Growing up in a middle class household made me strong. My parents always drove beaters and frowned upon ordering anything other than water when we went out to eat.
I knew my parents were not rich because their incomes were in the public domain as foreign service officers. As a result, I made a conscious choice in high school not to attend one of the two private colleges that had accepted me in order to save money. Instead, I went to William & Mary, which cost $2,800 – $3,200 a year in tuition from 1995-1999.
We were by no means poor. We just pulled up to parties in a paintless 1976 Nissan Datsun alongside Audis, Mercedes, and BMWs for the four years we lived in Kuala Lumpur, Malaysia between 1986-1990. I was quite mortified as a kid I’ve got to admit.
I knew nothing of expensive shoes because I had none except for my wealthier friend’s hand-me-down Air Jordans that were two sizes too large. I couldn’t even afford a camera or a Nintendo game system. We led comfortable lives, but didn’t have more than we needed.
I was always curious about my wealthier friends. Many of their parents were business owners so one day I told my father, I too wanted to be a businessman.
By the time I was 13 I was hooked on every single episode of “The Lifestyles Of The Rich & Famous,” narrated by Robin Leech. A million dollar house and a $40,000 sports car. What a life! I thought to myself in the 8th grade. Might as well give it a go. That’s when I started really hitting the books.
There Is Money Everywhere, You Just Have To Find It
Becoming a millionaire is becoming more common rather than the exception thanks to inflation. After all, $3 million is the new $1 million today.
If you work for 40 years and save and invest just 20% of your after-tax paycheck a year, there is no doubt in my mind you will amass at least one million dollars in net worth thanks to historical compounding returns.
Maxing out your 401K for 30+ years will also most likely lead to over $1 million dollars as well due to market returns and company matching as well. We’ve got financial planners, personal finance blogs, television, books and even free financial tools to help you build and track your wealth. So many resources make building wealth much easier now than in the past.
Three Reasons Why The First Million Could Be The Easiest
1) Tremendous energy. When we first graduate from high school or college, we have a tremendous amount of energy to show what we can do after all our education. We’re hungry, motivated, and need to prove to others and to ourselves our worth. Unfortunately, so many of us piss away our youth by buying new cars, getting into credit card debt, not listening to our elders, and thinking the world owes us something. Forget it folks. Nobody owes us anything. But we owe it to ourselves and to our parents who sacrificed all that time and money raising us to give life everything we’ve got.
2) Less dependents. Most of us won’t have children by the time we graduate from college. As a result, we can focus 100% of our efforts on generating wealth by developing our careers or our businesses. Compare ourselves to middle aged adults with two children, a mortgage, and aging parents to take care of. We are like finicky Ferraris on a starting line ready to blow away our older model competitors.
3) Nothing to lose. When we graduate with nothing, we have nothing to lose. Compare that with people with property, stocks, and other investments during economic downturns, and they have everything to lose. With very little assets, we should be taking more risks. Now is the time to start a company, invest in that growth stock, take a new job opportunity, or move half way across the world on a hunch that good things might happen. If we don’t take risks while we are young, we certainly aren’t going to take them when we are old.
Surprise Millionaire
I had no idea I became a millionaire at age 28 until two years later at the age of 30 when I did my first detailed net worth spreadsheet in 2007. It’s easier to achieve something when we don’t even realize what we’re doing. I was too busy saving, investing, working, and trying not to blow my money on things that I didn’t need. I was one of those “Super Motivated Boyfriends” (SMBs) who were impossible to lock down.
Like most people believe, 30 is a big milestone. Ever since college I told myself I was either going to make it, know that I was going to make it, or be an absolute failure by 30. The fear of being a failure at 30 with no job, no woman, no savings, no investments, and no world experiences made me so motivated to not mess things up.
A painful two years of working 70+ hour weeks right out of college with difficult bosses also got me into overdrive to figure out a way not to work forever!
There was no fanfare when I discovered the seven figure milestone had been achieved, just the realization that time passes more quickly as we age. I had to make the most of my opportunities since nothing lasts forever.
Years later, I’ve continued to grow my net worth with a variety of passive and alternative active incomes to keep me motivated to grow them into self-sustaining income sources on their own.
If you’ve been reading my posts from how to save for retirement and how to properly invest for your future, there’s no magic behind wealth accumulation. Amassing wealth is about savings, discipline, perseverance, luck, an X Factor, and the belief that you too deserve to be wealthy. Eventually you will have more than enough so that you’ll either retire or keep on playing for fun.
After leaving the work force for good at the age of 34 in 2012, I decided to keep on playing by building Financial Samurai into the best possible personal finance blog I could. When people tell me I’m lucky, I agree. As a result, I’ve tried to re-create my luck by writing 3-4X a week for 10 years in a row on this site.
So far, so good as this site now earns more than a typical Managing Director does at a major investment bank while only requiring about 20-25 hours of work to run.
The Road To One Million Dollars
To the best of my memory here’s how I was able to amass a million dollars by age 28.
Age 22. Year 1999. Place Your Neck On The Chopping Block. When I graduated from The College of William & Mary, the total amount of cash I had was roughly $4,000. I had saved some money from summer jobs temping and flipping burgers at McDonald’s for $3.25-$4 an hour. I just started a dream job in New York City at Goldman Sachs and was feeling confident I wasn’t going to get fired the very next month.
The pay was $40,000, which at the time didn’t feel too great. I lived in a studio with my buddy from high school for two years because we couldn’t afford something nicer.
See: Achieving Financial Independence On A Modest Income
As a result, I invested $3,000 in a dotcom stock called Vertical Integration Systems (VCSY) that turned into $200,000 within several months. Yes it was incredibly lucky, but it also took some analysis and guts. I just wish I had more money to invest!
The stock pulled back by around 25%, at which time I sold everything for around $155,000 and stayed out of the bubbliscious stock market for the next year and a half due to a job change in 2001. VCSY ended up being worthless a couple years later. $155,000 equals about $120,000 in after tax proceeds. The trade is detailed in the post, Don’t Stop Fortune Hunting.
