When it comes to your finances, everything is relative. To get ahead, you must outperform the average. If everybody is up 20% in their investments, have you really gotten richer? You have not. This post will discuss the average net worth for the above average person. Our goal is to outperform the average so we can live better lives.
You've got one life to live. You can have the average net worth in America, which is pretty low. Or, you can shoot to have an average net worth for the above average person. Let's all shoot to be above average with our one and only lives! This is, after all, Financial Samurai, the top personal finance site in the world with over 1 million organic page views a month.
If we all earn $1 million dollars a year and have $5 million in the bank at the age of 40, none of us are very wealthy. With this level of wealth, all our living costs (housing, food, transportation, vacations) will be priced at levels that squeeze us to the very end.
As such, we must first get an idea of what the real average net worth is in our respective countries, and then figure out the average net worth for the above average person!
Suggestion: In addition to building wealth through stocks, also invest in real estate. Real estate provides the powerful one-two punch of principal appreciation and rental income growth over time. Fundrise manages over $3 billion in private real estate investments, mainly in the Sunbelt region where valuations are lower and yields tend to be higher. With the Fed embarking on a multi-year interest rate cut cycle, there should be increased demand in real estate in the coming years. I've personally invested over $430,000 with Fundrise so far.
Average Net Worth By Age In America
According to the latest Federal Reserve's Triennial Consumer Finance Survey available, the average net worth for the following ages are:
Under 35: $76,200
35-44: $288,700
45-54: $727,500
55-64: $1,167,400
65-74: $1,066,000
75+: $1,067,000
Not bad. Believe it or not, the average household net worth in America is now $1.06 million. But these average net worth numbers are skewed by the super rich who have generated an enormous amount of wealth since the financial crisis. The median household net worth is closer to $192,000, which is a better reflection of America. And when most people think about average net worth, they are really thinking about the median net worth.
Now compare the average and median net worth in America to the median age for Americans at 36. Your goal is to try and beat the average net worth by age in America every step of the way.
I started Financial Samurai in 2009 and it is the top personal finance on the web today. I worked in investment banking at Goldman Sachs and Credit Suisse for 13 years, got my MBA from Berkeley, and write everything based off firsthand experience. In 2012, I retired at age 34 with a $3 million net worth, and have been publishing three times a week ever since.
If you're looking to achieve financial freedom from someone who has, you've come to the right place. I firmly believe if you join 65,000+ others and subscribe to the free Financial Samurai newsletter, listen to the free Financial Samurai podcast on Apple or Spotify, and read my new USA TODAY national bestseller, Millionaire Milestones, you will grow your net worth for above average.
Let's look at the average net worth for above average people. It's much more rewarding to shoot for stretch goals and achieve the.
The Above Average Person Is Loosely Defined As
1) Someone who went to college and believes grades and a good work ethic do matter. Or someone who graduated from high school and went straight to work in the trades or building your own business.
2) Does not irrationally spend more than they make.
3) Saves for the future because they realize at some point they no longer are willing or able to work.
4) Takes responsibility for their own actions when things go wrong and learns from the situation to make things better.
5) Takes action by leveraging free tools on the internet to track their net worth, minimize investment fees, manage their budget, and stay on top of their finances in general. Once you know where all your money is, it becomes much easier to optimize your wealth and make it grow.
6) Welcomes constructive criticism and is not overly sensitive from friends, loved ones, and strangers in order to keep improving. Keeping an open mind is critical.
7) Has a healthy amount of self-esteem to be able to lead change and believe in themselves.
8) Has a diversified net worth, which includes stocks, bonds, real estate, and alternative investments.
9) Enjoys empowering themselves through learning, whether it be through books, personal finance blogs, magazines, seminars, continuing education and so forth.
10) Has little-to-no student loan debt due to scholarships, part-time work, or help from their parents. Our parents have saved and invested through the largest bull market in history. It's understandable that parents want to help their children out.
11) Does not confuse brains with a bull market.
12) Understand the power of inflation and believes $3 million is the new $1 million
13) Is constantly learning and reading about health, wealth, and relationships. In fact, the above average person reads 10X more than the average person.
The Above Average Net Worth Deconstructed
Now that we have a rough definition of what “above average” means, we can take a look at the tables I've constructed.
The tables are based on the tens of thousands of past comments by you. They are also based on the more than 2,500 posts I've written since 2009 to highlight the average net worth of the above average person.
