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Old 02-02-2012, 10:07 PM
 
2,677 posts, read 5,076,404 times
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I tend to disagree a bit. Some come from well to do families but many do not. Many successful people grew up in lower income families and were driven to do well. Even many of us in the lower to middle class came from lower income families.

Sure its hard work but sometimes car loans, credit card debt etc are a choice and part of handling money -- for some it really wouldnt matter if they made $30k or $200k, they would be broke. Remember there are plenty of millionaires who never made six figures in their life time also.

Quote:
Originally Posted by ericsonga View Post
In terms of wealth, I think the vast majority of people who have a high net worth come from at least an upper middle income home. It's much easier to achieve success and wealth coming from a background like that. Most upper middle class homes value education and saving. Also, while in college and a young adult, most children that come from those homes have a great deal of financial help. It's much easier to accumulate wealth when you are older if you do not have student loans, car loans, high credit card debt, etc. Then later in life, you will most likely receive at least some inheritance, furthering your financial wealth.
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Old 02-02-2012, 10:16 PM
 
2,677 posts, read 5,076,404 times
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I think you are forgetting anyone with investment sense will not be holding all their money in a savings account. There is no reason they shouldn't come close to doubling their money every 10-15 years, on average of course.

20 years ago the Dow was in the 3,000's, today its knocking on 13,000. Wealth can be made in the long term if you live below your means and invest.

Quote:
Originally Posted by ATLTJL View Post
For example, suppose you get a great job that starts at 20 that starts at $60k, by the time you hit 40, maybe you are at $140k or something. Whatever the math, let's just say that for 20 years, you averaged $100k per year. That's doing well by most standards. However, even if you managed to save half of your pretax income over that 20 years, which we all know that nobody does, you would still only have $1 million. With interest rates where they are, even the power of compounding isn't going to get you much above that. You'd have to take some very serious investment risk and get extremely lucky to double the money in that amount of time.
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Old 02-02-2012, 10:44 PM
 
2,407 posts, read 2,613,238 times
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Quote:
Originally Posted by ATLTJL View Post
I think you guys are missing the point of what I'm asking. I was only using the mansions as a metric of wealth.

If it makes you feel better, let me pose the question this way:

If someone has a net worth of $2 million by the time they are 40 years old, how do you think they got there?
Despite how this post may read, this s not a brag post/ I do not own a fancy car (I drive a 5 year old Honda and the wife drives a 2002 mercury sable), I do not own a half million dollar house and I am generally not flashy and driven by possessions.

Dual incomes for professionals can do get you to that level. The wife and I are on pace to reach that savings level at age 42 (assuming 6% growth in our investments and continued investing at our current levels). The wife is a IT systems auditor with a CPA certification and I am a federal employee. We don't have obscene individual earnings (both of us have yet to crack $100,000 per yet). Two incomes, live reasonably, avoid the splashy "oooooh and awwww" items that depreciate, save and invest responsibly. End up wealthy.

$2 million net worth isn't all that much anymore. To sustain our quality of life (not that extravagant, but not lacking) and retire at 57 (our goal) we figure we'll need $4+ million in the bank to draw from.

My advice:

Pay yourself first. (put money into your Roth IRA, 401-K automatically each month). Don't rely on saving whatever is left in your account at the end of the month.
Avoid name brands.
Avoid new cars.
Learn about investing.
Learn more about investing.
$10 a week in coupon savings = $520 a year.
Write down your goals and track them. You are more likely to meet your goals if they are written down.
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Old 02-03-2012, 12:17 AM
 
7,707 posts, read 9,549,562 times
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A couple of thoughts....

The 20 year time horizon on investments is interesting. I was going to counter that by providing some real world numbers on some conservative investments. Upon doing so, I realized the err of my thinking...I have only been an investor since 2000, and I have seen returns that will definitely never make me a millionaire in liquid assets. However, if I extend back to 1992, the results get interesting.

