real state gave much better return (leverage)

I'm curious now
adave
Posts: 567
Joined: Thu Sep 13, 2007 7:17 pm
Location: Houston

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by adave »

Basic point here in this thread is that those of us who are "retail investors" and well employed may "only" accumulate multiples of millions of dollars over their lifetime via Boglehead style passive investing.... definitely first world troubles.

We have an embarrassment of riches actually. I love that I can easily and cheaply access market beta with Vanguard ETFs. I also scratch a little itch to keep things interesting with small positions in some individual stocks.... cause, why not. That's enough risk for me.

Regarding OP: I say go for your business dreams, but understand the risks and any asymmetrical risks in particular. I also completely disagree on your take on college but that's OK, different takes are always of interest.
unwitting_gulag
Posts: 666
Joined: Mon Dec 05, 2016 3:37 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by unwitting_gulag »

adave wrote: Mon Jun 05, 2023 4:54 pm Basic point here in this thread is that those of us who are "retail investors" and well employed may "only" accumulate multiples of millions of dollars over their lifetime via Boglehead style passive investing.... definitely first world troubles.
Indeed. Broadly, this is the distinction between "get rich slowly", and "try to get rich quickly". The former takes decades, and results in "middle class millionaire" status. It's highly likely to succeed, assuming that one remains gainfully employed, and one's personal life doesn't implode. The latter has a low probability of success; there are many aspirants, but only a handful succeed. However, it is the only way to amass a truly impressive sum.

Phrased another way, a BH method allows a person earning a good but unexceptional professional salary, to tickle the bottom-edge of the 1%, after a lifetime of diligence. But if one wishes to enter the top 0.1% or beyond, the BH approach is insufficient. Something grand and spectacular has to tried - with high odds of failure.
Topic Author
broncocountry25
Posts: 352
Joined: Thu May 18, 2017 11:49 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by broncocountry25 »

For sure going to go for it. I will leave assets in tax advantaged accounts alone. If I fail I still think I will have a better life all around.

Talked with someone’s dad this weekend that was an immigrant first generation. He got a civil engineer job in California. Was promised a pension in he stuck with it.

He didn’t want to wait forever he bought one gas station. Turned to 2…to 4…you get the point.

He said he can travel and see family whenever he wants now and has great flexibility that’s what I want.

I don’t want to just focus on retiring “one day”.

I will leave the money alone but take my chance next year when I come to the end of my parental leave.

I don’t think it’s worth it to stay in corporate world in my position with my personal goals.

Also having $3 million or $5 million when I am 60 I will still be happy.

I want to embrace risk now and take some calculated chances for more now. I don’t think this is get rich quick I think it’s American spirit.
international001
Posts: 2748
Joined: Thu Feb 15, 2018 6:31 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

IT's good to take risk. But in bH spirit you shoudl measure it.
Your sample is (survivor) biased. You should talk with a sample of all the people who bought a gas station, not the ones that became reach before of it.
Or you can listen to the Academy Awards Ceremony and believe that with lots of hard work you can get an Oscar.
Logan Roy
Posts: 1839
Joined: Sun May 29, 2022 10:15 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

I'd say Boglehead investing is a great way to grow wealth.. And once you've achieved enough, it's a great way to retire and stay wealthy.

But being relatively young AND wealthy, I think, puts you in an awkward situation. Especially if you work in an industry that's at risk of disruption over the next 5-10 years. It's happened to me twice.

So when you look at long-term charts of stock and bond returns, you're aware that there can be long periods when you lose wealth in real terms. And that we're basing what might happen this century on relatively little market history. So when you look at typical UHNW portfolios, they tend to spread their bets a bit more. Like aggressive Harry Browne portfolios. And that's what you want: to preserve value above inflation, and grow it consistently. It's not about winning a race, when you've no idea where the race is going to go.

Image
Leesbro63
Posts: 10643
Joined: Mon Nov 08, 2010 3:36 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Leesbro63 »

Logan Roy wrote: Sat Jun 10, 2023 1:43 pm
So when you look at long-term charts of stock and bond returns, you're aware that there can be long periods when you lose wealth in real terms. And that we're basing what might happen this century on relatively little market history. So when you look at typical UHNW portfolios, they tend to spread their bets a bit more. Like aggressive Harry Browne portfolios. And that's what you want: to preserve value above inflation, and grow it consistently. It's not about winning a race, when you've no idea where the race is going to go.
This is a very good comment. At age 63, I worry that we are exactly in one of those periods where there's no way to avoid real wealth loss, and I might be too old to appreciate a comeback if I have to go through 1966-1981 first. That being said, I'm not convinced that adding hedge funds, private equity, private debt and real assets does anything to improve the odds against real wealth loss other than much of that is not priced daily, so you just don't know that you've lost money. Put another way, I'm not convinced that the not-ultra-wealthy are at a disadvantage to the ultra wealthy, (mostly thanks to Jack Bogle).
wolingfeng
Posts: 77
Joined: Sat Dec 01, 2012 8:09 pm
Location: Upstate, New York

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by wolingfeng »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm Hello BH's,

I was a finance/real estate major in school and graduated in 2013. Found this blog when I started my own (should have continued it). As much as I love the simplicity of a BH strategy I am getting tempted to take more risk.