First, we'll focus on the simple 401(k) retirement savings system. For 2024, one can contribute a maximum of $23,000 in pre-tax dollars. The maximum contribution amount will likely go up by roughly $500 every couple years if history is any guide.
This chart can be used as a rough estimate for those with the RRSP plan in Canada and retirement plans in Europe and Australia as well.
In fact, any country that has any sort of tax-deferred retirement plan and social safety net program for retirement that has a GDP/capita of $30,000 or more can use the below chart as an aspirational guide.
Remember, we are talking about the “above average person.” Given not everyone can contribute the maximum 401(k) amount, I've used an average contribution of $18,000 instead. In 2025, the maximum 401(k) contribution for an employee is $23,500.
Get a free financial checkup from a professional: If you have over $100,000 in investable assets, you can receive a free financial analysis from an Empower advisor by signing up here. An annual review is always worthwhile as your asset allocation can shift significantly over time, and your financial situation may evolve as well. We all have financial blindspots that are worth recognizing to build more future wealth.
Financial Samurai 401(k) Savings Guide
The average net worth for the above average person takes full advantage of his or her 401(k). The 401(k) is a tax-advantaged account where you contribute pre-tax dollars, which lowers your taxable income and tax bill. The money then compounds without a tax drag.
Only after 59.5, when you can start withdrawing from your 401(k) penalty-free, do you need to pay taxes on the withdrawals. However, by then, your marginal income tax rate should be lower since you're retired.
Below is the recommended 401k amounts by age.
401(k) Contribution Assumptions
The assumption here is that the above average person is able to start maxing out their tax-deferred retirement plan every year after the second full year of work. He or she will continue on without fail until 65. You can read more about the right contribution order of your investments between tax-advantaged and taxable accounts.
The low and high end account for a conservative 0% return to a more historical 7% – 9% constant rate of return. Of course you can lose money if you are unlucky and make much more if you are good and lucky.
Given the 401(k) maximum contribution limits have increased over time, the left column can also be used as guidance for older savers over 45 years old. The middle column can be used for middle aged savers between 30 – 45. The right column can be used by younger savers under 30 who can max out at higher amounts for the majority of their careers.
For example, when I started contributing to my 401k in 1999, the maximum contribution limit was only $10,000. If you are a 40 year old, it's best to focus on the Mid End column.
This chart does not take into consideration any after-tax savings post 401K contributions. However, the high end does include 401k company contributions, as this is common for those with seniority and those who work at profitable, generous companies.
For example, for my last five years at work, my employer paid out more than $20,000 a year in profit sharing.
Financial Samurai Post-Tax Savings Guide (Taxable Investments)
The average net worth for the above average person is also bolstered by building a large taxable investment portfolio. After all, you can't withdraw from your 401(k) before 59.5 without a 10% penalty. When I say post-tax, I mean taxable investment portfolios such as your online brokerage account.
It also refers to your rental property portfolio you are building. Some of you may simply prefer real estate over stocks. That's fine. Real estate has historically been a fantastic wealth-creator long term. The combination of rising rents and rising property values is hard to beat.
My favorite private real estate investing platform is Fundrise, which focuses on residential and industrial properties in the Sunbelt region. Valuations are lower and rental yields are higher in the Sunbelt. The platform was founded in 2012 and manages about $3 billion in real estate.
The above chart assumes on the low end that one saves about $5,000 a year in after-tax income and around $10,000-$15,000 a year in after-tax income on the high-end after maxing out their tax-deferred retirement vehicle.
I've tried to keep things as simple as possible, assuming no inflation and no investment returns. I also believe saving $5,000-$15,000 a year in after-tax income is very realistic for the above average person, and probably very easy for many who earn more than $85,000 per person.
If you want to achieve financial independence sooner rather than later, it's your accessible post-tax savings and investments that matters more than your tax-advantageous retirement accounts like your 401(k), IRA, Roth IRA, and so forth. Why? Because your post-tax savings guide is what will spit out passive income to pay for your lifestyle.
Finally, the chart should show you the power of consistency. Every person who wants to be above average financially should target a 20% savings rate after maxing out their 401(k) contribution.
The Importance Of Real Estate To Build Wealth
The average net worth for the above average person also owns his or her primary residence and invests in real estate for income and diversification purposes. Inflation is too powerful a force to combat. If you are a renter, you are short inflation and the real estate market, which is no good long-term.
The Federal Reserve study showed that the average net worth of a homeowner is roughly $1,034,000. This is 11X greater than the average renter's net worth of $91,000. Some studies show the average net worth for homeowners is 40X higher! This is a result of long-term acid price appreciation and forced savings.
