Bankers, Techies, Doctors, And Lawyers: You’ll Never Get Rich Working For Someone Else

There's a lot of wealth to be made in this world. And yet there's so much truth to the saying you'll never get rich working for someone else. You might think that sounds crazy. But, when you look at the super rich, you'll realize the majority of them were able to get rich by hiring others to work for them.

They are innovators, entrepreneurs, business owners, and hustlers. And, they own a lot of equity. If you want to get rich, it's beneficial to study those who already are. I'm not just talking about the 1% rich; I'm talking about the 0.1% super rich.

Being an entrepreneur is hard. I estimate an entrepreneur needs to make at least 35% more to replicate his or her day job income to run in place. But two-and-a-half years after starting this site, I began to realize how much more upside there is getting rich as an entrepreneur over working for someone else.

Back in 2012, 23-year-old graduates with one year of experience could clear $100,000 no problem. Despite ascending from Financial Analyst, to Associate, to VP, to Director within 10 years, and earning Director level compensation for three years before leaving, I still wasn't able to earn and save enough money to buy my dream home in Kahala, Oahu.

Can't Afford A Dream Home Unless You Get Rich

Dream House In Kahala, Oahu, Hawaii
Contemplating on never being able to afford my dream home

The above is a picture of me sitting on a lanai, looking down the southeast coast of Oahu towards Koko Head. This dream home is on Blackpoint Road in the exclusive Kahala/Diamond Head neighborhood. Since I was a kid, I've always dreamed about living here one day. But I've come to realize my childhood dream will likely never come true.

The asking price back in 2015 for this 6,000 sqft Kahala home with 4 bedrooms and 4 bathrooms was $3.5 million ($583/sqft). The lower level is a 1,800 sqft rental apartment that is going for a below market rate rent of $2,500 a month. Therefore, the main house is therefore not that huge.

$3.5 million is actually great value given the view and the size of the house. Other houses in Kahala are easily asking for $900/sqft or more.

If I was able to get rich and had $4 million cash, I would buy this house in a heartbeat. But it needs at least $300,000 in renovations given it is quite dated. I can't even imagine what the remodeling permits would cost on a project that big. But the lanai and the spectacular view are priceless.

All I think about when I'm looking for my dream home is being able to sit outside in 72-85 degree weather with an ice cold beer and write about various adventures. 

Calculate How Long It Takes To Afford A Dream Home

Everybody's dream home and desires are different. Some people want to get rich fast, others are content with a slower path to greater wealth. And others don't want to be rich, just comfortable.

I'm using a dream home as an example in our discussion on ways to get rich because it is almost always the biggest ticket item people want to purchase. I personally don't give a crap about driving a fancy car anymore. If I did, I wouldn't be rolling in a Honda Fit, baby.

As I was sitting on the lanai, pitying lamenting for not being able to afford such an amazing property, I began to calculate whether other occupations could allow people to afford this home. Shaking my head, I realized it's almost impossible for even some of the most well-paid workers to afford a dream home.

Here's how long it would take a person who joins an investment bank right out of undergrad to save up $4 million dollars assuming steady promotions and pay raises, 25 years of surviving economic cycles, and consistently saving 50% of his or her income without fail.

A Banker's Financial Path To Get Rich

How Long It Takes A Banker To Afford A $4 Million Dream Home In Cash

As you can see from the chart, it would take this top 1% income earner roughly 24 years to accumulate $4 million dollars, assuming no loss or gains in the market. If the banker were to pay 100% cash, then clearly s/he would have to work at least a couple more years after age 46 in order to have a cash cushion.

But, let's say the banker has no problems taking out a $2 million mortgage for the home = ~$10,000 a month PMI mortgage at 3.5%. The banker could put down roughly $2 million at age 40, have a $500,000 cushion and carry a $2 million mortgage.

Some of you in banking may look at my total compensation figures and find them to be conservative. But how many of you know bankers who last for more than 20 years?

The cyclical downturns in finance are vicious (income gets cut in half at age 36). And plenty of people top out in the mid-six figures with the structural decline in compensation due to government oversight and declining profitability. Furthermore, only a minority of people save 50% of their after-tax income, even at these levels.

Meanwhile, most of you are probably thinking the total compensation figures are absurdly high in my chart. I would have to agree. There's no other industry that I know that pays as well of a salary. Just think about this for a moment.

You enter the highest paying industry out of college and have to save 50% of your after tax income every year for almost 20 years just to be able to get a $2 million dollar mortgage.

With debt, it will force you to work at least another 5 years at the very least if you want to own your dream house. Not an easy path to get rich. No wonder why people can't break free from the golden handcuffs!

A Techie's Financial Path To Get Rich

I've been fortunate to experience the techie world for the past 12 months through my consulting gig. I've been to numerous tech happy hours and conferences, and I've read a ton about tech compensation and stock options as well.

Here's a sample income chart of a typical techie in San Francisco. They don't make as much as bankers. But, they have a lot of company perks and elusive stock options to keep their hopes alive. Let it be known that for the majority of tech workers, there is never a liquidity event.

Tech workers also tend to jump ship every three years, which means they never get to fully vest their options either. Many people in tech work insane hours and can't even think about how to get rich. They're just struggling to meet deadlines and stay awake.

How Long Does It Take A Techie To Afford A Dream Home

Based on my chart, a techie could potentially afford my dream home at the age of 44 by dumping all s/he has (~$2 million) into a downpayment and taking out a $1.8 million mortgage.

Unfortunately, she will be sweating bullets every month. She's not going to get rich quick only taking home roughly $90,000 after tax a year based on a 50% savings rate, which is equivalent to $7,500 a month. A $1.8 million mortgage costs around $9,000 a month! As a result, she'll have to lower her savings rate to 0% in order to eat.

The more realistic age when this techie can more comfortably afford a $3.8 million dollar Kahala dream home is closer to 50 years old. Her semi-liquid net worth will be around $4.2 – $5 million by then. But then again, dumping 70-90% of her net worth in a dream home might not be the wisest move.

I'm actually surprised by how little techies earn given their skill set. Plenty of them are frustrated they can't even comfortably afford a median $1.1 million home in San Francisco. Plus, we only tend to hear about the massive tech wins. The losers are often just brushed under the carpet.

Diversify To Protect Your Net Worth

Personally, I don't recommend having more than 40% of one's net worth in property. Read this post if you want to know what my net worth allocation splits should be.

The road to get rich is going to take time and risks. I never said it was going to be easy. But you'll never know what you're fully capable of if you don't try. Just make sure to protect your net worth along your journey. Now let's analyze a doctor's path to get rich.

A Good Doctor's Financial Path To Get Rich

I feel kind of sorry for doctors. When they first entered medical school 15 years ago they were promised a much higher salary than they are receiving now. The reason for the salary crunch is due to lower rates of insurance reimbursements and more red tape.

For example, my friend who has a post fellowship from Cornell Medical will be making roughly $200,000 as a cardiologist at 36 years old. When he entered medical school in 2001, he was expecting to make $300,000 – $400,000 to start!

For three years he made $40,000 – $50,000 a year as a resident after four years of medical school. Then, $60,000 – $75,000 a year as a fellow for the next three years after that. Luckily for him, his parents paid for all his medical school tuition.

The median education debt was $170,000 in 2012 according to data from the Association of American Medical Colleges, and surely much higher today.

A Doctor's Typical Financial Path

The good doctor will be able to comfortably buy my dream home when he's roughly 50 years old. He'll put down $2 million, take out a $1.8 million mortgage, and have $854,850 in liquidity or various investments. That's 50 years old folks.

Several of us won't even live until that age! Because a big mortgage has been taken, the doctor will need to work for another 5 years to feel comfortable. If he wanted to pay for the home in cash, he could potentially get there around 53, but have nothing left.

I'm being very gregarious with my total compensation assumptions for doctors. Doctor's salaries have done nothing but go down thanks to big government and difficult insurance companies. I doubt most doctors will ever make $1 million a year anymore, let alone $700,000. But I've thrown the figures in my chart anyway since this is one very special cardiologist.