For example, let's say I invested $10,000 in Procter & Gamble in 2000. Today I would have $10,870. Hardly even worth the effort. But suppose I invested that same $10,000 in 1992. Then, today I would have $56,134!!!!!

Consider the same thing with Johnson & Johnson. If I invested in 2000, right now I would have $13,701. That's not terrible, but not terrific. However, if I invested in 1992, I would now have $46,984.

These are just random blue chip stocks I chose, but I bet it's the same story for most investments.

Looking at this, I can easily see how people who have been investing longer than I have would say that conservative but consistent investing is key. For them, I'd say that's a good strategy. For younger people, though, you see there's a new paradigm at play. The market just isn't returning that well anymore. I know we're in a huge recession, but the returns haven't been good for the past twelve years. Maybe for the people who really know what they're doing, or the extremely lucky people....but for normal people who are going to buy chip stocks or conservative mutual funds, we haven't been seeing our money grow very much. Some people have seen their money shrink.

My other thought is that I agree that dual incomes help. They help A LOT. However, I have to ask GTCorndog this: if you have a dual income and neither of you has hit six figures and you want to retire with $4 million in the bank, I'm going to make a very large assumption here. That assumption is that you have no children. How much different do you think your financial situation would be if you had to pay daycare costs or see your wife quit her job or go part-time? What about paying for college for children? If you do have children, I want to know what your investments are, because you must be beating the market by a long shot.
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Old 02-03-2012, 07:13 AM
 
Location: Marietta, GA
7,844 posts, read 14,527,425 times
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Quote:
Originally Posted by Norlan View Post
I suggest you should start reading Under 30 CEO

And most people that are rich in Georgia don't make money from Georgia alone. Look around all these asian people in Gwinnett, they own businesses outside the country in places like China. Make money in China, spend it in USA
Again though, I don't think you need to be "rich" to buy homes in that price range. When I lived in MA, out of necessity many people bought homes in the $750 to million range, because that's what a decent home in a town with good schools was going for 5 years ago.

Those people might have been couples who each made $150K-$200K/year each ($300 to $400K/yr total), which despite some misinformation to the contrary is not rich, especially in the Boston area. If you break it down even more, there is not much difference between a couple making $50K each ($100K/yr total) today in Atlanta, and looking to buy a $250K home. The ratios are essentially the same.
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Old 02-03-2012, 04:16 PM
 
131 posts, read 467,225 times
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Quote:
Originally Posted by neil0311 View Post
Again though, I don't think you need to be "rich" to buy homes in that price range. When I lived in MA, out of necessity many people bought homes in the $750 to million range, because that's what a decent home in a town with good schools was going for 5 years ago.

Those people might have been couples who each made $150K-$200K/year each ($300 to $400K/yr total), which despite some misinformation to the contrary is not rich, especially in the Boston area. If you break it down even more, there is not much difference between a couple making $50K each ($100K/yr total) today in Atlanta, and looking to buy a $250K home. The ratios are essentially the same.
I didnt measure wealth by the metric of homes so dont quote me on that. Also, everyones got their own definition of rich. If you can still consider yourself rich living in a 150k~200k house compared to the next person that sleeps at the highway exit. You could be making 200k in Boston and that's not rich there then you just want to show off your wealth or rip off the rich resources in Atlanta by moving down here. You can deny that you're not that "rich" all day long
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Old 02-03-2012, 04:49 PM
 
Location: Marietta, GA
7,844 posts, read 14,527,425 times
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Quote:
Originally Posted by Norlan View Post
I didnt measure wealth by the metric of homes so dont quote me on that. Also, everyones got their own definition of rich. If you can still consider yourself rich living in a 150k~200k house compared to the next person that sleeps at the highway exit. You could be making 200k in Boston and that's not rich there then you just want to show off your wealth or rip off the rich resources in Atlanta by moving down here. You can deny that you're not that "rich" all day long
I didn't bring up the word "rich" to begin with in the conversation. I was just quoting. I do think some people automatically use that word to mean "people who make more than I do" and don't consider specifics. Likewise, people draw political conclusions and make politically based definitions that don't necessarily mean anything. It's popular right now to knock the "rich" in some circles as a political concept. To me, it's about net worth.