We can debate the merits of this study all day long (demographic sampling, housing price changes, etc), but the point is: above average people generally all own homes and are much wealthier than renters.
The return on rent is always negative 100%. You get a place to live and that's that. There is never a positive return on an asset after a month, or 30 years of renting. A renter cannot pass on her paid off house to her kids or grandchildren. There is no asset accumulation at all. There is a reason why some 97% of millionaires are property owners.
The value of real estate varies across all the land and the world. It is very hard to make an assumption of what should be inputted as a result. According to the US Census bureau, the median home price in America is roughly $440,000 as of 2024.
Real Estate Investing Arbitrage
You can't get anything livable in San Francisco, New York City, Los Angeles, Washington DC and Boston for $440,000. But, you sure can in the Midwest where I'm aggressively investing money through real estate crowdfunding platforms like Fundrise. They provide a way for all investors to diversify into real estate through private funds with just $10.
Valuations are so much cheaper and the net rental yields are so much higher in non-coastal cities compared to the coastal cities. With companies like Google investing $13 billion in heartland real estate to expand operations, you know other companies and investors will follow.
Further, work from home is here to stay after the pandemic. Technology has made working from home acceptable. As a result, there will be a multi-decade migration away from densely populated and more expensive cities to cheaper cities with more space.
I personally sold a San Francisco rental property for 30X annual gross rent and a 2.5% cap rate in 2017. Then, I reinvested $550,000 of the proceeds in real estate crowdfunding with a target 10% cap rate. It feels good to diversify into no-coastal city real estate and earn income passively.
My total investment is $954,000 in the space. I've received over $800,000 in distributions since 2017. It's been great to diversify my expensive real estate holdings and earn more income passively.
Financial Samurai Home Equity Guide
Let's now construct an equity value chart of something based on a range of $250,000-$500,000. Let's assume that upon retirement, you have your house paid off and can attribute this amount into your net worth.
I assume that the above average person buys a $250,000-$500,000 piece of property at 27. By the time they turn 28, they will have owned the property for 1 year. They will have also paid down $3,500-$7,500 in principal on a $250,000-$400,000 loan.
I conservatively assume a $250,000 no money down loan for the low end house. Even though after 5 years of working, the low-end above average person should have around $25,000-$30,000 saved up in cash based on the after-tax savings charts above.
Paying Down Debt Is What Above Average People Do
By the time a 27 year old pays off his or her mortgage in 30 years, s/he will be 57 years old with a place to live rent from for the rest of his/her life. That is the true value of the property, the rent saved for the remainder of the owner's life.
I assume zero price appreciation on the home. It's always best to keep things conservative. There are no extra payments to accelerate the payoff either.
Home prices have historically returned just a bit above inflation every year e.g. 3-4%. But given the above average person puts down about 20%, the 3-4% returns suddenly turns into a 15%-20% cash-on-cash per year.
15-20% compares favorably to the average S&P 500 return of roughly 5.6% from 1999-2018 and 10% since 1926. Although, expect future returns for stocks, bonds, and real estate to be lower.
Add on the tax benefits for mortgage interest deduction and owning a home through a mortgage becomes very beneficial for higher income earners.
The Average Net Worth For The Above Average Person
Below is the end result. It shows the average net worth for the above average person by age and years of work experience.
The chart includes the average 401(k) amounts, average taxable investment amounts, and average real estate equity amounts. The table should give you a rough net worth amount to shoot for if you want to be considered above average.
The average net worth for the above average person by age is as follows:
$250,000 by 30
$429,000 by 35
$660,000 by 40
$914,000 by 45
$1,240,250 by 50
$1,684,000 by 55
$2,180,250 by 60
Somewhere in their mid-40s, the above average person becomes a millionaire. In comparison, the average American only becomes a millionaire between 55-64. This is 10-15 years later according to the Federal Reserve.
The key is to stay disciplined with your savings and investing routine. With a proper asset or net worth allocation, you'll be amazed at how far your net worth will grow over time.
Stay On Top Of Your Finances
The best way to build wealth is to get a handle on your finances by signing up with Empower. They are a free online platform which aggregates all your financial accounts on their Dashboard. This way you can see where you can optimize your finances.
They've also come out with their incredible Retirement Planning Calculator. The calculator uses your linked accounts to run a Monte Carlo simulation to figure out your financial future.
The average net worth for the above average person is all over tracking his or her finances. There's no rewind button in life. It's better to end up with a little too much than a little too little.