Change Your Expectations On How To Get Rich

Who knows what homes will cost 15-30 years from now. If a $3.8 million dollar home rises with inflation at 2% a year, that's a $76,000 increase in cost every year. But even during your best income years at $300,000 for a techie, your salary isn't going to go up by 25% a year to keep up.

You've got to be making more than $700,000 a year to keep up with a $76,000 annual increase. Hopefully most bankers, techies, and doctors have more than my chart's estimates given I provide zero growth rates for savings. But I'm doubtful since life gets in the way all the time.

One obvious solution to finding your dream home is to change your parameters. If you're willing to sacrifice on size, location, food, and weather, surely you'll be able to find a dream home somewhere in America for under $2 million.

At $2 million, the banker above can achieve his dream at age 35. And the techie and doctor above can achieve their dream home by age 40. At a $1 million price tag, both banker and techie can buy their dream homes by age 30.

Six-Figure Jobs Are In Expensive Cities

The problem with finding a dream home somewhere else is the labor market. High paying jobs are usually located in expensive, urban cities. The exception is Hawaii where there are very few high-paying jobs. Yet luxury housing prices rival the housing prices in San Francisco, where six figure jobs are ubiquitous. The best bet is to live frugally, aggressively accumulate your nut in an expensive area, and then relocate.

If you don't want to relocate out of state or to a new city, look for a lower cost neighborhood in your area. There are hidden gems everywhere if you look hard enough. You can use a geoarbitrage strategy to save money.

Instead of seeking full-time employment as a banker or techie, why not try and be an entrepreneur who not only earns a modest wage, but controls a massive amount of equity as well? I spoke to the realtors of four Kahala listings between $3.5 million and $7.5 million, and they told me every single owner is an entrepreneur.

The owner of the most expensive listing runs a chain of Korean BBQ and other no-name fast food restaurants in Honolulu. The restaurants aren't that great or impressive, yet he is able to afford a $7.5 million home! Of course the $10 million house in front of him at water's edge is owned by Honda Corp's President.

Related: Strategy / Management Consulting Pay By Title

An Entrepreneur's Financial Path To Get Rich

Here are the realistic financials of a small business owner I know very well.

Entrepreneur's Journey To Afford Dream Home

This entrepreneur can comfortably afford a $3.8 million home by the time he is 40 with $5 million liquid left to spare. It would be a little too risky for the entrepreneur to buy the home before his $5 million liquidity event given he lives off a modest salary.

The reason why the entrepreneur was able to capitalize on $8 million worth of liquidity events is because the entrepreneur owns a large majority of his company. He was able to sell off minority percentages of his holdings until he finally sold everything at the age of 40 to retire. The entrepreneur paid himself a modest salary relative to the size of the business because he didn't want to pay both sides of the FICA tax.

The interesting thing about the entrepreneur's lifestyle is that often, for many years, s/he lives a very sparse lifestyle. Then one day, they hit it big and everything changes. Hence, one has to make a choice between a smoother consumption curve, or a highly unpredictable one.

For those of you who are complaining that my charts are too conservative since I don't back in any growth, feel free to multiply the figures by 130%, 150%, 200% if you wish. The path to get rich is still not easy for the normal working person.

Start Your Own Business To Get Rich

Hot Tub And Outdoor Pool in Hawaii
Hot Tub Pool Party Everyday

Clearly, being a super successful entrepreneur is a long shot. But, so is being a successful banker, techie, doctor or employee in any field for 20+ years.

The big difference is that you actually have to study hard, get good grades, and go to a pretty good school to land one of the coveted banker and techie jobs. Meanwhile, getting into medical school and passing the boards is a Herculean task that even a smaller minority can achieve.

However, if you're an entrepreneur, you can be a high school dropout and still succeed!

Another of the many benefits of entrepreneurship is the incredible satisfaction you gain from creating something out of nothing. Having the freedom to do whatever you want provides for tremendous happiness as well.

It's been over fourteen years since I started Financial Samurai. And I am fortunate the site is now a cash generating asset. Plus, I've created an asset that can be sold for a multiple of revenue.

Start Building Your Brand

Everybody should start their own website and potentially access over three billion people online. From there, you can build a business. You don't have know exactly what type of business you want to start. The key is to just start and build your brand.

If you can do something on the side while working a day job, even better. Your ideas will start coming to you as you start tinkering around. The cost to start a website is next to nothing nowadays thanks to technology.

When I started Financial Samurai in 2009, I just wanted to have a site where I could share my thoughts, connect with like-minded folks, and make sense of all the chaos during the financial crisis. I had no business plan or thoughts of making big bucks.

But two and a half years later, Financial Samurai was making enough money to give me the courage to negotiate a severance and dedicate all of my time to this site.

Since 2012, I've become much more strategic in building “Financial Samurai Inc.” I've focused on building the brand, finding fantastic product partners that add value to readers, and leveraging the site for interesting consulting opportunities. The opportunities are endless and go far beyond what I could ever imagine.

Design Your Own Dream Job To Get Rich

Below is a realistic income snapshot of what a successful blogger can make. If you don't agree that blogging is one of the best jobs, hopefully you have a job you love better. If not, start you own business and design your own dream job.

Pro Blogging Income Statement
Click to learn how to start your own.

I hope this post gives you some insights into the power of starting your own website and business. Change your thinking from being an employee to an owner. What's It Like Being An Entrepreneur?

Not only can you potentially generate a lot of online income, you can also find a new job or consulting opportunities, build new friendships, and reduce your tax liability as well. Don't let analysis paralysis prevent you from starting.

The Best Time To Start A Business Is When You Are Young, Broke, And Naive. Once you get going, the ideas and opportunities will just come to you.

Build More Passive Income Through Real Estate

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. If you don't want to work forever, you need to invest in income-producing assets.

I currently have $810,000 invested in real estate crowdfunding that generates roughly $120,000 a year in passive income. The passive income enables me to live freely and be a stay at home dad.

Check out Fundrise, my favorite private real estate investment platform. It manages over $3.5 billion and invests predominantly in the Sunbelt region where valuations are lower and yields are higher. Technology and work-from-home are long-term trends that will help boost real estate in lower-cost areas.


Invest In Entrepreneurship The Easy Way

If starting your own business sounds too daunting, but you want to gain exposure to entrepreneurship, you're in luck. It's never been easier or more affordable to invest in private high-growth tech companies. Thanks to Fundrise's Innovation Fund, you can quickly get investment exposure to the below industries with minimal effort, time, and capital.

The Innovation Fund invests in:

  • Artificial Intelligence & Machine Learning
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Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

What's incredible is the investment minimum is only $10! In addition, you can see what the Innovation Fund holds before deciding to invest.

To put this in perspective, most venture capital funds require a minimum of $250,000+ just to get started. And typically you won't know what the VC fund will hold until after sometime after you've sent them your money.

Check out The Innovation Fund today and invest in tomorrow's great tech funds, today.

For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

151 thoughts on “Bankers, Techies, Doctors, And Lawyers: You’ll Never Get Rich Working For Someone Else”

  1. But you’re assuming that the cash sits in a savings account and doesn’t appreciate at at least the market rate. Most people in these jobs at least have 401ks. And most aren’t dumb enough to leave everything in cash for 15 years.

  2. But you’re assuming that the cash sits in a savings account and doesn’t appreciate at at least the market rate. Most people in these jobs at least have 401ks. And most aren’t dumb enough to leave everything in cash for 15 years.

  3. this is good, but isn’t it even easier to be a techie, banker, lawyer, etc who gets a decent piece of an existing company; like regular employees of a large conglomerate who eventually move up to won a piece of the company; like Tim Cook now has equity in Apple and is now a billionaire. Shouldn’t that be the ideal path? Being a long entrepreneur is tough and risky, I know, I am one.

  4. Loved this post. I was comforted to see the comp of the different fields who are often touted as the end all be all of income. As a very typical fortune 500 ladder climber, I was happy to note I’m well ahead of the net worth and income levels of all of the other professions listed. And here I always thought I was the “loser” compared to those fancy “IB”ers, techies, and doctors…

    That said, I’m fairly sure your doctors are skewed toward general practice. I know that the guy who operated on my dad when he was in the hospital was pulling down $750k/yr in a relatively small city.

