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My wife and I just hit a million at 55. How? A college class in finance in my 20's and a professor who opened my eyes up to making educated choices with my money. I read everything I could and made my money work for me. Too many people I know invest in their 401k's blindly , not looking at expenses. performance, or diversification. They can't be bothered.
I also learned how to do a lot of things for myself. We've had 3 houses. I improved each one with my own sweat equity. Our current house is 9 years old. I was there every day doing projects while it was being built. I probably saved $50,000 in labor costs.
The key to being successful is to educate youself. Learn about investing, taxes, insurance, and every part of your finances. Even if you chose a financial planner later, you'll at least be able to tell if it right for you or not. I met with exactly one. After about a half an hour of listening to him, I realized he was looking for commisions and not for my best interests. I made a plan and stuck to it, only rebalancing occasionally and keeping up with financial news. Whether you'll get to million or not is up to you, but the more you know, the better your chances!
You didn't really save that much money on your house when you take opportunity cost into account. You had to forgo some income to do that! The other option would be, pay someone else to do that work, and work two jobs for added income.
How much did you save if you subtract the market value of your time?
A million in our 401k's between the two of us. By retirement in 5 years it will be greater than that. I use Mint.com to track absolutely everything. We've actually backed off our contributions some with the intent of starting to enjoy more of our money while still working.
I'm amazed at our net worth, but to be honest, don't feel "Rich". I just had a goal of being comfortable. Now my goal is to live long enough to spend it all.
A million in a 401K and/or IRA is $700-750k in real money. Still a nice chunk of change but something to keep in mind when doing retirement planning.
We started moving ours to Roths about 10 years ago when we were in our 50's and realized our retirement pension income flow would be more than comfortable without making withdrawals from them.
My wife and I just hit a million at 55. How? A college class in finance in my 20's and a professor who opened my eyes up to making educated choices with my money. I read everything I could and made my money work for me. Too many people I know invest in their 401k's blindly , not looking at expenses. performance, or diversification. They can't be bothered.
I also learned how to do a lot of things for myself. We've had 3 houses. I improved each one with my own sweat equity. Our current house is 9 years old. I was there every day doing projects while it was being built. I probably saved $50,000 in labor costs.
The key to being successful is to educate youself. Learn about investing, taxes, insurance, and every part of your finances. Even if you chose a financial planner later, you'll at least be able to tell if it right for you or not. I met with exactly one. After about a half an hour of listening to him, I realized he was looking for commisions and not for my best interests. I made a plan and stuck to it, only rebalancing occasionally and keeping up with financial news. Whether you'll get to million or not is up to you, but the more you know, the better your chances!
Congrats! Your advice is good, HOWEVER, I'd say less than 5 or 10% of the population is capable of going on their own in regards to investing.
[quote=ncole1;33237110]You didn't really save that much money on your house when you take opportunity cost into account. You had to forgo some income to do that! The other option would be, pay someone else to do that work, and work two jobs for added income.
Actually, I spent nights and weekends doing the work. My opportunity cost was not getting to see all those great TV shows I missed. Missed no income. The quote to install the hardwood floors alone was 8 grand of after tax money. I did it by missing survivor, gilligans island reruns, and Honey Boo Boo. I'm a numbers guy and understand opportunity cost. I liked working on my house, absolutely saved a boatload of money and know the jobs were done right.
I've done the same thing on 2 other houses. I always kept track of my hours and save way more by doing things myself than hiring it done or they end up doing the job. I hired painters because I'm slow, hate painting, and the savings didn't make economic sense. An Economist can point theory out to me all day long, but ultimately, I have 50 grand more left in the bank than I would have by watching someone else do stuff. That's really all that matters to me.
I think we will end up close to $1m by 50 but it will be a bit of a stretch. Unfortunately for us, we didn't start hitting it hard until I was 30. Then at 41 I went self employed and had a few years of zero contributions. Even though the wife has been ramping hers up each year.
I was also going to add that net worth should easily be north of $1m by age 50 though.
Well, no one can save $17,000 a year if they only make $20,000.
If you are only making $20K when in your 50's it's more than likely that you don't even have a 401K or IRA.
If you are starting out you can easily go with the 6% that companies will match and up it over the years.
The first story did say that early in his career he had 10% taken out and didn't mention his early career salary.
I know for sure early in my career I was not getting $17K taken out.
Congrats! Your advice is good, HOWEVER, I'd say less than 5 or 10% of the population is capable of going on their own in regards to investing.
I understand what you r saying but that could be 80 percent or more if retirement saving wasn't so heavily marketed. Part of how is the point of the article.
If folks were given basic asset allocation guidelines and access to low fee index funds they would be off to the races
Congrats! Your advice is good, HOWEVER, I'd say less than 5 or 10% of the population is capable of going on their own in regards to investing.
I hear what you're saying, but I believe it's not so much capability as desire. I have friends that find finance talk interesting and others that don't. There is a lot of free information on the net that could drastically improve peoples financial situations. Most people don't want to bother.
Case in point, our company 401k has managed funds with fairly high expenses and low cost index funds that perform as well or better. The expense ratios don't look like much and most people don't even know what they are. If you actually run the numbers on a $100,000 balance, you're paying a lot more every year for that managed fund. We did one recently and the managed fund cost $600 more a year. In 10 years you're $6000 poorer. Add more time and more money and the costs are significant.
My company has about 1000 employees at our site. The company offers seminars when you get close to retirement. That makes no sense to me. By then, it's too late to anything meaningful about your situation. I've watched many friends retire and most say the same thing. They're going to "look at the numbers" and decide. You should be looking at your numbers every year and adjust your plan accordingly.
So I believe you're right about the 10% number with the only difference being I think most people are capable but most people just don't want to.
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