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Diversify Your Retirement Investments
Stocks and bonds are classic staples for retirement investing. However, I also suggest diversifying into real estate—an investment that combines the income stability of bonds with greater upside potential.
Consider Fundrise Real Estate, a platform that allows you to 100% passively invest in residential and industrial real estate. With over $3 billion in private real estate assets under management, Fundrise focuses on properties in the Sunbelt region, where valuations are lower, and yields tend to be higher. As the Federal Reserve embarks on a multi-year interest rate cut cycle, real estate demand is poised to grow in the coming years.
In addition, you can invest in Fundrise Venture if you want exposure to private AI companies like OpenAI, Anthropic, Anduril, and Databricks. AI is set to revolutionize the labor market, eliminate jobs, and significantly boost productivity. We're still in the early stages of the AI revolution, and I want to ensure I have enough exposure—not just for myself, but for my children’s future as well.
I’ve personally invested over $400,000 with Fundrise, and they’ve been a trusted partner and long-time sponsor of Financial Samurai. With a $10 investment minimum, diversifying your portfolio has never been easier.
To increase your chances of achieving financial independence, join 60,000+ readers and subscribe to my free Financial Samurai newsletter here. Financial Samurai began in 2009 and is the leading independently-owned personal finance site today. Everything is written based off firsthand experience.
Hello,
Lots of great information- thank you!
We are fortunate to have exceeded “above average” (as an elder Gen-X’er and barely Boomer couple) of each of the three net worth calculation methods specified in the The Average Net Worth For The Above Average Couple post.
This is primarily due to living below our means, spending wisely/avoiding debt, saving, investing and staying active/healthy.
With more than double the max average total net worth listed in this post, I still do not feel comfortable retiring yet and not sure when to say WHEN. This is especially true given the increased likelihood of a administration-inflicted recession (with increased odds of stagflation and years of pain for all of us outside of the 1% top income “club”).
Neither my spouse (who stopped working at 60) or I has a pension. We will need to pay out of pocket for healthcare until we turn 65 which I imagine is in the vicinity of $24k per year. This might be a pertinent topic for a separate post…
I’m continuing max + catch up on 401k contributions (not quite old enough for the +$3,750 super catch-up) and have excellent employer heath care benefits.
Best of luck to all!
If I’m married, would it be reasonable to double these net worth numbers? How should one think about building wealth as a married couple (where both work)? How do kids factor in?
Yes! Please read my post: The Average Net Worth For The Above Average Couple, for some variations on what to shoot for.
https://www.financialsamurai.com/the-average-net-worth-for-the-above-average-married-couple/
Yes! Please read my post: The Average Net Worth For The Above Average Couple, for some variations on what to shoot for.
Not sure how much you can do to stop this, but here is a fun example of Yahoo and Benzinga stealing your content presumably via AI content creator. It includes a reference to Financial Samurai as source of their net worth numbers without providing a link to your site. I would assume this is entirely written by AI given the section where they have a 5 point list with 5 #1s. The author “Ivy Grace” doesn’t even bother giving it a quick edit before posting.
finance.yahoo.com/news/guess-average-net-worth-above-203022890.html
Thanks for sharing. At least I inspired a large organization to copy my work and ideas, right?
At the end of the day, the more financial education out there the better. I’m thankful they at least mentioned Financial Samurai, even if they were too stingy to link back.
Needed: More specific financial and investment data on the ages of, say, 70 to 95. This is a fast growing segment of the population and has the least economic resiliency. We, too, have our disparities and successes. We, too, need to keep on planning. The guidance that might be optimal for younger “old” people does not fit as well with we who are nearer the end of life.
I noticed below, you indicate there is a calculation on the amount you need to retire based on a multiple of what you make. But shouldn’t that be based on a multiple of what you spend? You could be making 600k a year, and saving a big percentage of that amount, and if so, calculating your needed retirement based on that number doesn’t seem to make sense.
You can use expenses as a multiple, but I prefer income because it forces you to focus and save and invest more as you make more.
With expenses, you can cheat your way to financial independence by slashing expenses to the bare bones.
Using Income is my Third Rule Of FIRE, which I started writing about in 2009.
I am 35 and just hit 429K in my investment and savings account, what are the odds. But my birthday is next month so I guess I am 47K behind. Still funny, also I rent and have no debt so my net worth is easy to calculate ha good luck everyone
“Average” is the most useless and deceptive indicator in the world of statistics.