Net worth: ~$160,000.
Age 24. Year 2001. Taking An Employment Chance. After two years in NYC, I was recruited to join another firm in San Francisco. I only knew a couple people in San Francisco, but felt the promotion to Associate without having to go to business school and 100%+ guaranteed raise to an $80,000 base salary + bonus was attractive enough to take a chance.
I was coming from a top firm and had established some solid client relationships over the past two years. The economy was still dicey due to the dotcom implosion and there was a big chance I would not make Associate after my third year at GS.
It turns out my firm in NYC did indeed let go of many colleagues, and only about 25% of the people I knew from my entering class were still there two years after I left. It was a little scary moving all the way cross country, but it wasn’t like I was moving to the middle of nowhere. This was San Francisco, one of the most beautiful cities in the world. Besides,
San Francisco is six hours closer to Hawaii, one of my favorite places on Earth, so I figured what the hell. I saved 100% of each bonus, maxed out my 401(k), and saved a little more for my after-tax brokerage account.
Net worth: ~$260,000.
Age 25. Year 2002. Continued To Live Like A Student. The first two years in NYC, I lived in a studio with another guy. We put up one of those Chinese Paper Walls to add more privacy. I didn’t care. I was living in New York City, the most alive city in America. I’d rather spend money going out and partying rather than on an extra bedroom.
When I moved to San Francisco, I spent even less on housing since NYC is about 30% more expensive. I found a two bedroom, one bathroom apartment at the edge of downtown for only $850 a person. I finally had my own room, yeah baby!
When you now make double what you were making a year ago, yet pay 25% less in rent, saving becomes very easy. I increased my after tax, after 401K maximum contribution savings rate from 50% to 65%.
Here’s a post I wrote later called, Home Expense Guideline For Financial Independence, that highlights how I lived in NYC and SF to maximize disposable income. The post also gives recommendations on how much money you should spend on rent/buying in your journey as well.
Net worth: ~$400,000.
Age 26. Year 2003. Conservative Investments Before & During The Recession. 60% of every paycheck and 100% of every year end bonus after 401(k) contributions went into long-term CDs that yielded 5-6% at the time. The reason why I invested in CDs was due to a job change and not having time to manage my portfolio in 2001, 2002, and 2003. Furthermore, I was scared of another market implosion that would not only take down my investments, but also my bonus, and potentially my job.
My 401(k) was already 100% exposed to the stock market already. Today, short-term CD rates are higher, while online money market accounts are really healthy at 2.45% from the likes of CIT Bank.
A day after my 26th birthday, I decided that it was time to grow up and buy my own place. I was renting a $1,600/month one bedroom apartment in San Francisco and wanted a nicer apartment. At the same time, I didn’t want to spend more than $2,000 a month on rent because the return on rent is always zero. I became very disillusioned with having a large chunk of money in the bank and started wondering what is the point of working more since I had more than I could ever have imagined.
At age 26, I was already thinking of “retiring” in Hawaii. Given my waning motivation to work as hard anymore, I decided to buy a two bedroom, two bathroom condo in a nice area of SF and live it up a little! The combination of 5-6% compounded returns in savings over four years, a growing 401(k), growing after tax investment account, and another year of saving a larger bonus really helped.
Net worth: ~$550,000.
Age 26-27. Year 2004. Renewed Motivation To Work. After putting down a 25% downpayment (~$140,000) for a $580,500 condo, my motivation to work skyrocketed because of a drained cash account. I prayed the housing market wouldn’t implode like the stock market did years earlier.
A year before my condo purchase I did a silly thing and bought a $78,000 Mercedes G Wagon (G500). The truck was sweet and I thought it was a great deal since it was selling for $150,000+ the year before since this small dealership in Sante Fe, New Mexico curiously owned the US import rights.
I drove the truck for a year and had to sell it for a $20,000 loss because it wouldn’t fit in my condo garage due to the height! What an idiot, but I felt buying the condo was the responsible thing to do. I traded way down to a seven year hold Honda Civic worth $8,000 instead. I was growing up but still had the thirst for nice cars.
See: The 1/10th Rule For Car Buying Everyone Must Follow
The $435,000 mortgage put a fire under my ass to work harder and be the best performer I could be. At the age of 27 I was promoted to “Vice President,” a title that is normally bestowed on business school graduates three to four years out of school at the age of 32-33. From there, my income took another large jump up to $120,000 + a larger potential bonus. I became one of the youngest VP promotes in my office.
Debt provided an unexpected side benefit for my career. From 2003 to 2005 my condo also appreciated to around $815,000, a 40% jump. Unfortunately, this increase was unsustainable as we all know.
Net worth: ~$800,000.
Age 28. Year 2005. A New Landlord. At 28, I decided to finally buy a single family house in San Francisco for $1,520,000. Believe it or not, $720/sqft for a house on the north end of San Francisco was pretty good because many homes were selling for $900/sqft at the time.
I was sick of having neighbors above and below me. I wanted a yard, a deck, reprieve from the HOA meetings, and to be king of my own castle. The bad thing about my house was that it was on a busy street next to the busiest street in the entire city.
After I moved into my single family house, I turned my condo into a rental, but finally sold it in 2017 for 30X annual gross rent because I no longer had time to be a landlord after my boy was born.
My rental property equity was around ~$350,000 plus around $750,000 worth of CDs and stock investments for a total net worth of around $1.1 million. I knew I was doing OK, but I had no idea I was worth over $1 million at the time. I was too busy building a business at work, managing a rental, remodeling a new home, and figuring out how to keep things going.
Note On 401k Investments: I put away the max 401K pre-tax contribution since my first full year of employment. At the time, the maximum contribution amount was $10,000 a year. The maximum amount is now $19,000 a year for 2019. If I take six years times the average $15,000 = $90,000. The average company match was around $15,000 a year since we had match + profit sharing, so add on another $80,000 = $170,000 in my 401K by the age of 28. But actually, I had over $200,000 given it did return more than 5% on average for six years. One of my 401K options was a hedge fund, where I put a 60% of my allocation during the downturn between 2000-2002. The fund actually did well given they had a net short position, so my overall 401(k) was able to take the hits. Here’s my recommended 401(k) by age chart.