Again, wealth is a relative thing, related more to net worth. If I live in a million dollar house and owe a million dollars to the bank in the form of a mortgage, I have zero equity and my net worth gains nothing. If I live in a $500K home that is paid free and clear, then I am adding $500K to my net worth. It's relative.
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Old 02-03-2012, 06:02 PM
 
2,407 posts, read 2,613,238 times
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Quote:
Originally Posted by ATLTJL View Post
My other thought is that I agree that dual incomes help. They help A LOT. However, I have to ask GTCorndog this: if you have a dual income and neither of you has hit six figures and you want to retire with $4 million in the bank, I'm going to make a very large assumption here. That assumption is that you have no children. How much different do you think your financial situation would be if you had to pay daycare costs or see your wife quit her job or go part-time? What about paying for college for children? If you do have children, I want to know what your investments are, because you must be beating the market by a long shot.
$4 million in the bank should be easily achieved at our current pace. We save over 40% of our income. While this might not be possible to someone with a $50,000 year total income, but it is for us.

I currently have no children, but any expenses from children should be close to offset by pay raises due to our career progression. We have invested in our educations and we could both make the case that we are currently underpaid for our skill set and if we were willing to switch employers, we would see a significant pay increase.

Day care costs are significant, but we have family in the area and they would be glad to watch future lil GTCorndog's at least a couple days a week for us. Heck, they would like to do it as they are retired. This will help us minimize day care expenses. We will likely have to decrease our savings rate to pay for child expenses, but not enough that we can't meet our goals.

College for children is a non-issue IMO. We already have a couple grand put away in an account and when the time is right, we'll put $400 a month in a account. Assuming a 6.5% rate of return in 18 years, we'll have close to $200,000 in the account. This should be enough to cover tuition and fees. Our child will go to an in-state public school. Anything else would be scholarship dependent. There is no reason in this state to pay for a private school when bot GT and UGA offer very good educations for affordable prices in state.

I'm not beating the market by a long shot. I haven't gotten much of a return since I started investing. I'm only 29, so there haven't been many good years in my investing timeline. Despite this, we continue to put money away into a series of low coast Vanguard mutual funds. Long term investing is about being patient and not chasing returns. Buy when people are selling and sell when people are buying. 90% of our retirement assets are in boring, low cost funds like Vanguard's Total Stock Market Fund, Total Bond Market Fund, Total International Market Fund, Energy Fund and Health Care Fund. Nothing splashy. You just have to be dedicated and keep a long term perspective.
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Old 02-03-2012, 07:47 PM
 
Location: http://www.johnscreekrealtypartners.com
953 posts, read 2,779,299 times
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I also disagree with Ericsonga. Many of my college friends came from very well off families, and they are too complacent living off their parent's money and not building the their own future. Many people succeed because they have no other choice but to succeed since their parents are not there to pick them up if they fail.

Among my close college friends, I am the only one who strategically moved to the south.

Quote:
Originally Posted by noah View Post
I tend to disagree a bit. Some come from well to do families but many do not. Many successful people grew up in lower income families and were driven to do well. Even many of us in the lower to middle class came from lower income families.

Sure its hard work but sometimes car loans, credit card debt etc are a choice and part of handling money -- for some it really wouldnt matter if they made $30k or $200k, they would be broke. Remember there are plenty of millionaires who never made six figures in their life time also.
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Old 02-03-2012, 10:09 PM
 
Location: Atlanta, GA
1,262 posts, read 2,446,459 times
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Quote:
Originally Posted by mrpanda View Post
Many people succeed because they have no other choice but to succeed since their parents are not there to pick them up if they fail.
Many people I'm sure do, however, I doubt that it's the majority. However, these are just my opinions. I'm just basing my opinion on my circle of friends and personal life experiences. Everyone's future is ultimately dictated by nothing but themselves.
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