  5. Nordic Fire

    This post is so true especially here in Nordic Countries. If you earn more than 150Keur, you pay almost 55% of your income to taxes..

    – NF

    1. Very insightful article. My family and I love driving around to see gorgeous homes. We always wonder what people do to afford those houses. Depending on who you ask the answer changes from Doctors and lawyers, to sales people, to entrepreneurs. Whatever they do to earn money, one thing is for sure, they are not your typical employees.

      I also appreciate your encouragement to build a website and brand. This is great advice!

  6. If you’re currently making 500k a year wouldn’t you be able to afford your dream house in ~6 years if you lived frugally?

  7. Good post. I am 51 yo physician have seen medicine change significoantly. I have 2 side jovs in addition to my occupation.

  8. It seems to be that if a person starts a business that they really like, then after paying their dues for a couple of years the business succeeds on its own. Whereas if a person is only working for a paycheck or starts a business that they are not passionate about, then it languishes in mediocrity.

    The “doing what you love” part is important.

    Btw, I live on Oahu (and used to live in the Bay Area) therefore like to read about your personal experiences.


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  14. Holy crap do you have a completely distorted impression of how much techies make. $100k at 25? $300k salary, later on? Maybe if you’re a CEO or other executive – in which case you’re an MBA; not a techie. A techie is looking at $100k with a good idea of experience or in an area of particularly rare expertise. It’s even harsher, now, in a world where people are being undermined by outsourcing (we just canned 500 engineers at our company and replaced them with a bunch of guys in Romania who will work for half the price, at most – and are younger).

    1. 90% of the range I’ve seen is $80,000 – $160,000. And yes, hopefully by the time you are in your 40s and 50s, you’re an executive.

      How much do you make and how long have you been working?

      If you go on, you’ll see a bunch of $80-$160K jobs. Most top out at $200K.

      Please share what you think are appropriate income figures in your neck of the woods for 20,25,30,35,40,45,50,55+.


    2. Stevie Wonders

      Totally concur with this. Outside of the coastal tech hubs, salaries are much lower, often shockingly so, even at fortune 500. In so small part due to rampant H1-B visa abuse and offshoring. Six figure salaries are just for the most senior people. Many must go into management for this, which of course is a totally different skill set. And the supposed tech worker shortage doesn’t exist in the “hinterlands”. Bay area is very unrepresentative of the field at large.

  15. Really good food for thought in this one Sam. Who would have thought that a fast food chain like that could make someone that rich. That is one amazing balcony! That’s really mind blowing too that all of the owners of those incredible houses are all entrepreneurs. Makes sense after looking at your tables!

  16. Andy in Denver

    Hawaii is overrated. Unless you grew up there, most mainlanders don’t last more than 18 months before they feel isolated and move back to the mainland. Life is a journey, not a destination, and if your goals are all based on “obtaining” the item that will “finally” make you happy, you’ll never be happy. Happiness comes from joy in everyday things.

    1. I would be bitter too if I could only afford to live in Denver where it is 18 degrees at night.

      Hawaii is amazing.

      1. You’ve obviously never lived in Denver. Also, Hawaii is only “awesome” if you’re already rich or happily poor. Your state produces nothing and educates no one.

        1. lol! so much salt towards hawaii
          colorado and hawaii are both cool
          calm down, calm down..

  17. I will never be as rich as I would like to be with my current job. Period. I cannot take up jobs with more responsibility than what I do now without sacrificing my kids’ lives. So the only thing I can do is move from SF to another smaller city that will allow me to live in a 2500 sqft home with a fraction of the cost, a more fruitful life enjoying simpler things in life. So Charlotte – here i come in May 2015!

    1. The key is mentality —the action mentality. Those that are rich are not smarter than you, but they do act while the public masses pontificate and being armchair critics.

      As Samurai mentioned above, BBQ restaurant venture can make you rich. How about a home renovation contractor, well I know one who is a multi-millionaire and you cant tell it when he is at the work site.

      Dont let what appears to be “lowly”, “unclassy” work etc hold you back. There are rich people in every type of businesses.

      The question often asked is “What should I do with my life?”
      My answer is, first figure out what you truly enjoy doing, then find out how to make money doing that. If being a hairstylist is what you really want to do, I can guarantee that there are many people in hairstyling business that are multi-millionaire.

      Tell us and the world what you truly enjoy doing.

      1. MoneySheep is correct … There is money to be made in EVERY type of business!

        I have a good friend that is extremely wealthy running his own business His business’ motto: “Striving to be #1 in the #2 business!” His business: Portable toilet rental! He also says quite a bit “People don’t realize how much green there is in the yellow and brown.”


  18. Samurai, Since you could go in to see those houses on Blackpoint Road you are 75% looking like an owner. Last time I was there I drove my friend’s beat up Honda Civic, and the realtors refused to let me in!

    It takes a special kind of character to be an entrepreneur, not anyone can be one. But if you dont try you dont know.

    So I always say to any kids who want to listen to go do something daring –like starting a venture or start a water-well project to help the drought strike areas for example– before 34 years old. Live like a monk if they have to, it is an adventure. If they succeed, they know they dont have to worry about money again or have leave their mark. If they fail, it is ok, not everyone is cut out to be one. They can still have 30 years to work for someone, in the end they will still be ok.

    I did what I say, and I retired at an early age.

    1. Maybe! But im not sure.

      I walked into 5, $3.5-$7.5 million dollar homes and everybody greeted me with kindness. I spoke to all of them for 5-25 minutes about the details of the house, the property market, and San Francisco.

      I definitely do not lack confidence. I love property and perhaps when they are me smiling they are more open to welcome me in – even with a tshirt, shorts, and flip flops :)

      I like your advice for you get folks!

    1. That’s kinda the epiphany I got when I found out the guy who owns the $7.5 million other house just runs a bunch of Korean BBQ fast food joints in Honolulu. Nothing huge, but huge enough!

      1. Superb effort in replying to so many comments :)

        Of course if you are in a well paid job, say in finance, you are already above the mean in terms if take home and it’s hard to make the jump. Perhaps once you are near FI it could be tempting!

        Franchising maybe…

  19. According to this article, 64% of 30 mil plus net worth individuals are entirely self made, and only 17% fully inherited their wealth. I believe it. One generally doesn’t know how to hang on to wealth if they didn’t make it themselves.

    I am in healthcare too and I think your doctor chart is pretty accurate for a high income specialty early on. Many or most doctors would need to cut those income numbers in half and most these days have 200k plus in loans. (many in med school now will have 400k by the time they graduate!) I don’t think the income usually jumps like that toward the end of a career unless you are doing something unusual ie fee for service plastic surgery, etc. In my experience, income after reaching partner (which happened after a year) has been flat or slightly decreasing. One can only see so many patients or do so many procedures and the reimbursement for these is set by medicare and insurance companies which have been slashing rates. This forces you to work harder for the same income. Also, consider that it is quite difficult to save much during residency and fellowship, during which you are living in larger more expensive cities. I agree that becoming a doctor is a way to a stable good income but not the way to afford a 4 mil house! :)

    That being said, I am ahead of the savings curve in your chart in my late 30s due to market gains, realestate, a more aggressive savings rate of 70% of post-tax income, and living in an inexpensive area.

  20. Hi Sam, what about stock market investment to make you rich. I heard that one of the best investments to make for eg was $10K invested in Altria (MO) in 1970 has turned into $18M today with reinvested dividends provided you kept hold of all the Altria spinoffs like Phillip Morris, Kraft, Mondelez etc

    Today, you got to be looking at growth stocks like Visa, Starbucks, Disney etc growing earnings at 20%+, but you have to invest significant money. Stock growing at 20% should double in about 3.5 years.

    Regards, Jon UK

  21. Samurai, do you consider yourself rich? What’s the minimum financial net worth does someone have to attain to become rich in your view? From UBS studies, $5 million seems to be the minimum number.

    1. I consider myself happy and fortunate to be able to pursue what I want to do. So in that sense, I feel very rich. Freedom and the ability to choose = wealth to me. I never want to do something because I’m forced to for the money.