Thoughts On Building A $1 Million Nest Egg Before 30
I strongly believe most people reading this article can accumulate a million dollars if they have the motivation, a good amount of planning, the right amount of guidance, and some luck. I’m sure some of you will have your own doubts, while others will scoff at how little $1 million is. But here are my suggestions for those who want to accumulate wealth quickly.
1) Don’t mess around in high school and college or else you will have a hard time landing a good job that pays well. Give yourself optionality please. There are thousands of straight-A, top 25 university graduates every single year. I was one of the thousands, and it’s hard to compete if you are not one of them because employers can’t respond or meet with everyone. Many firms such as Goldman, Mckinsey, Bain etc have GPA cutoffs of 3.5 out of 4.0, with some at 3.7. If you don’t have connections then you just aren’t going to make the cut when there are thousands of applicants for only 60 spots. You can rage against the machine and believe grades don’t matter, but you are going to be wrong like donkey kong and most likely regret your immaturity.
Getting a job on Wall Street was like winning the lottery for a kid coming out of a non-target public school. I went through seven rounds and 55 interviews over a course of six months before getting the offer. I would not have been able to even get an interview if I didn’t get good grades or show initiative. Your job income is the #1 main source of wealth for most people. Might as well focus on the highest paying industries that you think you’ll enjoy if money is what you want to make. It’s important to note that no way is a large income a guarantee for lasting wealth as many millionaire bankruptcies have proven.
2) Save until it hurts. When you’re a college student, you’re poor. Hence, even if you graduate and only make $30,000 a year, I’m willing to bet that’s more than you’ve ever made in your life! Try to continue living like a student for years after you’ve found your first full-time job and save! Stop making excuses why you need to buy a nice car and nice clothes. You’re a 22 year old recent college graduate for crying out loud. Build your foundation in your 20s and stop thinking you have a decade to explore, because you don’t. 10 years maxing out your 401(k) will likely result in a $200,000 portfolio in your early 30s.
The base you build in your 20s will provide tremendous returns for later on in life. If you stay consistent over the years, you will get there. Aim to save at least 20% of your after tax income every year, no matter what. Remember, if the amount of money you’re saving each month doesn’t hurt, you’re not saving enough.
3) Work hard and know your place. Working hard takes NO skill. If you’re not coming in first and leaving last, you aren’t putting in your time. I promise you that if you wake up by 5am every morning, work one to two hours before the rest of your peers and work another one hour after your peers have left, you will get ahead! Please read A List Of Career Limiting Moves To Blow Up Your Future.
The reason why I was promoted to Vice President at 27, when the average VP promote is 33 is because I put in my dues. I generated millions of dollars in revenue, built a solid network of internal supporters, and was a workhorse by coming in by 5:30am everyday for my first two years and leaving at 7:30pm-8pm on average. Sometimes I even left work at 10pm. Did I sacrifice some of my social life? Of course I did. But, I also partied hard many weekends goodness knows! Working hard doesn’t mean you can’t play hard and travel. You’re young remember? You’re energy is limitless!
4) Stop making excuses. You can spend time crying why the world isn’t fair, or you can do something about your life. If you are reading this post, chances are you have clean water to drink, shelter, internet and a legal system that protects your rights. There are millions of people in the world who are starving every single day. There are those who live in fear of dictators confiscating everything they own. There are people who immigrate to America for a better life, don’t even speak the language and crush it. What is your excuse?
Spend 30 minutes every day by yourself in meditation coming up with a better business model for your company or for own business. Spend four hours every weekend in the office studying up on new things that will help improve your standings with your clients. You can even start a blog and work an extra 30 hours a week online before you have a family and generate some healthy revenue if you wish. Let’s take advantage of the freedom our respective countries provide.
5) Consider both aggressive and conservative investment strategies. When I was 22, I only had about $4,000 to my name. Regardless, I invested 80% of my money and it turned into a 50 bagger. Was I lucky? Hell yes! But, I did my research and was I willing to put my balls on the line to try and make some money. I think it is very important to take more risks when you are young which is why I’m biased towards growth stocks over dividend stocks. With the proceeds from my VCSY China internet trade, I transferred my wins into long-term CDs and then ultimately into property.
When you are ahead, it’s very hard to walk away. As a poker player I know this feeling all too well. But it’s tantamount to invest a portion of your winnings in a safe haven. Lock it up. Protect yourself from yourself! I didn’t take on the reckless mentality of betting the farm with my windfall since I was now playing with the “house’s money.” This was my money now damnit, and I wasn’t about to piss it away on some B2B stocks. Continuously diversify your income streams and build passive income.
6) Property is one of your best friends over the long term. If you put 20% down on a property and it goes up 3% a year, that’s a 15% return on your cash thanks to leverage. Sure, you can get your face ripped off if you bite off more than you can chew. But trust me when I tell you that thanks to inflation, your debt payments will seem insignificant five years afterward. Five years later, you will be happy every month when you get to charge a rent that is much higher than the interest portion of your mortgage. Property is my favorite asset class for young people to build wealth.
I sometimes feel guilty raising the rent, but remind myself, I was the one who took the risk, put down the downpayment, and nobody forces anybody to rent my place. Real estate is my favorite investment asset class to build wealth. The condo I bought on my 26th birthday for $580,000 was fully paid off in 2015 at the age of 38. A neighboring unit with the same layout sold in 2017 for $1.36 million.
I’m now investing in real estate crowdfunding to take advantage of lower valuation properties with higher cap rates in the heartland of America. I want to invest in the next San Francisco Bay Area over the next 20 years, and lower cost of area cities like Memphis, Austin, and Salt Lake City look attractive to me.
My two favorite real estate marketplaces are Fundrise for their eREITs and CrowdStreet for their individual commercial real estate investments in 18-hour cities. There is opportunity to be had due to the coronavirus pandemic in 2020.