Here is what “average” is:
4 homeless people with a net worth of zero each are in a room.
Someone walks in with a net worth of 5 Million dollars.
Now “on average” everyone in the room is a millionaire.
Most US citizens do not achieve the “average” millionaire status by 60 years old. In fact, a net worth of about $850,000 is the lower end of the top 10th percentile in US as of 2022.
And yet, as of 2022, according to the Fed, the average American household is no worth over $1 million. Not bad!
Take it for what it is.
https://www.financialsamurai.com/average-american-household-is-a-millionaire/
After learning about personal finance (PF), I thought folks should stop thinking average and start thinking outside the box. Instead of owning a $500,000 home and having a very small amount saved in a 401k, why not flip that. Why not own a $500k 401k and a small home? Just my 2 cents.
When looking at a lot of these averages should we consider individual net worth or household. I read the charts both ways but just curious what the intent would be individual or total with spouse?
So I think I just passed $2M in my early 40’s riding the wave of real estate up. So $1M in stocks/bonds/options, and $1M in equity.
I still feel poor tho. I wonder if these numbers need to be revisited for targets given the crazy inflation these past few years?
I understand how you are feeling. I’m in my mid 40’s and have similar savings in equities but $3.5M in real estate equity (1 primary and 3 cash flowing rentals that more than cover my living expenses which now allows me to save 100% of my 1099 income from my job (multiple 6-figures per year), so my savings are growing fast). I still feel I am behind the savings curve and not financially secure. There has been little to no lifestyle creep despite my situation. I have the essentially the same wardrobe for the past 15 years. Sounds and looks ridiculous when you put thought/feelings to text. If you would have told me in my mid thirties, this is where I would be financially in a decade, I would have jumped for joy and done back-flips. It seems we share a psychological issue that won’t go away very easily no matter how much we save. I was listening to a podcast earlier this week and the podcaster who is worth well over $100M still feels financially insecure. That sounds even more ridiculous but the psychology behind the situation is real.
Are the above household numbers or an individual person’s share of household net worth if they are married. I.E. The average net worth for the above average person by age is $1,684,000 by 55. So a couple both aged 55 need $1,684,000 X 2 = $3,368,000 to be considered “Above average”?
So many of these posts, not just on Financial Samurai, don’t clearly state if these numbers are household or individual.
The title of the article literally says: “The Average Net Worth For The Above Average Person.” According to Oxford Dictionary a person is defined as: “a human being regarded as an individual.” You might consider giving Financial Sam an apology.
Marty, if you are interested, Sam has a different post for the above average couple.
Sam, please don’t let comments like this stop you from producing such awesome content. Your insight helps so many people, including me. Personally, I’ve referred to your blog and book countless times to help me navigate my own financial journey. Many thanks for what you do!
All good! I appreciate the support and shares. It’s been a good journey since 2009.
I’m slowly building out the Financial Samurai podcast as well. It’s been lots of fun. Check it out on Apple or Spotify.
Fantastic article.
Where is it reflected then? For instance, you list the following for Age 35:
Avg pre-tax savings = $284K
Avg post-tax savings = $115K
Avg property equity = $30K
Avg Total net worth = $429K
I don’t see how a mortgage fits into this – it seems like you are only accounting for assets in your net worth calculation. I would assume based on the $30K property equity and that you assumed ~$250K mortgage loan for most buyers – there should be at least low six figures of liabilities accounted for here?
Correct. $250K is equal to low six figures of liabilities.
If my net worth by age guide is above your net worth, don’t get discouraged. Get motivated.
So let’s then assume you have $250K mortgage value at age 35.
Shouldn’t your age 35 above avg net worth calculation be then should be $179K? Math below:
Avg mortgage value: ($250K)
Avg pre-tax savings = $284K
Avg post-tax savings = $115K
Avg property equity = $30K
Avg Total net worth = $179K
Sure it can. It’s a range because there there are so many variables involved. Don’t take the numbers as a rule.
I would count your home equity, (value – mortgage) but not count your loan against your net worth (you could have negative equity). Remember also that it would cost you 5 to 10% of your home value to liquidate it, so you would not actually get 30K from it.
Does you ‘average net worth for the above average person’ calculations include liabilities/debt (e.g., mortgage)?
Yes.
New to the site. Just turned 50, with a wife and 2 kids living in the Bay Area. Our current NW is 11M, including a 4.4M home, with no debts. TBH, this feels close to fat fire, but not quite. I worry about inflation, the cost of educating the kids, healthcare and market headwinds.