While I have a portion of my families net worth in the BH strategy for the long term I have drifted from the core principals and it has accelerated our wealth.

We own three rentals, invest in PE, and then the remainder is in the BH portfolio (no bonds).

I love the BH strategy for those who are looking to have a traditional retirement. I think it has a great probability for success. I am starting to drift from the strategy personally though for anything beyond my BH portfolio. I want to have CONTROL and OWNERSHIP, not be at the mercy of the shareholders to approve compensation increases.

Currently we are doing employer match for 401K's, ROTH IRA's, then some extra in a 529. The rest is being invested in taxable and short term savings to start new business ventures.

In the last 3 years we have "seen the light" with getting away from W-2 and moving to business ownership. The amount of money we have made in business vs. the time and effort we have put in at W-2's is laughable.

We are type A people and dedicated to anything we do. I am leaving my W-2 next year and diving into full time entrepreneurship.

What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
We are in our 30s right now with kids. These few years I feel we were fortunate in a lot of aspects. Overall career wise, health wise and wealth all been doing well and trending on the right direction. I reviewed my portfolio recently and I think to an extent similarly to you, I definitely appreciate how much BH philosophy has helped me to steer where I am right now. Are there other strategies that can make portfolio growth faster? Definitely. I also have to admit that not all my money is being invested in BH way. But BH philosophy is overall the least complicated, most balanced and most achievable if someone sticks to it. With other wealth creation strategies, personally I feel as long as one understands how to execute and understand the risk component, it's really up to you. But it's always easy said than done. Otherwise everyone will make good $$ :D But on the back end, always good to implement part of your portfolio in the BH way.

I think it's always to good to keep the option open for kids. If your kid is pursuing a professional career like doctor, lawyer, scientist etc, college degree is probably a must. It does open up many doors for many careers. But yeah, higher educations are getting so much more expensive nowadays :( for a lot of people and that probably will be another topic to discuss.
adave
Posts: 567
Joined: Thu Sep 13, 2007 7:17 pm
Location: Houston

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by adave »

Boglehead strategy of low-cost index type products works well at any wealth level. It takes some time to get going but once you hit a certain number the compounding effect (especially with reinvested dividends) really becomes impressive.
Logan Roy
Posts: 1839
Joined: Sun May 29, 2022 10:15 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

Leesbro63 wrote: Sat Jun 10, 2023 2:12 pm
Logan Roy wrote: Sat Jun 10, 2023 1:43 pm
So when you look at long-term charts of stock and bond returns, you're aware that there can be long periods when you lose wealth in real terms. And that we're basing what might happen this century on relatively little market history. So when you look at typical UHNW portfolios, they tend to spread their bets a bit more. Like aggressive Harry Browne portfolios. And that's what you want: to preserve value above inflation, and grow it consistently. It's not about winning a race, when you've no idea where the race is going to go.
This is a very good comment. At age 63, I worry that we are exactly in one of those periods where there's no way to avoid real wealth loss, and I might be too old to appreciate a comeback if I have to go through 1966-1981 first. That being said, I'm not convinced that adding hedge funds, private equity, private debt and real assets does anything to improve the odds against real wealth loss other than much of that is not priced daily, so you just don't know that you've lost money. Put another way, I'm not convinced that the not-ultra-wealthy are at a disadvantage to the ultra wealthy, (mostly thanks to Jack Bogle).
Absolutely – I started worrying back around 2014, because the yields on investments were getting worse and worse.. So no matter how much things got bid up, you were buying <2% yielding investments, with increasing downside if rates started to normalise.

Right now, you can buy things on much better yields – but of course the era of free money might be long gone, so the tailwinds we're used to might not be there. But I think what alternative assets give you is the ability to buy cash-flows (often inflation-linked and long-term) that are subject to different forces. Core plus infrastructure being one I've bought a lot of. It can be thought of as a real asset. But also, of course, you can buy TIPS on positive yields now. Not likely to make anyone rich, but you can at least guarantee positive real returns over almost any meaningful period now. That's a situation we haven't had for a while.