7) Pretend you are poorer than you are and show few signs of wealth. Stay humble despite amassing a fortune. Don’t show off or waste money on things you don’t need. Make people believe you are younger and poorer than you really are. I drive a 13 year old car and wear t-shirts, jeans, and a baseball cap most of the time. Once you’ve accumulated your war chest, practice Stealth Wealth.
I would say at least 80% of the millionaires I know are very low key. You can’t tell they have a lot of money except for when you get to their house. The only people who want attention are those who are insecure, not not really rich.
8) There are more ways than one to rub a furry koala. You can make big bucks through a day job or by starting your own online business. Better yet, you can do both. While I was working in finance, I launched Financial Samurai as a personal journey and worked on it before I went to work and after I came home. After almost 10 years of writing, Financial Samurai provides a nice supplemental income stream to my passive income investments.
9) Office politics counts. In order to get ahead, you’ve got to play the game by building as many company allies as possible. I don’t know many people who like to sell themselves internally to their colleagues and bosses. People think that all it takes is good work to get recognized, paid, and promoted. This is absolutely false! You must sell yourself internally as much as you sell yourself externally. Once you have someone with significant power on your side, your entire career gets that much easier.
10) Invest in yourself. Your greatest money making asset is you. Don’t cheap out on education or consulting. Education is worth more than any material thing you can buy. My studies in college and grad school taught me how to market, negotiate, communicate, analyze investments, and influence. Thankfully, you can now learn most everything for free thanks to the internet. It’s hard to recognize value when you can’t touch it. However, I promise you that knowledge and education is worth more than everything else.
11) Diligently keep track of your progress. How much you keep is even more important than how much you make. There are people who make millions of dollars and end up broke years later because they had no idea where their money went. Perhaps they made some ill-timed investments. Maybe their risk exposure didn’t align well with their risk tolerance. Or maybe they simply just spend too much. Everybody should leverage the free financial tools online to track their cash flow, analyze their investment portfolios, and calculate their financial needs in retirement.
Align Your Beliefs With Reality
One cannot downplay the importance of luck in building wealth. I have been fortunate to have two loving parents, an incredible spouse, and a brain that works most of the time.
If you’re born in America, please take full advantage of all your opportunities. Despite having a deficiency in higher level math, uninspiring SAT scores, and a run in with the law as a teenager, I made up for my weaknesses with plain old work ethic and relationship building. It also helps to be an undying optimist as well.
You can’t complain about not having wealth if you decide not to pursue wealth. That’s a mental misalignment. The desire for wealth shouldn’t be viewed as evil. It should be viewed as natural for anybody who wants to live a better life, take care of his or her family and parents, and have the opportunity to give back to the community.
As soon as we align our realities with our beliefs, we become congruent and happier with ourselves and our outlook. Good luck on your journey to your first million! Once you get there, that’s when the real fun begins.
Related: The Secret To Your Success: 10 Years Of Unwavering Commitment
Updated for 2020 and beyond.
Just found your blog and I love all your unique insights on finance. We are on track to have our home paid off by the age of 35 and have zero debt. We have been aggressively saving money and living well below our means so I would say we are on the right track. Great article!
Good stuff and congrats! You won’t regret paying down a mortgage. It feels so good.
Thanks for all your advice! I have been reading your notes for years and went diligently along your advice. I’m a 28 year old female and my net worth is about 300k, not near your 1 million but hoping to be there one day! My question for you is, I recently did back out of a home because I was fearful the home was too high of my take home pay (37%). Do you follow any take home pay strategies when you got these homes? My goal is to save aggressively one more year and live very below my means and put a large sum of case on the home. Would you recommend this? Thanks in advance,
Work from 5 AM to 10 PM!. Yeah but I still have a social life on weekends!
What about your own health? what is the point of amassing so much money? you don’t have endless energy in your 20s… you are still young and throwing your health out of the window to be a slave of capitalism.
Work smart, NOT hard. I am 30 and I am worth $1,000,000 already and I don’t work 10 hours days…. I work normal and take plenty of time off. I dedicated most of my 20s to education, while I worked at the same time, got a few patents and now have a very good paying job. I think carefully every decision I make, but my health comes first and I refuse to work like that to simply die with a bunch of work memories and “hard weekend parties”. What a joke.
Just found this blog and I find this so inspirational. Keep up the good work and stay active!
– Nordic Fire
Your title is a bit misleading for the majority of the population. Reading your backstory (kudos, btw) even you admit that a large portion of your wealth was based on luck (dotcom investment, early VP with no degree in a boom economy, move to sanfran before downsizing, etc.). Imagine if you’d been like the majority of the bachelor’s degree population & stuck at a 40k salary (or less) until your 40’s (or for your entire career).
I do however think the median wage college-educated individual can hit the first million by early/mid 40’s using similar techniques. My advice would be to eliminate the clickbait “by age 30” in the title & add a caveat that the advice works for most livable income ranges; faster if you have more dispensable income. If you have tens of thousands each year in dispensable income in your 20’s, by all means you can be a millionaire by 30.
ABSOLUTELY correct. A good portion of these articles involving advice seem a bit unrealistic. Saving 50% of your income,applying to best colleges/co’s in the US (virtually no one gets in), getting straight A’s, going to best MBA programs etc…It’s more of a story about a highly intelligent, gifted person that maximized his potential by working hard & smart and occasionally was lucky.
A better story would be a B student that worked 2 jobs and bettered himself/herself by attending night school and networking eventually landed a great job with benefits. Hard work, persistence, with a bit of financial acumen is the ticket.