How much do you think you need to feel secure?
I’ve proposed 20X your average household income or more to feel FI.
Welcome to my site. You can subscribe to my free newsletter here.
I agree with your calculation for the most part – again, it’s different for everyone depending on where they are in life, but if you are near the end of your career and expenses are winding down (and you have the correct insurances to protect in the event of an extraordinary event), that number works pretty well….
For regular FI, I think there should be no problems. However, for fat FIRE the big ticket items would include 2 private school tuitions (100k), a platinum health plan (60k), as well as property tax (let’s say ~30k). Adding up all the other costs, it’d probably be close to 300k annual spend. Under that scenario 6.5M in investable assets starts to feel a little.. iffy, especially with inflation.
I have been following your blog for years and find the net worth figures on above average people to be a good motivator and measuring stick. However, I’m worried that they may be skewed by national numbers for those of living in high cost cities on the coasts. Do you have any adjustments or thoughts of how these might differ or increase in major cities (SF, LA, DC, NYC, MIA)? I know our home equity can be much greater than the averages, as homes simply cost more and appreciate more. How would you interpret/adjust based on geographic region and cost of living?
Yeah, I agree Tony. It would be nice to have a location and an inflation adjustment to the net worth chart. It seems low to me as a 31 year old in NOVA. Sam we need an update!
The figures are updated. If you have a higher net worth than my figures, congrats! Keep doing what you’re doing.
And ultimately, try to get to 20X your average annual gross income or more for your net worth to feel financially independence.
These are guides. An easiest personal target is to achieve a net worth equal to 20X your average annual gross income. Once you get there, you are financially free. Minimum is 15X IMO.
See: https://www.financialsamurai.com/net-worth-targets-by-age-income-work-experience/
Sam,
Long time reader. Just bought a copy of your book and am thoroughly enjoying. As an Asian American living in a high-cost coastal city (Brooklyn NY), I can relate to so many of your stories and experiences. Wanted to thank you for all your incredible, easy-to-digest content, and valuable teachings.
I am happy to share we (wife and I) are on our way towards financial independence. I am 40 she is 39. Our net worth (give or take some crazy market volatility) is roughly $1.7M. Rough breakdown of asset allocation would be 55/40/5 [stocks including 401k/condo owned free and clear/cash].
It gives me comfort knowing disclosing this type of info in this community is not viewed as bragging, but rather a way to keep yourself honest to your goals and to encourage others to reach theirs.
Love the content and just ordered the book from Amazon. Curious to know if you’ve invested yet into Crowdstreet, and if not yet, why not? I see return content for your Fundrise investments but have not come across actual return info for CS. Thank you, Sam!
Thanks for ordering my book. I think you’ll love it as I go deep into money matters and tackle some of life‘s biggest dilemmas. I hope you will leave a great review when you’re done.
I have invested in CrowdStreet deals before. One worked out well, 40% return over 2 1/2 years for a class a office building refurbishment. Another is doing fine and should exit within the next two years.
I found that I don’t have time to pick individual deals and assemble a portfolio. Therefore, I like investing in Fundrise because they offer private funds and exposure to SunBelt single-family and multi family real estate. That is the asset class I want to gain the most exposure to. As I wrote about investing in the heartland of America since 2016.
The biggest strategy in investing is to invest in long-term trends. And I believe heartland real estate is one of the best long-term trends over the next 20+ years.
Thanks, Sam!
I love your book so far. I .an immigrant and started saving late but am applying a lot of the stuff you mention in your book. I have a suggested tweak, if I may be so bold. You 10x the interest rate of dept to determine the allocation toward repayment in percentage terms. I would actually square it instead. I’ve spent a lot of time figuring out whether or not to pay back this or that debt and I truly believe any debt that is low interest should be left alone as.mucb as possible.
Hi Sam
You mentioned that you invested $810K in Fundrise and received $640K since 2017. The average (I use 5.5 years) per year would be $116.4K which translates to 14.4% annual return. I am also an investor of Fundrise and I don’t think any of their funds have this kind of high return. Could you elaborate a bit on this return rate you got?
Also, what’s your opinion comparing CrowdStreet and RealtyMogul?
Thanks. Really enjoy your writing.
Jesse
Hi Jesse,
I’ve invested $810,000 in private real estate investments, which includes funds and individual deals. In addition, my $624,000 is from all distributions, which may include original principal.
Hence, the returns are likely closer to 8-10% IRR. Steady, just the way I prefer as a conservative investor in retirement.
