sockerton said:

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It was pretty easy, it just takes discipline. I'm at 1.2MM total net worth with 0.85MM in the stock market. My new goal is to be a stock market millionaire. My prediction for the goal after that is to have a million in retirement funds. Finally my final goal will be 5 million in retirement funds and retire at 55. I'm in my lower 30's. I'm a boglehead.

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Depends on what you think you need to live on. $5 mill in todays $$ will be worth far less when you reach 55. Healthcare at 55 for you could be an issue as far as monthly cost at your time of retirement. We will have another cycle like 2000-2009 in the stock market of zero returns in the future. If you are a buy and hold that can hurt your returns depending on when you retire or during retirement. Who knows what the cost or what kind of health care system we will have at in 20 years. Considering everything it could very well be Medicare for all when you are 55 or earlier. God help us. If so there will probably be a private insurance system for the ones that chose not to be in a gov't run medical. You will have to pay for two health care systems if you want decent care more than likely.

Health care cost is my biggest concern in early retirement at this time. Considering what we are seeing out there is a push toward gov't run healthcare I am considering leaving the country in the future if that happens. I will have to go on medicare in a few years and if there is an additional 300 million on Medicare in the future, well you can see the writing on the wall. Disaster.

I think your numbers below look about right. Where you live will skew the numbers to an extent.

Closer into town it would probably be a higher weighting towards higher level finance, legal, medical.

Suburb/exurb/lake retirement will follow the sales, corporate track more closely.

Any Sales Professionals willing to share what they bring in, and what industry they are in?

I will start

Construction Equipment
30 Years Old
70k

I read part of this thread, and did so thinking about my clients who have a million dollars or more of net worth. Went down my list of clients, and have quite a few that fit that definition, and some with more than a million dollars in annual taxable income. I bet there are way more people who have a million dollars of net worth than most people realize. I only know about their situation because of my profession.

Most own their own business (or businesses), but some have done it working for others. While not 100% the case (but pretty close if you weed out those who got there via oil and gas and coal royalties or inheritance), they pretty much all:

1. Built one home, nice but not extravagant. Haven't traded up to the mansion type home.
2. Have been married once, never divorced.
3. Own other real estate, often vacant land (as opposed to rental properties).
4. Are risk takers, haven't had issues with trying things they felt would work out and went for it.
5. Haven't borrowed other than for their home, other real estate, and some have borrowed to buy their vehicles (quite a few pay cash for their vehicles).
6. Had 2 kids or less.
7. Most are extremely generous when it comes to charitable contributions.
8. Over half do not have a college degree, though most who don't have seen to it that their children went to college.

Not saying these things cause or don't cause them to be where they are, but they pretty much all share most, if not all, of those attributes.

oldarmy1 said:

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I have had many conversations with fellow millionaires and see vast and unique differences in their mindsets, yet most (not inherited wealth) do have common themes or principles.

• They work like they own the business even if they don't (or until they do) - Entrepreneurial spirits
• They study wealth, time value of money, and accumulation strategies
• They are disciplined in their daily routines to the point where most are called stubborn (even to a fault)
• They seek panic because they have learned to recognize opportunity to lead, to learn and to capitalize
• They look beyond the "noise" and set priorities based on sound long-term principles
• They think outside the box. Example: Most say the glass is half full or glass is half empty. I say maybe the water level is actually just right and you have a glass twice the size as needed for that amount of water (or whatever is being deemed short or long)

Interestingly, more than half of my millionaire neighbors, friends or business associates (speaking only of the ones I've had open conversations to be able to confirm they are) never started or owned their own business. Here is the breakdown by profession of those who didn't reach the status via ownership:

1) A SVP or higher Executive level within a company - 29%
2) Sales Professionals (How about that?!) - 25%
3) Medical Industry - 19%
4) Big Tech - 14%
5) Legal - 13%

That leads me to my last bulletpoint

• They tend to be obsessed with numbers!

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Thanks for breakdown oldarmy, I've got a question along the same lines. Do you ever run into engineers/former (or reformed) engineers? Usually engineers take their 80-160k salaries, 40-50 hour a week schedule and live the comfortable life.

I always wonder how someone with technical knowledge breaks that mold and transitions into a business owner. I'm mechanical by degree, and I see opportunities everywhere but they seem to always be so capital intensive compared to the dollars they are chasing. And usually require extensive software either baked into the production process or sold to consumers to become differentiators in the market.