“Stealth wealth.” Exactly. That’s why you made sure to brag about how much money you have in a huge public blog that you literally work on 20-25 hours a week. Maybe you are afraid of getting audited like everyone else with money. Did you ever stop to think that some people without a “regular job” may have unbelievable social anxiety being a part of those types of social situations? You sound as if you you are the type of person who is pissed at people who don’t have a regular job. No offense, your way of earning money doesn’t interest me at all. Like continuing going to school or some insincere ass kissing institution for the rest of one’s life where the only ones who survive are the ones who get off on socially hurting and being a dick to others in the group, ostricizing those different and trying to hurt them or push the innocent “weaker”
ones out of the team so you can deliberately hurt them for no reason while you kiss ass to be the most popular. You remind me of my older sister, getting off on being out and about out there, socializing and socially deilberately hurting others to survive. I never got along with people like you, never understood you people, never felt comfortable around you people. And you will probably never understand rock stars, real artists and people who followed their passion. You chose money for the sake of money, which is something I will never be a part of. I guess somewhat hurting others a little every day in a daily way is the type of thing you are actually good at. I don’t agree with you at all and felt really bad just having to read your post and probably wouldn’t get along with someone like you in real life and definitely wouldn’t feel very comfortable around you unless I was being a dick just like you to fit in in this inherently somewhat evil world. I just could never get how people like you thrive in those environments, obviously by shifting the blame to others on a regular basis, when people like me only did it out of necessity and real survival here and there and would never get off on it or try to intentionally live like that every day or actually enjoy it in any way. But its people like you who pushed me and pushed me and emotionally beat me down all those years until I had to be the biggest, most evil one of you people out of sheer survival, following the rules perfectly yet thinking horrible things about others in my mind, all while following societal normals as best as possible. The way to achieve things in life, right? You would think people can just get along and be happy, but apparently your kind will never change, and I will never be like someone like you. The thing is I am your same age, and you sound just like some popular kid who made fun of me in high school or forced me into silence in high school and was well aware of my suffering but only tried to make it worse as you realized it was helping empowering you in nature. You are the type of person who in my opinion will not go to the other side after this frivolous life, rather you will probably be reincarnated, unless by some miracle you learn to be more kind to others in your old age. Anyway, just really aggravated me reading your post so I figured I would tell you what I really think about your kind insteda of trying to pretend like any of you are interesting to me in any way, other than you trying to make me feel socially uncomfortable. You are the same type of person who would be a roommate or live in a more crowded space with others as roommates and get off on making them feel awkward and uncomfortable while you saved money for yourself, like a little touch of evil every single day as you learned to be steady in a daily regular early morning waking way. The sad thing is that your kind pushes and pushes and pushes genuinely kind human beings like me, until we have no other choice but to join your club, and if we are good enough at following the rules or lucked out by meeting the right mentors or people in our families, then people like me can be even way more evil than you… Its like your kind pushes evil on the kind people like me to corrupt our morals and prove that your conscience is okay and that those with less money and who are more kind than you who you are afraid are going to heaven or the other side instead of you, so you push them to their lowest point and try to bring them up again by having them embrace evil to prove that they are no better than you morally. …or maybe that’s just unfortunately the mentors or people I have had to be a part of and I am wrongfully projecting that on you. I could be wrong about all of this, you just sound like the type of person I would never ever want to be too close to, just totally right field of everything I enjoy , believe in and that makes me feel okay, comfortable and happy.
Haha why are you haters even on here. You don’t want to chase money and get wealthy the way he did? Then don’t. All the time you wasted writing that novel is the real reason you’re not building wealth. I enjoyed the post. Good to see how someone made it to that point, even if some of it was “luck”. I’m 26, net worth of 300k+ built purely off of hard work and discipline. I have a long way to go, but this stuff works.
Why am I about to reply to this? I’ve never replied to blog post IN MY LIFE. But there is something very disconcerting about your post that struck a chord with me.
There’s a good chance you won’t even see this… but here goes:
“…or maybe that’s just unfortunately the mentors or people I have had to be a part of and I am wrongfully projecting that on you” <—BINGO.
Your entire diatribe is filled with assumptions, projections, and logical fallacies.
He's not making a blog to "brag about his wealth". The blog exists to detail how he did it, and to help INSPIRE others to do the same. There is absolutely nothing wrong, evil, or immoral about discussing strategies to maximize wealth.
Discussing wealth means you have to discuss numbers. If his wealth numbers spark jealously and resentment in you, I would suggest trying to shift your mindset to being INSPIRED by his results. BE INSPIRED and LEARN from the success of others. If you aren't on the exact same path as him, that's fine, but you can still learn from his life and apply the knowledge to your own circumstances as you see fit.
"Your kind pushes genuinely kind human beings like me"… I'm sorry if someone hurt you or the world has you feeling down, but life is NOT fair. I repeat. Life is not fair. But he isn't PUSHING you AT ALL. It's a blog post, not a mandate. Don't like his advice? Don't follow it. But your vitriol and contempt shouldn't be directed towards the author. Don't assume all people that pursue wealth are "evil". They aren't. And don't make yourself out to be some sort of "genuinely kind" hero. I would bet money you aren't. In fact, your post reads rather sad and pathetic.
In addition to finding a good therapist, I'd suggest reading Rich Dad, Poor Dad by Robert Kiyosaki. It's an old standard for personal development and wealth accumulation, but it might help you shift your mindset to a better place.
Change your way of thinking, or it will be a problem that manifests itself in all areas of your life. You'll be glad you did. Or, continue to be bitter and presumptuous and see where that gets you. I suggest the former.
I hope you read this reply. Good luck to you.
'Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured.' – Mark Twain
30x annual rent is insane, where I am at 10x annual rent is probably more in line with the market (which is already high to begin with).
That is the primary reason for your obsession with RE and anti-rent. Right place, right time.
Indeed.
I’m diversifying into the heartland of America with target 10% cap rates and much lower valuations through real estate crowdfunding.
No reason for Silicon Valley to have a monopoly on capital or innovation, especially with costs so high.
Hi FS, how do you book the net worth for your properties? Is it mark to the market value minus outstanding mortgage? Thanks
Yes, the estimated equity in each property with a 10% discount for transaction costs and to try and be more conservative.
Thanks FS. You also count retirement savings/ benefit into the total net worth, right?
Wow!! very great advice, indeed!! If you’re lucky enough to have an employer that offers a 401k plan, take advantage of it. Four years ago, I started contributing to my employer’s 401k starting at 3%, every year I increase the amount. This year I am maxing it out and will continue to do so. This is one sure way to build wealth.