Hi Jesse,
Not sure what Sam did with the distributions (re-invest, party, ?.), but if he re-invested, I am seeing something closer to 1.11% compound annual return. (not factoring in taxable events)
— back of napkin —
S=START=810
E=END=(810+640)=1450
G=GROWTH=E/S=1450/810=1.79%
NP=Number of periods=5.5
1/NP=0.18181818…
CAGR = G^(1/NP)
= 1.79^0.1818= ~ 1.11%
This is a great measuring stick for me, just crossed one-year working full-time after graduating from undergrad. By most accounts in this article, I’m on/above schedule but already feeling a little burned out. The supply chain in the automotive has been unrelenting in the past couple of years and shows no signs of slowing down.
Additionally, I’ve been taking roles that are high-stress/high-visibility due to advice from a lot of leaders at my company. One of your recent articles on prestige chasing has me reconsidering my priorities. At what point in your career did you stop taking on “stretch assignments” or specific jobs just for the clout?
Thanks,
Drake
I’ve been following this site for a few years; I enjoy your work. I’ve been in financial services for my career but over the last 5 years have spent a lot more time in the wealth management field of finance.
I noticed that in many of the wealth / net worth posts you have, there’s not much distinguishment between pre-tax and post-tax planning.
I was recently attending a seminar that a client of ours hosts and the attention placed on how an individual saves and *where* those dollars are saved was incredibly impactful for how best to position for retirement.
For example, if you save predominately in 401k’s for most of your life, you can find yourself paying more in taxes due to required minimum distributions.
If you’ve tackled this subject in a post that I’ve missed, feel free to disregard and/or share a link.
Thanks
Hi Oliver,
You can check out this post for where to invest between tax-advantaged and taxable accounts.
The Right Order Of Contribution Between Your Investment Accounts
I also recommend you pick up a copy of my new book, Buy This, Not That: How to Spend Your Way To Wealth And Freedom. It is the most comprehensive personal finance book on achieving financial freedom and making optimal decisions for some of life’s biggest dilemmas.
Thanks,
Sam
I wish this type of website and information was readily available at my fingertips when I was young. Thank you financialsamurai.com! I’m close to 70 years old, live in California, and I recall when 401(k)s first became available in my mid-20’s of thinking “Oh, I’m too young to worry about retirement.” I didn’t start investing in a 401(K) until around 36 years old or so. Life throws you a bunch of curves, though won’t go into detail with my story. As the saying goes, “best laid plans.” Also, my parents were of the “greatest generation” and lived through the depression. I grew up thrifty but cautious. I was not aggressive enough during the years of investing. I’m still working and have been maxing out by 401K accounts for some time now.
Anyway, I, as a single, divorced individual (no alimony, I had to pay it to my ex for a time), have accumulated almost $755,000K in cash, $1,325,000 in 401Ks and an IRA, as well as have $750,000 in home equity for a rough net worth (not counting other things that can count toward net worth) of $2,830,000. In 2023 I’ll be 70, so I will get SS along with some small pensions since those started to phase out big time when I was in my 30’s.
My purpose is saying all this is:
1) I feel torn with feeling that I “should” be OK if I don’t crazy with spending so “good job” yet I also feel like I missed out on so much more $$ that could have been accumulated because I have been quite conservative in my investments and started later in life with the 401(k)s. I never used a financial planner. I have always been a good saver, but a divorce in my 50’s (I made more $$ than my husband) really put a lot of what was built up at risk and did set me back several hundreds of thousands of dollars.
2) I encourage anyone I come in contact with that while “living for today” is great because life is meant to also enjoy when we can, think about the future, too, and don’t delay with getting a good financial plan going. Start now, if you haven’t. I never used a financial planner and feel if I consulted with a reputable CFP early on, I could have done so much better.
My grandmother name was Joann miss her
I have been thinking about the rent/buy trade-off for many years. Finally I am at the time of my life where I have an opportunity (work, family, location, etc.) to consider buying. In addition to all the variables that often (necessarily) get simplified for general analyses, the thing I find most confounding to me is the concept of property taxes.
Do you have any insight / analysis on this?
For example, if I buy a $500,000 house and benefit from all the equity, leverage, inflation, etc. dynamics – and even pay it down in 30 years – I will still be on the hook for let’s say $12,000+ per year in property taxes, which is like $1,000 per month in rent. When I then add in maintenance and insurance, it seems to be a rather significant missing perpetual fixed expense from these analyses – and yet I wonder if I am missing / overstating the issue?