      Monetary wise, I don’t feel particular rich living in SF b/c I live pretty frugally (Honda Fit, slightly above median priced home, save 50% of my after tax income at least, take the bus and train). I also play tennis with people who make 8 figures a year, and who built a $4 billion dollar company. So to them, I feel poor.

      But it goes back to having freedom. $5 million is rich for everywhere in the country except SF and NYC imo. The figure might be closer to $10 million in these two cities. I can write a post about it and do a survey!

      1. Sam – you hit it on what wealth means. By that metric, I do not feel wealthy, though comparatively speaking I am. Its less that others have more, just that I do not feel like I have ability to choose. However, I wonder if I need to question that assumption more.

  22. I’m surprised the realtors didn’t mention any buyer who could afford these homes due to a massive generational wealth transfer, a topic you’ve mentioned before. But then again, who’d readily want to admit that? It’s easier to just call yourself an entrepreneur!

  23. I’m going to be honest here….a 6,000 square foot home is not my dream home. My dream home is a small one that is easy to maintain or a condo or townhouse. I don’t think I could even spend $4 M on a home. Maybe I could if I were a multi-millionaire, but I don’t know. I think I just want to make as much as I can and save it all. I am hoarder apparently. lol I like the comfort and peace that our savings bring. I don’t want to worry about money and by spending that much on a house, at any of those levels would bring me worry….even if I paid cash.

  24. Assuming 0% growth on your investments make this impractical. The majority of the multimillionaires I know did it through investing. I just got offered a six figure compensation package at 21 on my Bachelor of Science in Electrical Engineering from a state school and the first my company is doing is sending me to a top 10 engineering school (I’m aiming for Stanford, Berkeley, or UT) and they are paying my salary and 100% of my costs. Then I go back and make the 6 figure salary upon graduation again. So for top “techies” I think your numbers are low. This is what I got from a state school as a top student, I’d be willing to bet the top students at the Ivy’s are pulling more than my generous package.

    That being said, I don’t plan on getting rich from my day job. The real money will come from my investments. I plan on investing 50k a year religiously of my salary into real estate and the per-forma in my area shows a yield between 10-20%. Generating that kind of yield annually and continuing to add to the portfolio at a rate of 50k+ a year will allow me to get the benefits of the techie job pay and easy lifestyle while having shit tons of cash to invest and grow as the entrepreneur can. Eventually, I can cash out the real estate too if I want for huge landfalls as the mortgages pay themselves off. So I think having the job that will generate huge amounts of excess capital to invest like an entrepreneur is the optimal strategy.

    I have also considered going to wallstreet to work for a big bank with the engineering skills and taking the engineering pay and again saving massive amounts of cash and investing. You get rich INVESTING not off salary IMO so you missed a huge point on that. The entrepreneur who built their business in essence invested and that’s why you see their number so much larger than everyone else.

    I still believe that on average the engineer will make more and live more comfortably than any other major. Of course IB salaries will mess up that up. But counting all of the majors. Bet then again top Techie’s making 7-8 digits and some who also own the companies are billionaires. I don’t know many doctors who can say the same.

    The thing I have to consider is at what point should I get an MBA and transition to the business side or try to ride up the ladder on my engineering and quantitative skills. At what point do you think it would be necessary to get the MBA? I think by 30 I will easily be making over 200k so is it even worth it if I’m already business minded. I did complete half my MBA in my undergrad program too already. But putting it on hold to get shipped off to the top 10 engineering school. But for a pure salary/compensation perspective what route is the best to follow?

    1. I am happy for you at 21 that you plan on generating 10-20% a year in returns, are willing to work for decades, and become a multi-millionaire. Can you clarify your statement on being offered a salary, but then needing to go back to school, and then work? Isn’t that a year or two less income you get to earn? Why not take the 6 figures at 21 and build now?

      If you don’t believe in yourself, nobody else will. Let me know how it goes at the 5 and 10 year mark!

      1. I’ve already been investing and receive approx 6-8% per loan and that’s with minimal effort. Once I finish engineering school I’ll have the time to find and manage more time intensive and profitable endevears!

        And yes, I’ll work until I’m 80 and a billionaire. I just solving solving problems, and making more money off investments is a nice brain teaser that I get a lot of enjoyment out of. As for engineering being doing it through internships and it’s 40 hrs a week and go home so low stress and won’t burn me out. The investments will be what potentially burns me out!

        My company hired me on with the job go be a student in graduate school at a top 10 engineering school. This means that they will pay 100% of all expenses regardless the price of the university and give me my salary to live off of. In exchange, I will have to work summers for them and owe them 2 years when I graduate. But every year of grad school I’ll clear 6 figures when including benefits only working summers and then make 6 figures working for them the 2 years I owe them.

        They’re trying to gamble they can hook me and I’ll stay and thus are willing to risk the few hundred thousand it will cost for my schooling. They also want to bring in students from top 10 schools since it’s rare for them to desire to come to the southwest desert I live in lol.

        When I get back from graduate school I am also allowed a yearly amount to continue my education and plan to use it towards an MBA. For the MBA I will have to work simultaneously but hey they’ll pay so can’t complain! If you work hard enough and are bright you shouldn’t have to pay for 1 day of education in your life!

    2. Thomas H Schaefer

      Jon, catch your breath and be realistic about your expectations. Engineers are great with numbers and calculators. Projections look good until they don’t. Real life and market returns are humbling. Financial Samurai is being realistic in setting this framework of numbers, timeframes and wealth. I will share my story with you. I apologize now that this will be a long post.

      I am a 48 year old attorney in a big midwest city. I was admitted to the bar in October of 1992. I had the benefit of working at a law firm that had a 401(k) from the beginning and am still at that same firm today as a shareholder. I work very hard and make a decent income.

      Back then, 401(k) plans had not quite evolved to where they are today. Choices were expensive and limited. Most plans, including ours, included a limitation on the percentage of income participants could contribute (ours was 10 percent). The caps were low, well under $10,000, so 10% or the cap really was a wash anyway. I have maxed out this plan from the beginning, with money flowing into low expense mutual index funds, domestic and foreign, at standard recommendations.

      I remember watching my account explode through the 90’s. The dot com stuff was nuts. I was making more money on my investment accounts than I was practicing law. It was crazy. I had one mutual fund (a fund mind you, not a stock) return 185% in one year. I think it was Warburg Pincus Emerging Growth? Other attorneys were quitting their practices to invest full time. I was always jealous of my in house dot com friends. Then, the market crashed. Trust me, there were no safe harbors. The early 2000s were stagnant. Then came 9/11. For years, it was tough to even look at your statements. I focused on my career and continued to invest. I was just a W2 guy so what was I going to do anyway?

      I plugged away living life and continuing to max out the account. I did not sell. I did not change my elections. I kept the same diversification. Simple domestic funds with 75% of my money and 25% in the foreign index choice. The market recovered nicely. I was married and had kids, sold the house I bought in 1993 in 2004 (for too much money), built a beautiful house (and paid too much for it), and kept going. I remember having my sons pals and their dads over to the house on Halloween, October 31, 2007, and sharing with them I was getting burnt out being a litigation attorney and that maybe it was time for something else after what was almost 15 years of a lot of hard work. I had a flush account again!

      The market stopped going up that year, slowly started to track down in 2008, and crashed thereafter by a big percentage. The Great Recession of course. Damn, that really sucked. It was hard again to look at my statements. It was back to focusing on work and continuing to max out and invest in the 401(k). By December of 2008, the house was substantially less than I paid for it as were the investment accounts. I almost cried as an adult. Not because I felt sorry for myself but because I felt like I had done everything right and failed my family.

      I am now going to get to the point. When I looked specifically at the 401(k) account, in December of 2008, after having been contributing the way it was taught to be done, with the rises and dramatic falls, the account value sat exactly at the value of my own contributions. 15 years … no return. It was worth exactly what my contributions totaled over the years. I sat back up and thought at least I hadn’t actually lost anything!

      Of course, December of 2014 is different than was December of 2008. Investors since that time have only seen the market rise. A crash will happen again. I have seen 3 already. The point is that you really cannot count on averages or any other promoted returns. The author is right on with his numbers and framework. Do not count your chickens before they hatch!