Great post, thank you. Can you please explain the calculation for this part: ‘If you put 20% down on a property and it goes up 3% a year, that’s a 15% return on your cash thanks to leverage.”
Sure.
$100,000 property value, $20,000 down payment.
Property goes up 3%, or $3,000. $3,000 / $20,000 = 15% return on your cash downpayment. Plus, you are paying down your mortgage in the process.
I’d check out real estate crowdfunding as well. I like Fundrise.
I spent a lot of my income, I pi$$ed it up the wall and lived my life to the full. I still worked my arse off, I still do sometimes 7 days a week in my absolute dream job that is a “paid hobby” and I still have a net worth over a million at age 40. The difference to me of 1 million or 3 is nothing. What I did in my 20-30 years, how I lived, the memories I have, what I gained in every way other than just financial is absolutely priceless and I wouldn’t swap it for anything. There is no bank balance that could ever match a happy existence living life to the full. I did everything and I loved it. Saving everything so you can enjoy yourself at 70 is absolutely ridiculous and in my opinion the worst possible advice someone could give or listen to. You can not do all nighters, several in a row, raving, climbing mountains, travel to dangerous places, super remote places, super exotic places, and do the same sort of things when you are 70. At 70 you are close to death and there’s a reasonably probability you have already died. Money as a singular yard stick and measure is the most soul destroying and sad perspective in my book. What a waste of a life.
Totally agree! There’s definitely a spectrum between spending 100% and saving 100% — and it’s up to everyone to judge what is best for themselves.
I went nuts in my 20’s and wouldn’t trade it. However, my dad saved ‘until it hurt’ as described, and built a business for himself, and generational wealth.
Tangentially, we see some people today talking about ‘taxing the rich’ like it’s some easy resource. However, they don’t see the years of scrimping that my Dad endured to get where he is today. Can those people that want to tax him give him back experiences that he declined? Can they give him back his youth? So I don’t see it as super fair to levy taxes on those that planned for their future.
As a 16 year old I am able to save 100% of my income (may it be small), and I am in the midst of building a stock portfolio. When do you think the optimal time to invest into real estate is? ASAP, out of highschool, out of college, during a housing correction, or later?
Needed to comment about the ordering anything other than water line. Up until now, when other people are paying for my meal, I still feel uncomfortable ordering anything other than water. My parents drilled that pretty hard into my brain! Although, unconsciously I’m sure
Financial Samurai – quick question on the math above. When you calculate net worth do you consider total assets less mortgage? Or simply total assets? Was trying to follow along with the net worth math in / around significant home real estate purchases.
So being in my late 40s, and with the same career for 24 years, it is a little disheartening reading how quickly FS attained 1 million in net worth. The younger a person recognizes the importance of budgeting, investing the excess income above needs, and having a game plan cannot be overstated. By disheartening, I mean realizing how many working years were squandered without a plan for financial freedom that stunted my wealth building.
The good news: FS demonstrates action that can be taken at any age to improve financial health, as well as passing the knowledge to your kids so they jump start the process early.
Our goal is imparting our current knowledge and habits to our kids as they grow and mature. We are building our financial independence with very deliberate steps: healthy net worth, small mortgage left to pay off, pension eligibility currently for the wife and I, well funded 529s and climbing. No other debt than the mortgage. We are trying to track all the information but occasionally get lost in the chaos of life.
I have read multiple times about personal capital. Inputted our data manually but did not feel comfortable linking any accounts through the site. How safe is the site? Isn’t it a bad idea to have all personal account information linked through one location, making it a high value target for humans with malicious intent. Does anyone have personal experience with the site that can explain the security? Thank you
Great read and i hope that I can have similar luck im think of investing in ripple. i hate i missed out on bitcoin. if anyone is looking for a great read and a teaching source i recommend this https://tinyurl.com/y9auflzx
I have personally learned alot from it and made a nice amount of money from its teachings just thought I would continue helping anyone that wants more and more knowledge
I just read a review of RealtyShres @NomadCapitalist. Seems like they bungle up every property he purchased. How has your experience been?
Thanks and Happy New Year!!
So far so good. That’s why I committed another $300,000 to the real estate equity fund.
Not sure what nomad capitalist’s picks were, just like if you invest in the stock market, there are winners and there are losers. My thought process is, that I would just invest in a fund that is run by a committee, who controls what deals get on the platform, to choose the investments for me. After a couple years of learning their process, then I can pick specific deals.
Also, for those people who are picking single-family homes as investments on a real estate crowdfunding platform that is trying to focus on the middle market, I think that’s a sub optimal move.
Hi Sam,
I really enjoy your blog. You cracked me up a bit with this post, though. You mentioned your family wasn’t rich because your parents were FSOs. Well, I was an FSO for 13 years, then bailed at 42 to become a full-time investor.
Dude, pretty quickly FSOs are making six figures and then have zero expenses while living overseas. Plus, FSOs earn pensions in 20 years, including health care for the rest of their lives from age 50 onward.
If you do the math, if they retire at 50, each pension would be valued in the mid-seven figures relative to the amount of money you would need on-hand to purchase a comparable annuity.
Anyways, no utilities, no rent, no cell phone charges even, making six figures, earning a pension that pays forever from 50 onward (yes, I did abandon that one!), and your kids get to go to private schools that can cost up to $20,000 a year, for free, for as many kids as you have.
Maybe relative to the financial world you were swimming in they weren’t wealthy, but that’s pretty rich! It’s cash flow upper-middle class (when you are abroad), but when you add in the benefits FSOs are making north of 200K per year. Cheers!
Tom
Glad I made you laugh Tom.
My father is 72 years old. Maybe pay has accelerated since you joined?
We lived in a modest town home, and drove an eight-year-old Toyota Camry. Here’s a picture of our house actually: https://www.financialsamurai.com/rich-spoiled-clueless-work-minimum-wage-job-at-least-twice/
We definitely were not poor, but I’m pretty certain that we lived a very middle-class lifestyle. Went to public HS and college too in Virginia.