Completely agree with this question!! And taxes really add up over the lifetime of ownership, mortgage or not!!
However, my own situation still costs me less money versus renting:
Monthly taxes without mortgage: 800
vs. Monthly rent at market rates: 3,500
Of course this still required me getting rid of the mortgage in order to enjoy this savings…..no two ways about it.
I am a landlord. I own 2 single family houses that I rent out. I include the cost of property taxes, mortgage, maintenance and repairs in the monthly rent charged. After all, a landlord is renting their property out in order to make a profit, not a loss.
As a renter you are not avoiding the costs of home ownership (taxes/maintenance). Those costs are built into your rent in addition to a profit margin for the landlord.
In the end, it is always cheaper to buy than rent.
$750,000 is the MINIMUM wage in the NHL BUT MAXIMUM WAGE in the REAL WORKING WORLD!!!
My lifetime gross income for 35 years is almost exactly half of what JOE THORNTON will make in ONE year ($376,000). Only about 75% of that is EARNED INCOME!!
I have received NO INHERITANCE YET but still have a net worth of $600,000!!!
LESSON: Get a good financial planner early and invest primarily in EQUITIES (especially AMERICAN)!!!!!
$10,750+ per year!!!
Do you know anybody who has averaged LESS than 11,000 a year for 35 years and is still worth $600,000 dollars without an inheritance or lottery victory???!!!
I am going to average only a $9,000 gross the next FIVE years and fully expect to be a MILLIONAIRE (still without an INHERITANCE or LOTTERY VICTORY).
COMPOUND INTEREST LATER ON IS BEAUTIFUL!!!
It is time to contact THE GUINNESS BOOK OF WORLD RECORDS!!!
In your blog you have mentioned the average net worth for all age group. Some people may attain this or some not. But I believes that one should save for the future because at some point they are no longer willing work. So start now so that you have enough for your future.
43, saved heavily and finally hit the 1 mil mark at 42 — felt like it took forever. Now at +2 mil. If this is an inflated market, we might need a new inflated above average person spreadsheet.
You doubled your life savings in one year?
I’m shocked too! I was overly cash heavy, deployed it all in March March 2020 during the covid crash.
Sorry. I do NOT understand!!
You deployed it from cash to equities?
If you did that, you would have lost A LOT of money for the first month or so before getting it back??!!
I do NOT see that it is at all possible for you to double your life savings in one year UNLESS you received a LARGE INHERITANCE!!!!!
Christopher:
Jealous much??!!
It’s possible, I know because similar happened for me. No inheritance necessary, just a little infusion of extra cash into the right stocks at the right time. Some might call it luck, and I don’t mind. I call it a blessing for which I am very grateful.
I am NOT jealous!! I am just realistic.
If you look below, I have no reason to be jealous.
Agree – similar result in equity growth in my portfolio from Q1/20 to Q1/21
Can you double it again from Q1/21 to Q1/22??
I doubt it.
Let me know in a year!
You MUST have MOSTLY AMERICAN EQUITIES?
Know few folks who made 10x via TSLA in 2020. Just lucky—they did see their net worth increase by $1M YOY.
Absolutely true , I more than doubled (110%) my portfolio from March 2020,
My total gross income will be $420,000 for 40 years of work. THAT IS GROSS. This includes all jobs, EI. insurance, severance payments, self-employed income and CPP. I am still on track for millionaire status by age 65!
I shall not receive any inheritance money or OAS until AFTER age 65. THE KEY: Get a good financial planner early and invest primarily in equities (especially American) to start. I am just as rich as DENNIS RODMAN and almost twice as rich as AMY JO JOHNSON!! Both have earned WAY more than $420,000 in their lifetimes.
DENNIS RODMAN: 27 million gross income and a net worth of $500,000 at age 60. ME: right now: about $370,000 and I will have a net worth of $600,000 at age 60. My highest paying hourly blue collar wage: $13.50 an hour. That is 75 cents below minimum wage in Ontario today!
I am a real health nut and at one time wore TWO sweatshirts:
1) ME: 1962-21? (This implied longevity)
2) MOXIE MUSIC WATER (This implied NON-MATERIALISM).
Number 2 definitely helped with my financial portfolio!!!
ya but how much fun(eh coke) did you have during the time. you’re comparing apples and oranges my friend. at the end of the day you are both going to be dirt(6feet under).
just kidding by the way…but arrogance is stupidity.
I shall NOT be 6 feet under until the year 21?
22nd century, here I come!