      By the way, everyone needs to invest. Markets are beautiful. Putting your money into the market is the mother’s milk of wealth creation. I am now right at $1m in the 401(k) this year with the max over my working timeframe (it has taken about 22 years). Financial Samurai can let me know if I am on his numbers or not, but I could not have done anything more over the years and it is real life. I did, though, also understand at the beginning that I needed to do much more as an investor. My taxable accounts about equal my 401(k).

      1. THANK YOU Thomas for sharing your financial journey. I do fear everybody who started investing after 2009 are over optimistic, over exposed, and over enthusiastic about this bull market.

        I do hope more people who be more balanced in their beliefs. But, it takes real pain, loss, and disaster for people to change their views.

        Congrats on hitting the $1 mil mark! I’m on my mobile at an airport and can’t check my figures. How long more do you plan to work for? You’re doing great. I’d rebalance and get more conservative if you are still 75/25.

        1. Thanks FS. Agreed. Everyone is way too optimistic right now. Since 2009? Way too easy. There are some books out there that talk about investment cycles and investment returns and to be mindful about where you are at in the journey. The difference between hanging it up and being successful is sometimes nothing more than your luck in timing what the next market cycle brings.

          Yes, I am getting away from that balance (100% in equities at my age!) but it is tough knowing where to put it right now. I am simply gathering cash with the dividends and new contributions. It is tough because such low rates are forcing us into stocks. I kinda like REITS (I personally can’t be a landlord – no time) and BDCs, but in small percentages. I am keeping the blue chips and focusing on the riskier satellites.

          If I needed the income from my investments, I would probably harvest now from my accounts what I think I needed for income in 2015. I would keep investing though because it feels like the only game in town. That said, December is always the best time to go shopping in the market because of tax loss selling. So this year, if I wanted to get into big energy stocks, for the long term time frame, and I kinda do, I would do it before year end.


  25. A slight problem with your maths Sam is your assumption about savings rate. Your expenses don’t need to rise exponentially as your income rises, if you could make do with 50% of your aftertax income when you’re on $200,000 (Your ideal income), why not just bump up the savings rate on any marginal income you make. If you reached the hypothetical $1,000,000 a year, you could be saving ~83% of your income and have the same quality of life. Otherwise quite interesting to see! Do tell me when you come to Melbourne for the tennis.

    1. True. I could change my assumptions and try and live forever on a set amount of disposable income. But what’s the fun in that?

      What percentage of your after tax income do you save and have saved over the past 10 years?

      1. It’s all a matter of priorities I guess. If I really wanted an expensive house, I would sacrifice the ‘fun’ of having a higher income than suffer the disappointment of not getting the house till 50 because I couldn’t live on the same income as before.

        I’m heading into second year at Uni, so I wouldn’t have income figures for you. I do save over 50% living with my parents, although it is rather easy when you don’t have to pay taxes or that much rent.

        1. Ah, I thought you were one of us working stiffs.

          Enjoy university and all the freedom and joy it brings. Once you have to make money on your own, things change drastically and saving doesn’t come as easily.

          I kinda wish I did 5 years in college. It was a blast!

  26. But Sam, where were you 4 years ago? The same house was just $1.5 mill then. You could have gotten one hell of a bargain!

  27. Terry Jones

    In your blog you consistently point out that it is normal for someone in banking to may $200,000 or more.

    I live in a city of 250,000 people in the Midwest.

    The only people I have heard of making $200,000 or more are business owners and CEO’s of local companies.

    I work for a public utility employing 450 people and our CEO is the only person who makes more than $150,000.

    In the past, I worked for a manufacturing company employing about 4000 people, and same thing there, just the CEO made more than $150,000.

    In both my manufacturing and utility experience, our company’s income, and therefor employee salaries, were based of the products they sell (quality windows/doors and reliable electricity).

    I am total disbelieve that a banker/financial person is providing a service that is worth $200,000 to their customer.

    In my mind the typical finance industry customer is a middle class worker, somewhat unknowingly paying a 1% management fee, in addition to the 1% mutual fund’s expense ratio, on his hard earned 401k.

    And the business is a big bank, basically screwing them over by charging these fees and not providing much of a service to the customer.

    Can you enlighten me on what service a banker provides that is worth the +$200,000 salary, especially from the point of view of a hard working middle class midwestern worker?

    1. That is the difference between the Coasts and/or big cities and a smaller town in the middle of the U.S. Where I live just about everybody makes 6 figures. I am an accountant and make well over $200k. Yes, I am in management, but out of the top 7 or 8 employees in my company of 35, I am not a part of.

  28. I don’t think it is an “either or” choice. There are some people who got lucky and started working for Google and the like in the early days and became quite rich. It may even be a better bet than being an entrepreneur. There are others who take the safe route of working in government or some other “safe” profession and lowered their expectations, but have a nice life. Not that different from living on considerably less than your earnings in a high paying job.

    It gets down to what you find important. My wife and I bought our dream house in 1976. It was on top of the hills overlooking a private country club with a view of Los Angeles. If I still owned it, it is worth about $1+ million dollars.

  29. I appreciate your numbers.

    In reality, all your ‘dream’ numbers and dream homes are just that-dreams. The price is so high because almost anyone in the world would want to live there.

    That is why these dreams are only available to the super rich- the people who inherited their money most of the time, or the bankers controlling the financial system and the federal reserve.

    1. I think you missed the crux of the discussion. There are quite a few self made business people that can afford this lifestyle. Like Sam said, in Hawaii all the people getting the $4-$8M houses are entrepreneurs. Open your eyes.

    2. I believe his point was that if you want to be in the super-rich, then be an entrepreneur. Obviously not everyone can do it, but I think more can do it than most people think. It just takes risk, sacrifice, work and patience – not something everyone has (for various reasons). Most of the super-rich did not become the super-rich out of thin air. And your comment about bankers is probably one thing holding you back. There is no cabal of secret people controlling everyone’s destiny and preventing you from growing your pie.

      The whole point of this blog is that everyone can become super-rich (however you define it – rich to me may be poor to you). It just takes sacrifice, work and patience – add the risk on top of that and sky’s the limit.

      Might you fail – yes. But you may also succeed.

      These are lessons I wish I had learned at 20 and not 40. At 40, all 4 of those attributes are in shorter supply.

      1. Sorry, you are blind by choice if you don’t see the elite bankers pulling the strings.

        I know his point. I am an entrepreneur and an employee of a company.

        I build my wealth and my business. The point is to say entrepreneurs make more than these positions is, on average, a complete lie.

        1. Do you think that’s my main point John? Let me clarify for you. To get super rich, it takes equity. Entrepreneurship provides a much higher chance to produce equity. Every single one of these houses is owned by an entrepreneur. The same goes with the Gold Coadt in SF.

          1. Half the houses are probably owned by entrepreneur and their spouse also. If plan A doesn’t pan out, try plan B and try to snag one of the these wealthy folks. Probably better odds of success than making enough to buy these dream homes, especially if you’re a woman and attractive.

  30. My company rented my family a house worth US$4.2 million in Dubai for 2.5 years, does that count for anything :)

    Although living in Dubai was pretty awesome, I could never justify ‘investing’ that amount in real estate. There are plenty of fantastic hotels and places for lease. And the best part is being able to hand the keys back to the owner after finding out then, yes, even a 4 million dollar home has all sorts of issues (electrical, bugs, water leaks if it does rain, and just plan deficiencies in location that can occur over time when they keep building out prime real estate).

    1. I rented a $4mm house on the beach in North Carolina for about $3500 for a week in October a couple years ago. Cheap in the off season. The family keeps asking when we are going back.

      1. Wow, we (the company) paid over 100k/yr for our house, so well done sir, very well played! Of course, the summer low season should have been less and the winter high season (flood of Russians, Brits, and anyone from the Far East with bags of cash) was the pay-off… Nothing like getting together with friends at the Jumeirah Islands Club in December and January, kids playing in the pool while we ate and drank well.