And if you live in New York City, or San Francisco, the median price home is almost $1.5 million now. Even if you make an adjusted $200K, you can’t afford a home 7.5X your gross income. The D.C. area where we lived. was expensive, but not as much.
I find this a good read. Especially I find it an awesome tool for parents/caregivers to share with their middle school and beyond children. I was not taught nor did I think about time management and personal finances. I’m certain that is because my parents were not taught. Now that I am older I see the very importance of starting young. This is the first writting of yours I’ve read and most certain will not be the last. I am going to share this for I see it’s value. For this I thank you.
I’m 13, live in an upper middle-class family, have good grades in school, and wan’t to start planning out my future now. I wan’t to learn the major mistakes other people have made before I can even grasp the chance to do the same. I run an ebay account where I make ~$400 gross a month buying and reselling high tier shoes and clothing. The money usually ends up in my desk drawer, but I have been dabbling in the investment of crypto currency and I have turned around a $2200 profit so far. I know that money comes with work and gambling for it is the worst thing you could do. I wan’t to be able to live a happy and wealthy life and I know I have all the utilities but I don’t know what to do. This article and many other on this site have been a non-stop read for the past few days. I am willing to work and take risks to sustain financial growth but I don’t know where to start.
If anyone is willing to give me 3 pieces of advice for my future I will take them with full consideration.
Thanks, Daniel.
Hi Daniel,
Here you go! https://www.financialsamurai.com/financial-advice-for-a-13-year-old-cryptocurrency-trader/
Wrote a whole post to answer your question and you’ll see tons of advice from other readers.
Good luck!
Sam
Thanks!
Hi, guys I just ran across this forum in a 20 year old nursing major. I have little student loan debt as of right now and I was wondering what I could do now to set myself ahead in the financial game.
I was being harassed in Anaheim with my child for asking he neighbors kid on some type of drugs to go home-these people have invaded every job i have had- including target -it’s a doctor from allergan pharmacuetical i hadn’t worked there since 1980 when they drugged me and no one called the anyone at all-they put a cot in the bathroom after they did it-terrorists–
my loan in anaheim was from bank of america-diane alexander was not arrested after i called te anahiem police in 1986-cause of the people nextdoor used to live next to me in garden grove.
my sears a nd discover credit cards were stolen, when i tried to send in a name change and job change and income report-1997-principal mortgage- inside our store by people from the back of the store-I counted the deposit for the store and the manager gave it to lisa, she must have taken it-
In 1972 all… insurance agent set p an accident-I came ot a stop twice-fat man black hair-the police did nothing about felons allover the riverview drive-riverside –
I received 0 un employment checks everyone else from the store did- laid off when the store closed-nothing at all-worked there for years and asked to built a new store-near by-
You are absolutely right about what to do when one graduates from college and gets that first big job — preferably without huge student loans.
If a graduate continues to live very cheaply their first year at their new job, and saves just $15,000 that year, it can transform their retirement.
Historic rate of return after subtracting inflation for the US stock market is around 7%. $15,000 compounded at 7% for 42 years will yield, on average, over half a million dollars. (That’s in today’s dollars, the actual number would be higher to account for inflation.)
It would also put the person in the 73rd percentile of net worth among those 65 and older even if they never saved another dime.
Delaying gratification for a second year and repeating the process would put them at a net worth of just shy of $1,000,000.
And those are income producing assets that should safely generate an income of $40,000 a year in today’s dollars!
When I read about middle class families with less than $25,000 in retirement savings at age 65, I just cringe.
Darn, I typed in a few numbers wrong. $15,000 at 7% for 42 years will be around a quarter of a million dollars. So two years of that saving would net a half-million dollars, not a million. Safe withdrawal rate would net $20,000 a year of the half million.
It’s still a huge amount of money for a very small amount of “sacrifice”.
Is it worth it to spend 450K on a dental school degree? I feel like the return on investment is poor. Median salary for a dental associate is around 120K and dentistry is becoming saturated in big cities. What are your thoughts?
I would say that you really have to ask yourself if you would like a particular profession before diving in. If you look at something like dentistry, nursing, or physician careers, none of them may be the ultimate return on investment if you look at it from purely a financial standpoint.
Obviously, not everyone is suited to even be in any of those professions either. Most people in dentistry have some degree of interest in helping others and probably did not choose it solely for money. That being said, dentistry is a relatively stable profession. No matter how much debt you rack up, you’ll likely get out of it if you are able to hold the job for a certain period of time. How quickly you repay the loans/debt is up to how you choose to spend your earnings early in your career.
Doesn’t sound worth it to me, unless you really, REALLY love to work on people’s teeth. $450,000 earning 5% a year is a nice $22,500 a year in passive income.
What is it about dentistry that calls to you? If it is about the money, there are plenty of other six figure jobs out there that may be more intriguing. Have a look yourself.
Hi,
I think our way of thinking quite a like.
underdog, think before act, company politics etc.
But still, i just finished my study at 24, 2 years late. :D
My plan is to work and build a relationship as much as i can until 28 (currently working in logistic line).
At the end of 28, i should have something i can depend to in order to build my first million. (business).
From there, i give my self 2 years (until 30) to reach that goal.
Wow I glad I found your site I can’t wait to build my first million. I’m 32 and have a net worth of about 930k so I’m almost there. Not quite under 30 years old but somewhat close. Most of it is into real estate. I also live in Los Angeles.
Here is my story
I have always worked and saved money my whole life. First job was at 15 at a local hobby store net worth at 18 years old was about $25000
I started a successfully eBay business at 18 and put my self through college at the local state university but the eBay business failed and ended when I was 21 years old net worth was $100,000
I dropped out of college and got into selling life insurance and became a life insurance agent at 22 years old. This was at 2007 and I know because of the housing crash I need to save asap to buy a house. I made 12k my first year as an insurance agent and 73k my second year, 86k my 3rd year about about 80k every year after that. When I was 25 I has a net worth of 150k and I bought my first house for 380,000 with a 150k down payment. My mom gave my $50k so I only had to use my 100k so I still had 50k for emergencies. Bought my second house at 27 years old for $222,000 with 20% down and my 3rd house 29 at $260,000 k at 20% down and I have been aggressively paying them dos. Every since and they are all rented out
I’m now 32 and the first house is with 650k and I owe 169k second house is with 260k and I owe 95k and 3rd house is with 310k and I owe 185k. I have about 30k in company stock and about 30k in paied of cars and 70k liquid. Last year was my first year I made over 6 figures as an insurance agent at $103,000 last year and this year I’ll probably end up at about 115k
You don’t need a crazy high income to become a millionaire. You just need to live well below your means and save and invest.