Maybe I'm biased, but my girlfriend and I both have high paying jobs and really high net worth in our 20s. It's distinctly possible, if we got married we could be millionaires in a few years. It would largely depend on stock market performance and my company's bonus which is pretty variable year-to-year, but almost always healthy.... Also I guess it matters if I were to decide to get an MBA. Even if we didn't get married, however, i could possibly be a self-made millionaire in my early 30s and I only modeled a 4.5% annual return.

I'm really just looking for a hypothetical future where my returns outstrip a comfortable cost of living. The number isn't quite as high as I imagined it was when I was young. Don't think I plan on retiring early per se, but I'm already starting to value vacation time over a 5% bump in salary. I think the dream for me is to make enough cash to live off of from investments and work 40 weeks a year as a consultant or something. Maybe that's ridiculous, but i really want the freedom to travel a lot, but still work. Maybe my priorities change with time.

We made it 1-2 years ago. I'm split about 50/50 time wise between being a stay at home dad and a 1099 contractor for my old company. My wife is a senior level exec. The last couple of promotions is what did it for her. While her income was always nice, the combination of a good salary, annual cash incentives, non-qualified pension contributions, and long term stock awards is what really jumpstarted the process. Granted, we can't touch any of that stock for years to come, it will still continue to grow quite nicely.

We've eliminated non-mortgage debt, increased house size/quality only when we have relocated along the way, and are trying to make sure we keep an eye on our spending. 2019 is going to see us start really hammering away at our savings rate, aiming to save at least 50% of cash (or cash equivalent) income each year.

Our youngest goes to full time Kindergarten next fall, freeing me up to either chase an encore career in a low paying passion field (teaching) or reignite the desire to kill/eat. That would either be through a sales role or building and opearting a rental real estate portfolio.

I agree with the previous comments about $5 million being less than what you think it will be unless your retirement horizon is fairly close. We're looking to get out in 10-15 years and either set up a consulting firm or maybe just live off the spinoff income of accumulated assets. Paid off real estate in a couple of locations will help with that, whether I manage it or pay someone else to do that for us.

Getting to the 2 comma club is the hardest part. Once you get there, increasing the number of millions gets easier (or so we've been told/shown).

It does. The key at that point (low 7 figures) is building diversification with returns and creating long term cash flowing assets. Diversifying asset base with yearly returns will be key.

Yep. We are shifting focus from maxing out qualified plans to building that taxable "bridge" funding that will allows to jump ship when we want.

I think until we start acquiring actual real estate, I'm looking pretty hard at things like Peer Stree and similar vehicles to diversify. I'm not wild about being an out of town or out of state landlord, but the cost of real estate here is insane right now and rents just won't generate the return we are looking for locally. I may move that focus back to Texas where we have some potential help as local property management.

I'm consuming Bigger Pockets content pretty steadily lately, though I think some of the guys that are leveraged to the max and have enjoyed nothing but wild returns the last few years may be due for a wake up call in the future.

Successful Engineers are the 2nd most process oriented people in existence. I would take an engineer over about anyone to be in an operations exec role. If they have sales experience that's a bonus.

I was in Sales, Sales Management and ultimately President of a company division. I started mapping out a plan for my own business in a similar vertical and seeded a startup with full controlling interest. Once I tweaked the business plan and revenues began consistently flowing I announced my departure from my position, with a 6 months overlap, and ramped/replicated the plan.

Brain storm, ask "what if" questions within a space you're interested in. Reach out to someone you might know in that space and ask if they would be willing to give counsel/advice in exchange for a Board position at "X" valuation. I've had those contacts come work for me on occasion as well. Great relationships created through mutual interest!

Quote:

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Maybe I'm biased, but my girlfriend and I both have high paying jobs and really high net worth in our 20s. It's distinctly possible, if we got married we could be millionaires in a few years. It would largely depend on stock market performance and my company's bonus which is pretty variable year-to-year, but almost always healthy.... Also I guess it matters if I were to decide to get an MBA. Even if we didn't get married, however, i could possibly be a self-made millionaire in my early 30s and I only modeled a 4.5% annual return.

I'm really just looking for a hypothetical future where my returns outstrip a comfortable cost of living. The number isn't quite as high as I imagined it was when I was young. Don't think I plan on retiring early per se, but I'm already starting to value vacation time over a 5% bump in salary. I think the dream for me is to make enough cash to live off of from investments and work 40 weeks a year as a consultant or something. Maybe that's ridiculous, but i really want the freedom to travel a lot, but still work. Maybe my priorities change with time.