        1. Cool! Nice your company paid $100,000 a year! How did you feel living in such an expensive house?

          The funny thing is, my new tenants of my old house pay over $100,000 a year as well…. so I think you got a good deal if the house really is worth $4 mil!

  31. Sam,
    Good post and very interesting when you run the math – I think you are spot on! Could you check your table for the “Techie” as it looks like you went from age 30 to 33 to 37 to 40. The savings math doesn’t calculate correctly. It doesn’t detract from the overall effect of the post but wanted to see the accurate math results.


  32. Relevant article as I have been thinking about my dream home for the past few months and wondering if it will ever be obtainable. Maybe it will, maybe it won’t. Maybe it is just good to have the dream. Maybe I should stop dreaming and just be content with the wonderful things I have.

    That being said, if I could give the younger me some advice, I might advise myself to start a business in my early 20’s. I’m sure then as now I would say I don’t have capital, I don’t know what to do, I am not offering anything unique. But I have represented enough people who started without a degree and with one truck or one tractor. And from that they built up a multi-million dollar business. Not by offering something completely unique, but simply by providing a service at reasonable prices. I really think a lot of people could do this if only they took the chance. Even now, I suppose I could, but at some point it is difficult walking away from a good paycheck and taking a risk with a family to support and putting it on the line when I no longer have the energy. This is why you should do it young. I think the guy who founded Jimmy John’s was given some money which he could use for school or to start a business. He started a sandwhich shop. The ROI has been a lot better than a degree. There is a great lesson there.

    If you can buy or lease a truck, you can start a moving company – its easy to hire some labor. Do it right and then you can expand. That’s all it takes. I would like to see this encouraged more in our country.

    1. Never stop dreaming! It’s fun and free.

      I was just amazed that a local Korean BBQ fast food chain store owner in Honolulu could afford a $7.5 million Black Point house, and still probably have millions more assets elsewhere.

      You don’t have to start Yelp to be able to afford something amazing.

  33. Oof. These numbers clearly show what I’ve been thinking — this household is not getting rich from our day jobs. My dream home would be under the $2M range in the Seattle area, but I’ve gotten a late start in my tech career which puts me into retirement age by the time I might afford something like that.

    That could be disheartening, but I find it to be motivational. If I bust my tail in some side gig to supplement or eventually supplant my income, maybe I can afford that dream home. All the while, I’m contributing that much more effort into actually producing something worthwhile. Even if I don’t make it, I’d be pretty happy that I made the attempt as long as I didn’t half-ass it.

    1. Yeah James. It’s all about the motivation for me!

      I don’t want to be almost dead before enjoying life to the max now. It’s a big reason why I left corporate America in 2012. I haven’t regretted it one bit.

  34. This is a good reality check, and agreed, namely successful entrepreneurs can afford the more ritzy luxury homes. I was thinking along the same lines the last couple weeks as I’ve been contemplating upgrading to a larger, more dreamy beach-front property for ~$2M. Then, I started looking at the $5M and $10M houses and realized I will probably consider one of those my dream home after living in the $2M house for a few years. It’s important to be careful, because the chase never ends if you let it take ahold of you. Do we really need a $3M beach view property when all of us can simply utilize public parks and beaches for free? Materialism and vanity can tug at the most hardset of us savers. I’m not saying we shouldn’t stop striving, but it’s important to come back to center sometimes and realize most all of us who follow this site are already living in what most the world would consider their dream homes.

    1. Your words ring so true. I’m sure after 5 years of chilling on the lanai in my dream home, I will be longing for the $7.5 million expansive dream home down the hill! It never ends, until you decide to be happy with what you’ve got.

      I just think it’s so motivating and fun to look and dream. All beaches are public in Hawaii, and that’s something that I love about the island.

  35. Without factoring in market growth, these numbers are absurd (sorry, but true). Further, many “high achievers” that I know are two-income couples, so you can double your savings numbers even ignoring the market growth. In response to your earlier query to Ryan T.

    “Because there are no guarantees in life and I like to keep things simple and conservative. Are you currently a banker who saves 50% of his after tax savings and is worth over $7 million? If not, what is your age and current net worth so we can compare your figures to my chart.”

    My spouse and I are mid 30s, both ‘techies’ at fortune 100 companies (no massive liquidity event, just the usual $100K-$150K of vesting stock). One of us is successful (the ‘associate’ in your finance example), the other is very successful (the ‘director’ in your finances example). Combined total-compensation started at ~$150K 15 years ago, and is now ~$550K. Combined NW is about $4M, of which $3M is liquid-ish (though that includes funds in retirement accounts).

    Realistically we could pay cash for your $3.8M home within a couple years (late 30s) if we wished. As it happens, we also live in a lower-cost-of-living area, and our “dream home” is around $700K. We could have paid cash for our dream home in our late 20s. We didn’t, but could have.

    So to me the reality check is that even for a generous definition of “dream home” (large, new, secluded home with a gorgeous view), a successful techie working for an established company can get there in 15 years, with a prudent lifestyle.

    1. Ah, hah! Thanks for helping me prove one of my strong beliefs I’ve been highlighting for a while: There is more money out there than you know!

      Despite a 50% divorce rate, good point on going in as a couple to buy the dream home.

      So even though I conservatively estimate zero growth in savings, you two in your late 30s are able to, together come up with $4 million liquid, which PERFECTLY matches the total savings amount for a late 30s individual banker in my chart X 2! Pretty cool huh?

      1. Actually no, our ‘savings’ numbers are roughly double what your hypothetical banker has saved, despite a *combined* income roughly equal to your hypothetical banker.

        Our *combined* compensation 15 years ago was ~$150K. Our *combined* compensation today is about $550K. So our combined income has roughly followed the trajectory of your single banker to this point. Though to be honest, our 15 year aggregate compensation is far less than your banker’s example, as our ramp has not been nearly as linear as you show for the banker.

        And yet despite that our current liquid savings is 50% greater than your hypothetical banker.

        So despite lower overall earnings than your banker, and a savings rate that approximates the same as your banker (~50%), our liquid savings is substantially higher than your model shows. That (substantial) difference is due largely to market growth.

    2. Doesn’t having $2 million each in your late 30s therefore totally corroborate Financial Samurai’s banker chart of having $2 million by 38? Every scenario is different, but I find these charts to be pretty encompassing of the large amount of people out there who don’t already own real estate or do.

      Or are you saying you are below average, and therefore the numbers are understated since average or above average people in these industries generally have much more?

      1. No, I’m saying that Sam’s numbers are entirely fictional and in no way represent reality, because they do not account for market growth. If his hypothetical banker, doctor, and techie were to put their money in the market rather than stuff it in their mattress, the result for a well compensated person would approach or exceed his hypothetical entrepreneur.

        1. I understand that you think every banker, doctor, and techie have much more money than in my charts. Hence, could you give some examples as to how much more money do you think everyone has at age 40, 45, 50, 55 for example? Thanks for contributing!

          1. Now hold on there pardner, I never said anything about everybody. You listed very specific parameters in your examples.

            “Here’s how long it would take a person who joins an investment bank right out of undergrad to save up $4 million dollars assuming steady promotions and pay raises, 25 years of surviving economic cycles, and consistently saving 50% of his or her income without fail.”

            That last bullet “saving 50% of his or her income” excludes the vast majority of bankers, techies, and doctors. It probably excludes anybody who leases a BMW, gets horse-riding lessons for his daughter, takes expensive vacations, upgrades houses frequently, etc…

            But someone who *does* meet the criteria that you set forth in your post will easily exceed the savings numbers that you showed in your post, thanks to market growth. It baffles me why you refuse to concede that point. It would take very little effort to add a conservative ‘5%’ savings growth to your spreadsheet, and you would quickly see that it makes a tremendous difference in the end result. You’re a finance guy, you know the rule of 72. 5% doubles your money in ~14 years.

            1. Up until a couple years ago, the return on the S&P 500 was flat.

              Sounds like you’re letting the bull market get to your head. You’re still young and will learn that lots of things happen on the way to 50. I’m 56.

    3. “Without factoring in market growth, these numbers are absurd (sorry, but true)”

      I’m glad you added the “sorry but true” because it makes you sound a little less douchey.