Glad to see this post on your front page today!
I read through the comments and felt a bit surprised by how many people rag on you for the early stock earnings. If anything, I think your path to wealth is much more difficult because you did have an enormous pile of cash at the age of 22/23.
For most people, that would have led to building a lot of negative spending habits that would have taken many more years to correct. The fact that you were able to wisely invest and keep your earnings – VERY impressive!! :)
Thanks for putting this post together and I too wish I had read it years ago!
Thanks for reading. The temptation to blow the wad of cash at a young age was there. But because work was so stressful, I knew I had to save it in order to have the option to do some type of less stressful work later.
I’m VERY glad I converted a lot of the funny money into an SF condo right after my 26th birthday. The ~$460,000 mortgage locked me down!
My path to millions
20s: living in the Bay area making about 40k/ year (mid 1990); actuary entry level. At age 26, made a big bet that China/ Asia was the place to be and packed it all in to become a poorly paid English/ Math teacher in China (making about USD100/ month…yes USD100!) It was an awesome and incredible experience – did it for one year.
Mid 20s to Mid 30s: Worked in HK and bounced around jobs here and there (including co-founding a company), making about USD50k/ year. Net worth age 30: USD150k.
At age 35 got fired from my job and was offered to go to Shanghai China to lead a business unit for well known consultancy. Starting job was USD70k (but was paid in Chinese Currency). Age 35 Net worth about USD300k. I arrived in Shanghai at the right time (when it was affordable and I was paid decently). Key milestones which really accelerated by NW a) married a woman and bought 2 properties in Shanghai b) RMB was appreciating big time. By the time I left China in 2009 at age 42 my networh was USD1 mn.
In 40s Now living in Singapore (low taxes) and pulling in USD200k year. Bought property in Singapore (not making or losing money).
At age 50 now (2016) – networth is about USD4 mn. Which approx. 75% is from property holdings. The rest are liquid investments. Although my initial target was USD5 mn…hopefuly I can hit that before 55.
Need to add that along the way…the family had nice windfall when my uncle sold his bank and my dad shared some of the windfall. My dad gave me about USD500k.
In hindsight, it was about making the right career bet (betting on Asia) and having a horse shoe up your ass (getting married and lucky time to buy properties in China) and being blessed (uncle selling his bank).
I’m now thinking about returning to California…and winding down the career. But the taxes in California are so damn scary!!!
I have two kids 10 and 8. Wife is 35.
FS – you and I need to hook up man; enjoyed reading your post! Probably have taken some similar paths.
20s: Figuring out what you want in life
30s: You’ve figured it out and you are now building your brand name
40s: Maxing out on pay and titles
50s: Winding down the career
60s: Leaving a legacy
Sounds like you took an adventure that I WANTED to take out of college, but didn’t because I got a job I could not refuse (GS in NYC). If I had an offer from any other job, I would have gone to China in 1999. But it is hard to reject a frontline revenue generating job from what was then the toughest bank to get into (maybe still is) and be potentially set for life if I lasted 10 years.
The China move for you was great. Seems like your wife comes from a wealthy family? If your wife can buy TWO properties at age 20, or in her early 20s (?), that is pretty damn good! Not too sure how many people have Uncle’s who “sold his bank” either!
What a crazy run Singapore went through from 2000 onward yeah? I remember Singapore being relatively affordable then. We can go eat some curry crab next time I’m visiting!
I view the tremendous energy as a huge advantage. That’s why I spend all of my time right now (early twenties) working my a** off to build something for myself, while the rest of people my age are concerned with partying and other shenanigans.
Hi Sam, I’m 55 years old, I live in the Canary Island, can you give some tips to achieve the finance freedom. I Speak more languages, Spanish is my mother tongue, I speak English, French, German, Italian, Portuguese. I want to start in some new project for my life. Thanks for very useful articles.
Well said. Nicely told with great instruction. Have one for you. Im am 34. I worked my tail off, made some great investments and have a net orb of 6 mil. But I don’t know what to do. I feel stuck and not sure what to do. It’s wierd. I am the underdog, wear exactly what you do, it’s funny actually. I have my toys, a few houses, nice cars, great wife etc, so do I just live. I can retire if I want. Easy. At number was a low ball. What do you think
It’s funny how we get used to our net worth isn’t it?
Figure out what things you really love to do and do them. You have enough money to do whatever you want now. I left banking in 2012 at 34 to make little money as a blogger. But it’s been a ton of fun, and it surprisingly has turned out to be quite lucrative as well. See: How Much Can You Really Make Blogging?
Find something that pays you, fulfills you, and is fun. Then you’ll have a lot more inspiration!
Great motivational post. Definitely shows that after 2 years, people are still commenting. It’s refreshing to see what it’s going to take for someone in the medical profession who is over a decade behind to build wealth. It definitely can be done if you stick to the principles that you’ve outlined.
I’ve considered that if I had taken a tech job instead of going into medicine (I made a last minute decision to change careers) and had been knowledgeable about finance then, it’d still take me into my late 40’s/early 50’s to catch up financially as a doctor compared to the tech/finance equivalent of me. That’s the power of compound interest and time.
Keep up the good work!
Hi Sam,
I found your story really inspiring and to me, it seems like you’ve grafted to get where you are. Some are given opportunities and, as you say, waste them due to laziness or entitlement. I also think that writing posts like this is a great way of giving back in a way as others glean their own advice and solutions from your experiences.
Glad to have found your blog.