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Honestly, at your life phase, i'd keep the hammer down until you see what "health lottery" your children win (if you have children). it sounds crass, but all I takes is a kid with some health issues to make you grateful for the income level but cause you to refocus on the job side.

diehard03 said:

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Quote:

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Maybe I'm biased, but my girlfriend and I both have high paying jobs and really high net worth in our 20s. It's distinctly possible, if we got married we could be millionaires in a few years. It would largely depend on stock market performance and my company's bonus which is pretty variable year-to-year, but almost always healthy.... Also I guess it matters if I were to decide to get an MBA. Even if we didn't get married, however, i could possibly be a self-made millionaire in my early 30s and I only modeled a 4.5% annual return.

I'm really just looking for a hypothetical future where my returns outstrip a comfortable cost of living. The number isn't quite as high as I imagined it was when I was young. Don't think I plan on retiring early per se, but I'm already starting to value vacation time over a 5% bump in salary. I think the dream for me is to make enough cash to live off of from investments and work 40 weeks a year as a consultant or something. Maybe that's ridiculous, but i really want the freedom to travel a lot, but still work. Maybe my priorities change with time.

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Honestly, at your life phase, i'd keep the hammer down until you see what "health lottery" your children win (if you have children). it sounds crass, but all I takes is a kid with some health issues to make you grateful for the income level but cause you to refocus on the job side.

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Thought the same way in my younger years. Healthcare cost will become more and more important as you age especially if you retire early.

Interesting discussion... a few thoughts on recent posts:

Owning a business is commonly held out as the only/best way to build wealth. I flat don't agree. There is a point where that may become materially true, but I see that somewhere in the TENs of millions and up.

Everyone's sphere will look a bit different, but OldArmy's breakdown of the source of wealth rings true to me. Whether someone owns a business or simply performs like they do with their actions, if you can meaningfully impact the top and/or bottom line, you have a reason to share in the wealth creation.

Outside of simply having an outsized income, spending habits are the next largest marker for building wealth. However, spending habits are by far the single most important factor for maintaining wealth. Because of that, you can get there on relatively modest income by saving, over time and avoiding big mistakes. Many professionals are naturally in tune with this behavior, engineers included.

Generally speaking, I can fairly easily predict if someone is going to be financially successful. It mostly has to do with the presence of an entrepreneurial spirit, if coupled with a healthy understanding of risk. Sure life gets in the way sometimes, but some people just have "it" and we all know people like that. My best advice is to spend more time with people like that and they will lift you up.

very important topic!

Casey TableTennis said:

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Interesting discussion... a few thoughts on recent posts:

Owning a business is commonly held out as the only/best way to build wealth. I flat don't agree.

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I'm with you. My dad has 5 siblings, and he and 2 others are net worth of 1-5 million while working for companies their whole career, although his only brother is a business owner and in that range as well (He owns a tire store in Louisiana).

They are engineers and accountants and have masters degrees in those areas, but they simply had high income. My wife's mom and step dad are the same; he's an engineer who has worked for Spirit, Lockheed, etc, and he's simply a high earner.

Of course, if you're a high spender, then you're no different from a household making $80k. The spending component is just as important, and it's one you are 100% control over (unlike income)

A HH income of $200k or more can easily save to be million networth within 10 years. There are many combinations of degrees/occupations that get 2 people to that income level.

There are so many variables but a few other things to take into account.

Mid-Level to higher level professional services earners generally want to stay closer to the central business districts. They want their kids to play rec league and go to schools with their clients and potential clients kids.

This creates an issue as it relates to expenses.

Close to central business district is going to cost $750K+ in Houston or Dallas. Add in Private School at $20K per kid plus all of the other trappings and you need to be $350-500K to make that work and you are not saving a ton.

You generally see more engineers, accountants with dual incomes and $300-400K houses getting there closer dated 7 figure status as they do not fall to all the trappings of trying to match their customer base.

I say this as working with most of the prior group and understanding that the salary doesn't leave too much left over and the lifestyle creep is hard to slow once there.

Cyp0111 said:

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There are so many variables but a few other things to take into account.

Mid-Level to higher level professional services earners generally want to stay closer to the central business districts. They want their kids to play rec league and go to schools with their clients and potential clients kids.

This creates an issue as it relates to expenses.

Close to central business district is going to cost $750K+ in Houston or Dallas. Add in Private School at $20K per kid plus all of the other trappings and you need to be $350-500K to make that work and you are not saving a ton.

You generally see more engineers, accountants with dual incomes and $300-400K houses getting there closer dated 7 figure status as they do not fall to all the trappings of trying to match their customer base.

I say this as working with most of the prior group and understanding that the salary doesn't leave too much left over and the lifestyle creep is hard to slow once there.