I think betting big on stocks is still tricky, because we don't know how high rates will have to go, nor how much damage we'll do to the economy and earnings. So I quite like 20-25% in income-generating real assets, and 20-25% in stocks. And throw in a few things that behave differently (maybe hedge funds and gold), and then there's scope to rebalance things out of quagmires. I think strong diversification along with higher yields should be a recipe for quite good returns from here.
Pdxnative
Posts: 981
Joined: Sat Nov 07, 2015 1:17 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Pdxnative »

Sort of a baffling thread. I think of BH principles mostly as passive vs active investing, minimizing fees/costs, tax awareness/minimization, in addition to basic financial principles like diversification across asset classes.

Not sure what W2 has to do with any of it. But are you even sure you won’t be a W2 employee? S Corp is a pretty common structure and there you’d be a an owner AND W2 employee. Might not be the structure you’d use for real estate but might be for the bookkeeping business (which seems to me to be the most solid of the two things with a lot of potential for steady growth).

On the real estate, maybe you’ll hit it big but you should at least acknowledge that times have been good for RE recently. I remember a lot of folks with your confidence back in 2007. Didn’t turn out well. Not saying that will happen to you but since you haven’t been through any sort of downturn why are you so sure the gravy train never ends?

As far as college, this gets discussed endlessly here. Maybe think about how many positions at your current company (that you’d want for your kids) don’t require a college degree. And sure, the trades are a great option for some. Professional roles are a great option for others, and all the youngsters I know have been well served by their time in college. Including the philosophers and comp lit majors. Yes they’d have forged a path without it, but it wouldn’t have been the most efficient path to the life they wanted. And for some it would have been impossible to get where they are without college.
Topic Author
broncocountry25
Posts: 352
Joined: Thu May 18, 2017 11:49 am

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by broncocountry25 »

wolingfeng wrote: Sat Jun 10, 2023 2:33 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm Hello BH's,

I was a finance/real estate major in school and graduated in 2013. Found this blog when I started my own (should have continued it). As much as I love the simplicity of a BH strategy I am getting tempted to take more risk.

While I have a portion of my families net worth in the BH strategy for the long term I have drifted from the core principals and it has accelerated our wealth.

We own three rentals, invest in PE, and then the remainder is in the BH portfolio (no bonds).

I love the BH strategy for those who are looking to have a traditional retirement. I think it has a great probability for success. I am starting to drift from the strategy personally though for anything beyond my BH portfolio. I want to have CONTROL and OWNERSHIP, not be at the mercy of the shareholders to approve compensation increases.

Currently we are doing employer match for 401K's, ROTH IRA's, then some extra in a 529. The rest is being invested in taxable and short term savings to start new business ventures.

In the last 3 years we have "seen the light" with getting away from W-2 and moving to business ownership. The amount of money we have made in business vs. the time and effort we have put in at W-2's is laughable.

We are type A people and dedicated to anything we do. I am leaving my W-2 next year and diving into full time entrepreneurship.

What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
We are in our 30s right now with kids. These few years I feel we were fortunate in a lot of aspects. Overall career wise, health wise and wealth all been doing well and trending on the right direction. I reviewed my portfolio recently and I think to an extent similarly to you, I definitely appreciate how much BH philosophy has helped me to steer where I am right now. Are there other strategies that can make portfolio growth faster? Definitely. I also have to admit that not all my money is being invested in BH way. But BH philosophy is overall the least complicated, most balanced and most achievable if someone sticks to it. With other wealth creation strategies, personally I feel as long as one understands how to execute and understand the risk component, it's really up to you. But it's always easy said than done. Otherwise everyone will make good $$ :D But on the back end, always good to implement part of your portfolio in the BH way.

I think it's always to good to keep the option open for kids. If your kid is pursuing a professional career like doctor, lawyer, scientist etc, college degree is probably a must. It does open up many doors for many careers. But yeah, higher educations are getting so much more expensive nowadays :( for a lot of people and that probably will be another topic to discuss.
Agreed, BH strategy is great for hands off and high probability of success.
phantom0308
Posts: 493
Joined: Thu Aug 25, 2016 6:52 pm
Location: San Mateo, CA

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by phantom0308 »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
It’s helpful to note that contrary to your feelings on the subject on average a college degree has a high ROI in almost every paper I’ve read on the subject. It may not stay that way forever. The education data institute which afaict is fairly unbiased publishes statistics on this https://educationdata.org/college-degree-roi
international001
Posts: 2748
Joined: Thu Feb 15, 2018 6:31 pm

Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

phantom0308 wrote: Thu Jun 29, 2023 2:22 am
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
It’s helpful to note that contrary to your feelings on the subject on average a college degree has a high ROI in almost every paper I’ve read on the subject. It may not stay that way forever. The education data institute which afaict is fairly unbiased publishes statistics on this https://educationdata.org/college-degree-roi
Only 287% ROI for 40 years? You can get 2000% if you invest in stocks!

This kind of studies are tricky. You'd have to compare with your twin not going to college (and starting a bossiness, for instance)
Post Reply