      Considering that the past 14 years has produced two of the worst market crashes in history, many people investing during that timeframe might be lucky to just be ‘even’.

      1. I’ve lived through them, and my savings have lived through them, and come out OK on the other side. Anyone who is even over the last 14 years has either been micromanaging their investments or happened to drop in huge chunks of money at the absolute worst times, and then take that money out after the crash.

        Just for fun, I took Sam’s hypothetical banker, and applied a very modest 5% annualized growth to the savings. After 25 years, instead of $4.3M he now has $7.2M. If he’s able to get 6% (not at all unreasonable over 25 years), he’s got nearly $8M. He can buy Sam’s dream home and another for his wife. Of course we’re neglecting capital gains tax which will take about 1/5 of his gains, or $800K.

  36. Thomas @ i need money ASAP!

    My dream home would be small and easy to maintain. Spend my money and time traveling around the world! Say that the annual housing expense is 5% of the value then I could spend $175k on traveling each year if I avoid. $3.5M home :)

    1. Love it! When you put it that way, screw the $3.8 mil home! :)

      $175,000 a year to travel, or $14,500 a month ain’t bad at all.

      But how about having both? More, more, more! Ha

      1. I like this approach better! I figure building more income streams and having a huge portfolio that is providing about 175k a year! This would provide me more freedom to do more things, heck with that sort of money. You could travel around the world and stay in the best places with the best views! above all at least you will not have to worry about making huge mortgage payments, property taxes, maintenance costs and everything else that comes with owning a huge dream home!

        Those scenarios even with being a top earner just seems too tight. There is no way I would feel comfortable putting a huge chunk of my net worth into one property.

  37. Dang, I thoroughly enjoyed this post!

    1) I love how your chart shows that doctors don’t make hardly anything until age 30 – therefore drastically reducing their chances of becoming very wealthy.

    2) I used to live in a really posh neighborhood (long story). Nearly all of those homeowners were entrepreneurs as well (those who weren’t seemed to all have family $$$$$). Entrepreneurs are very interesting people to BBQ with.

    3) I love entrepreneurship… everyone gets a chance to become something great.

    4) Sweet t-shirt

    1. Glad you enjoyed it William! It really is kinda tough nowadays for doctors. Lots of red tape, and less prestige as the past.

      Hope you are surviving the Omega Storm in Nebraska!

  38. Great post. I have been tempted recently to “borrower” or leverage my side business (real estate and note investments) in order to buy a nice home now (no where near $4m, though). That’s what a life long worker bee would do. I can’t do it! I’d rather build a great income stream than a nice home – plus I think it’d be more fun to have a comfortable but humble home and the ability to travel and have great adventures. Also, the more you display your wealth, the more people start expecting of you, and then you end up becoming a slave to your assets and the expectations of others.

    1. Maybe. A home isn’t really displaying too much because you’re not showing it others. You’re also surrounded by other nice homes, so it becomes no big deal.

      It would be nice to have the $3.8 million home AND have lots of income to do whatever one wants.

      How’s your home now?

  39. Not sure if I agree with the cardiologist pay (I work in healthcare) since it would rise very quickly, but not grow as much over time. Regardless, I agree with the basis of your article. The debt that physicians take on is insane, too.

    I would like to move in to consulting at some point, but it is difficult to dive in. I may wait until reaching financial independence and then try it. At that point I would have all of my costs covered and would not need the income.

    That is an incredible view by the way. I think I will continue using credit card points to visit Hawaii in lieu of the $3m+ purchase. Even with early retirement in my sights, I don’t anticipate ever having that kind of cash to invest in real estate.

    1. Hi Vawt,

      I think I’m being very generous with the cardiologist’s pay. The big figures at the end are when she/he has their own practice.

      What numbers do you think are more reasonable at 40, 45, 50? Thx

      1. as a specialist physician in canada (can’t speak for USA) cardiologist pay is underestimated here in the 35-45 age range (would be around 500-600k every year where I am) and likely accurate to over estimated in the later age range (not many doctors get to 1 mil/year unless they are entrepreneurial.

  40. The idea that most people can start and maintain a business is more than a stretch. Even many (most?) highly successful people (Doctors and Techies) don’t have a clue what it takes to maintain a business.

    The other thing is that many people aren’t capable of starting a business unless they have worked for someone. Drop out of highschool, skip college and start a business? Not unless you are a genius or extremely good at what you do. Ever seen Shark Tank or Dragon’s Den? People always think they have a business when they clearly don’t have a business plan.

      1. I suppose you don’t consider it dangerous then, to focus on the gains to be had and largely ignore the statistics regarding the number of businesses that are even sustainable and make it to the 20 year mark. Since you used the 20 year mark for the professions you mentioned, why not consider that as a factor in entrepreneurship?

  41. Chaz Miller

    And when you further crunch the wage/income data, some funny numbers appear. Both the top earners AND the bottom earners get the largest share of their total income from sources outside their wages. Wages are king when you’re in the large group between those two.

  42. This post is both motivating and depressing at the same time. Getting rich enough to comfortably afford $4mil is a long shot for anybody in any profession or endeavors unless you come from a wealthy family background. Most entrepreneurs won’t become that rich either. However, enough people have gotten to that level of wealth in the big metropolitan area to keep the hope alive for other people to at least try. In the end, that’s what matters. At least give it a shot pursuing one’s dreams & lofty goals, especially when young. Even if you fail, you won’t have regrets and constantly wondering about what ifs.

    1. Josh, I think you’d be shocked how many entrepreneurs can actually afford the $4M home…I used to wonder the same thing, but all you need to do is drive along any coast line (and inland lakes too) in the U.S. and there are thousands upon thousands of these places. I wonder where all this money comes from, but I think the reality is that there are a ton of people who do or have done very well. Yes, some of these places are passed down, but I think 90% probably are not. Being a Dr. or professional, unless you are the superstar, is not the way to get there though that is for sure. It’s not depressing, its inspiring that we live in such a place and time where the opportunity to live so well exists.

      1. Yes, I do agree there are lots of wealthy people who can afford $4mil home cash. How they got there and around what age range is still a bit of a mystery to me. I think most people tend to hang out with other people in their social economic range in most cases. That’s probably why wealthy people seem more abundant to some people while less to others. It’s good to have dreams and goals though.

  43. You don’t have to own it in order to enjoy it. Maybe cut the home cost in half and spend the difference on trips to the great places. Too great an appetite leads to chronic dissatisfaction.

    I’m planning to build a home, and cutting 1100SF from the plans eliminated some anxiety. Feels good.

    1. That’s a great point. Although, there is something to owning something all to yourself.

      How big will your new home be now? I don’t want a huge house. I just want indoor/outdoor living and an inspiring view.

      1. Current design is 5100SF. Should be starting next quarter.

        I’ve gone back and forth between building new or doing a big rehab to my current house. New was going to cost too much, but redoing current home was going to disrupt our lives too much.

        The compromise of cutting size of new seems to make the most sense.

  44. In general, you’re correct. The only caveat, and I know you’ve covered it in the past, is in gaining other forms of equity. I know of a company that recently sold. The CFO had only been there for about 18 months. He walked away with about $17MM. Most of the other brass got about $60MM and the CEO checked out at $200MM+. After maybe four years in business.

  45. Another timely article Sam! So I fall into your category of this actually being a potential reality…recently I experienced my “liquidity event” in my early 40’s which pushed me beyond your thresholds of what you feel could comfortably afford this dream home. Funny thing is that I actually have less desire now to have an expensive dream home than I did when I was aspiring to get one. My current residence probably applies as it is a $2M home on the water (that I paid cash for a few years back when it was the end of the world and the price was half because of the panic), but not in Hawaii…or anyplace that amazingly cool that I would want to retire forever. If I were sitting on that lanai though, I might change my mind! My current plan is to be somewhat nomadic moving forward, but one of the things that you’ve mentioned before always comes to mind: the reason you work so hard is to have “tangible stuff” that brings you enjoyment…like a house on the beach. I wonder what the taxes are though on $4M home…where I live they would be $80k/year minimum which chews into the old retirement budget!