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See my comment re: spending.
YOU are in control of your spending, no one else. I think you're talking about a pretty small niche of people in your first example. It's pretty specific.

Legal, banking, professional services all fit under the highly educated, upward moving workforce and the ones that generally make the income that would allow for quicker financial independence.

Cyp0111 said:

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There are so many variables but a few other things to take into account.

Mid-Level to higher level professional services earners generally want to stay closer to the central business districts. They want their kids to play rec league and go to schools with their clients and potential clients kids.

This creates an issue as it relates to expenses.

Close to central business district is going to cost $750K+ in Houston or Dallas. Add in Private School at $20K per kid plus all of the other trappings and you need to be $350-500K to make that work and you are not saving a ton.

You generally see more engineers, accountants with dual incomes and $300-400K houses getting there closer dated 7 figure status as they do not fall to all the trappings of trying to match their customer base.

I say this as working with most of the prior group and understanding that the salary doesn't leave too much left over and the lifestyle creep is hard to slow once there.

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Go read The Millionaire Next Door. Overwhelmingly, high net worth individuals are prodigious savers, live below their means, and own a small business that does something boring. Wealth doesn't look like what the average american is raised to believe. All those people in the business district paying out the nose for housing, private school, and the city center livestyle- they're overwhelmingly light in wealth respective to the wealth they are signaling. Now go show me your anecdotal evidence of your three best friends that buck this trend, but the data doesn't lie.

You don't have to have those things to be successful in a professional field.

one MEEN Ag said:

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Cyp0111 said:

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There are so many variables but a few other things to take into account.

Mid-Level to higher level professional services earners generally want to stay closer to the central business districts. They want their kids to play rec league and go to schools with their clients and potential clients kids.

This creates an issue as it relates to expenses.

Close to central business district is going to cost $750K+ in Houston or Dallas. Add in Private School at $20K per kid plus all of the other trappings and you need to be $350-500K to make that work and you are not saving a ton.

You generally see more engineers, accountants with dual incomes and $300-400K houses getting there closer dated 7 figure status as they do not fall to all the trappings of trying to match their customer base.

I say this as working with most of the prior group and understanding that the salary doesn't leave too much left over and the lifestyle creep is hard to slow once there.

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Go read The Millionaire Next Door. Overwhelmingly, high net worth individuals are prodigious savers, live below their means, and own a small business that does something boring. Wealth doesn't look like what the average american is raised to believe. All those people in the business district paying out the nose for housing, private school, and the city center livestyle- they're overwhelmingly light in wealth respective to the wealth they are signaling.

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This maybe a good example of your typical high net worth on the lower end ($1m to say 4 or 5m). Hell a lot of farmers are in this range, just because of the assets and land they own. But a lot of people living in nice, large homes in the city can very well be VERY high net worth individuals.. $10m-$50m. To me, this is a new level of wealth. Basically every new figure of net worth is a very different level of wealth and lifestyle than the previous, especially if retired.

Think of how many executives in the O&G industry in Houston alone make very high 6 figure or into 7 figure salaries, and are likely in the 8 figure net worth range. Then you have all the other industries.

Then go sample the population in the bay area or NYC or DC, and how many people are in that 8 figure level. This is not a facade like your last sentence implies.

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Biggest mistake conservative spending males make her is to marry the hot high maintenance girl. It ends up costing them twice, all their working life to keep her happy and in the eventual divorce.

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Some might count that in the win column.

Quote:

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Think of how many executives in the O&G industry in Houston alone make very high 6 figure or into 7 figure salaries, and are likely in the 8 figure net worth range. Then you have all the other industries.

Then go sample the population in the bay area or NYC or DC, and how many people are in that 8 figure level. This is not a facade like your last sentence implies.

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I don't think we should really focus on this cohort to look at for the purposes of this thread. Someone at the executive level has a compensation plan that favors net worth and the numbers of those people is not very high.

You can't even say "bay area" with a straight face. That place is a clown show economically.

I'm not talking about the C-Suite.

Cyp0111 said:

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I'm not talking about the C-Suite.

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Well, that's a crapload of people you're just leaving out in order for your explanation to work.

According to this
http://houston.culturemap.com/news/city-life/04-28-17-houston-millionaire-ceos-compelo-wealth-insight-study/

Houston millionaires are 38% salaried, half business owners. So not denying business owner is the majority path, but 38% is certainly significant.

Edit.. they are calling it 'millionaire CEOs'.. That certainly can skew it a bit.

C-Suite an an oil and gas company is generally 45+. I'm talking about the under 45 professional crowd.