    To your original comment…it is 100% true and I tell the young, bright, and ambitious people I come across all the time. You have to take risks and you have to be an entrepreneur. What people forget is that to get to $10M net worth that is cash money, not paper value of a business that is challenging to sell…you will have paid a s%$! ton of taxes. If I stuck with my day job out of college I’d be very comfortable, but still have 20 years of working ahead of me before I could retire in a similar capacity. My advice = go for it while you are young!

    1. Great stuff and congratulations! What do you plan to do with all that money? I wonder if the seller of your current residence is kicking themselves for selling so cheap!

      Ah, taxes. Gotta love em. Taxes are partly why I got out of finance. I wanted to make money a different way.

      1. Yep, they were kicking themselves at the closing telling me i was stealing it! They had a $3M mortgage on it and lost it in 2010 because even at 65 years old they were living beyond their means…ultimate case of why you keep your powder dry to pounce on opportunities when they happen! Doctors making $1M + year but not a nickel to their names…sad really.

        Anyway thanks Sam, honestly i don’t plan on anything crazy for at least the first year. I am in the Midwest and i have never lived overseas, I’d like to give that a whirl…not sure if i am done working forever, but right now my motivation to add to the pile is very low! LoL

          1. Deal! Actually I was just there two weeks ago for a long weekend too. I am seriously considering a week in Tahoe for boarding this year again, and your post about your place was timely…I may end up being a renter from you : ) Would be great to have a conversation with you if our paths ever end up crossing!

    2. If you wouldn’t mind, I’d love to read a guest post from you on how you became a successful entrepreneur. Sam, please?

      1. Yes please. nbsdmp has been a long time reader and commenter with some great insights. If you ever want to share nbsdmp, please let me know! You might get addicted to writing like me.

        1. I’d be honored to guest post one of these days. I have a couple of non-compete things I have to make sure about with first and want my last installment paid from the sale of my stock redemption before I do though : ) Don’t worry, I’m not going away!

  46. Because there are no guarantees in life and I like to keep things simple and conservative. Are you currently a banker who saves 50% of his after tax savings and is worth over $7 million? If not, what is your age and current net worth so we can compare your figures to my chart.

    But I do see what you are saying, that the savings/net worth figures are likely conservative for bankers, techies, and doctors, which is one of the reasons why I’m so bullish on the economy. There are a lot more wealthy people than we know.

    Work on your X Factor concurrently.


  47. Financiable

    As the first commenter said this post is a reality check. I work in finance and run these numbers all the time, unfortunately, coming into my mid thirties and with each passing year it gets more difficult to walk away from good income and a good bonus (particularly when you have kids and the numerous expenses in the present and future to worry about). However, being pragmatic I know these things can go away in a flash no matter how safe they seem and burnout is a very real concern. On the flip side, being an entrepreneur or the more likely scenario of transitioning to an early stage company with great financial incentives provides no guarantees and if not managed correctly could cause an individual to blow themselves up.

    In the interim, I am going to continue to worry about cutting my monthly burn rate (i.e. eliminating mortgage & car loans) and continuing to max out 401K and kids college funds. I always view life like a poker game, as long as you have some chips in the game, you can wait and pick a spot to move in. Maybe this never gets me to my dream house, but it will keep a roof over my head.

    1. It definitely gets harder. This is why negotiating a severance really, REALLY helps people make the transition.

      Don’t look back with regret if you really want to pursue something.

      1. Financiable

        Thanks for the advice and I agree. I never look back, but “assess” so to speak. I think each experience creates a more unique profile and makes me a more valuable asset to not only a company but really myself. The skill set I have makes me employable at a lot of levels, but it is the burning desire to control my own destiny and not be a hired hand that makes me want more. I hope I can sense the moment to push the chips in and not be so risk averse as to let possibility pass me by. I am a few years away from needing to read your severance book, but will keep it in mind!

  48. My dream is to one day have my business buy a private jet (2-3 million). What do you think your net worth needs to be to justify the expense? I’m an entrepeneur 30 years old and in line with your chart. To me the advantage to entrepreneurship, once you make money:), is the ability to expense items and depreciation. Great article!

    1. Hmmm, I would say $30 million. Good luck! And give me a ride.

      But my friends who have that type of net worth all use NetJets. Just buy like 20 hours for $140,000 or something.

  49. Wall Street Playboys

    Ha! We have covered this topic ad nauseam on our blog. The numbers are roughly the same. Also in Wall Street there are many “career associates” who never make more than $250K… But even then finance is still the best position compared to doctor/lawyer/insert position.

    Here’s a decent way to hedge your bets.

    Go to Wall Street. Live in cheap housing. Start a business immediately at age 22-23.

    You will be able to save (you’re working on your business) and continue your Wall Street path while barely making top bucket.

    The people who cannot do this have poor political skills/social skills and end up overworking themselves. Do not do this. Play the game tight and right. Keep working on your biz.

    All that said, know about 5 people who did this and are worth ~4M at age 35. Not bad.

    End of the day? If you’re too risk averse, do not start a business straight out of undergrad/highschool you’re never going to make it to $10M.

    Start a biz and try to be wealthy. Or start a few small ideas and be happy with “moderately well off” $2-3M.

    1. Here’s the thing though, even at a $4 million net worth at age 35, one can’t buy my dream house b/c the $4 million is diversified. To truly buy the $3.8 million dream house, one probably needs to have a net worth of at least $6-8 million.

      1. Wall Street Playboys

        Yep agree.

        Choose between happy with $2-4M. Or… Start a company

        Felix Dennis “how to get rich” should be required reading in school

    1. Absolutely. One can do make many assumptions. I was just keeping all the starting points the same. But by starting at 18, that’s a nice 4-5 year heads start too. I’m modeling my entrepreneur chart after someone I know very well, and this is his path.

    1. Ha, OK. There are only three FS t-shirts in existence though, and all three are slightly different designs. How do I end up selling them for megabucks if I start mass producing them?! j/k

      1. Sounds like you need a bright and motivated entrepreneur to handle your t-shirt design, production, and distribution needs.

        Let’s talk about my distinguished and passionate t-shirt production and sales experience.

        You know how to contact me!

  50. Wow, what a reality check. I wonder how many people really do this sort of maths when looking to buy a dream home. I know everyone where I work assumes all the partners are just living this dream life, swimming in money, but their income probably wouldn’t be any better than the banker numbers on average.

    Funnily enough, I think I’ve just bought my dream home (if we take living in Hawaii out of the equation!) – it’s in Melbourne, Australia, in an awesome suburb near the beach, looking across from a great little strip of trees known by locals as ‘the Acorn Patch’. It really is a dream for us, but we’ve had to stretch ourselves to the max to do it. Now it’s time to knuckle down and start earning some more money to pay it off – a great motivator which is actually just what I need!

    Entrepreneurship just seems so hard when you’ve got a decent paying salary, a family and big mortgage. I’d absolutely love to create something myself and be able to earn a living from it, even if I had to work another job part time. But what I really want is that freedom to do whatever I want. Feels like there’s two main paths to that goal – one in entrepreneurship and one in striving for partnership and staying there until the financial nut is big enough (but not sure I like that 2nd option so much!)

    And what an unbelievable view from that house! I wish you hadn’t got me dreaming about such things with this post! But surely you haven’t given up completely on that dream home – who know what the next 10 years of Financial Samurai might bring!

    1. Awesome Jason! I know how you mean EXACTLY by “knuckling down” to start earning some money to pay it off as a great motivator. That is how I felt after buying my first place in 2003. I was getting demotivated at work, and the mortgage was the rocket fuel that made me come in earlier, leave later, and do my best to get paid.

      Thanks for telling me you’re in Melbourne! One of my bucket list items is to go to Melbourne to watch the Aussie Open! We’ll get some beer and grub!

      Always keep dreaming. It’s fun. It’s free. And who knows, we might just get there one day.

      1. The Aussie Open is fantastic, you just want to try and avoid those notoriously stinking hot days where it can get to +40 degrees celsius here in the middle of Summer. Melbourne is a pretty awesome city too, and has such a huge range of amazing ‘grub’, you’ll love it! Let me know when you make it down here!

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