I started my first real job right around 1/1/1998, about 20 years ago. To get my investment portfolio (primary home excluded) to the first $1,000,000 (Double Comma Club), it took a long time, almost 17 years. Or, because I like to measure stuff in days:
6,174!
During that period, I worked hard at various programming jobs. Some of them were very stressful and I occasionally worked long hours. Mindy* worked for most of that time as well. In between two full-time jobs, we flipped homes. We worked a lot:
- Friends: Did you see what happened on Blah Blah Blah TV show last night?!??
- Us (*blank stares*): We were setting tile until midnight.
Note: Now that I’ve left work and have loads of time, I still don’t spend any of it watching TV.
Last Friday (11/29), we joined the Multimillionaire (Double Double Comma?) Club! Yay $2,000,000!:
The second million was a lot quicker, taking right around 5 years or:
1,828 days!
The second million was also a lot easier. About halfway through those last 1,828 days, I quit working. Having your money work for more money is ALWAYS better than trading your precious hours. Besides, once your snowball gets to a certain size, it works way harder than you ever could. Your job earnings become a case of diminishing returns.
I have no clue how long it will take to earn the 3rd million. Mr. Market has been on an incredible run and I don’t expect it to continue, so it may take longer. On the other hand, I now have 2 million little workers instead of 1. Money makes more money which makes more money. This is also known as compound interest. And it is beautiful.
What I’ve Learned About Money
I love to think about money. Probably too much. But, it’s a better hobby than cocaine, competitive eating, yelling at kids on my lawn, or monster trucks. Here is some of what I’ve been thinking about lately.
No one knows what the hell is going to happen.
“Prognosticators” make predictions constantly. In this prediction, Robert Kyosucki stated that:
2016 would bring about the worst market crash in history.
The article was published in March of 2016. If you listened to Robert’s shitty advice and sold your S&P 500 index fund, you would have missed out on a 53% return. Oops.
In this turd-burger, also from March of 2016, Doug Kass proclaimed:
I have a high degree of conviction that staying out of the U.S. stock market could be an appropriate move for the balance of 2016.
And how did the rest of 2016 work out? Really, really great:
But, at some point, someone will say something like this:
The market is on the verge of a 20% correction!
And this person will scream from the top of a mountain when the market corrects 20% the following week. What they won’t tell you is that they’ve been making the same prediction every couple of months for the past 5 years. So have 898 of their buddies. Someone will be “right” at some point.
But they’re all missing the point, because:
Big losses will happen and are normal.
Mr. Market will take a massive dump. It will smell even worse than Robert’s and Doug’s advice.
You could see 50% of your stock market wealth wiped out in a week. Or a day.
Just like bad advice, screaming babies on planes, dogs that crap in your yard, Mr. Market tantrums are a fact of life. Returns can’t be steady and predictable because Mr. Market is complicated. The important point to remember is this:
A stock’s price is a reflection of the underlying health of a company along with a bunch of semi-related nonsense.
If the stock market dropped 50% tomorrow and your precious Widget stock got dragged down too, does that mean that the underlying company is now only 50% as good? Nope. It just means that Mr. Market lost his cool for a day and Widgets R’ Us got dragged down in the melee. What to do then?
If Store A is selling an identical TV for 25% less than Store B, do you go with the latter. No! You go for the best price.
The stock market is the opposite to most humans. Folks freak out and sell when the store goes on sale and buy when it gets expensive.
The next time Mr, Market loses his mind, keep yours. Don’t sell. Consider buying more while prices are cheap. Big losses will happen, but they’ll be followed by even bigger gains.
Timing the market is incredibly dangerous.
No, no, no. Just don’t do it. Here is an incredible chart:
So, if you missed the 10 best days in the market, your returns were less than half of what they would have been had you just left your money in the whole time.
If you’re about to retire and worry about sequence of returns risk, consider moving a couple of years of spending to cash. If the market takes a hit, you won’t have to worry about selling your stocks back to Mr. Market when he’s not paying as much.
Most money is made at the end.
Someone once trolled me with this:
Dude, you’ve made all of your money in the past couple of years.
And… what is the issue?
This is how the market works. With dividend reinvestment, the markets have returned close to 10%/year historically. Per the Rule of 72, your money is doubling about every 7 years. Let’s do an experiment in which a 30-year-old invested $100,000 and never put in another dime:
- 30: $100,000
- 37: $200,000
- 44: $400,000
- 51: $800,000
- 58: $1,600,000
- 65: $3,200,000
- 72: $6,400,000
- 79: $12,800,000
During the first 28 years of the experiment, the portfolio has grown by $1,500,000. In the last 7 years, it grew by $6,400,000. This is amazing to consider:
In 1/4 the time, the portfolio grew 4x as much!
This amazing growth illustrates an important point:
You must start as early as possible.
It’s time for a story!
When I was about 20, my college girlfriend took me to a weekend investing seminar. I didn’t want to go. At the time, I thought investing was incredibly boring.
The first thing I noticed at the seminar was a huge plate of huge cookies. Score! The second thing that I noticed was that everyone else in the room was at least 60. At one point in the seminar, the presenter locked eyes with me and said something like this:
Your advantage is your youth. Start now!
His words shook me out of my cookie-coma and I still think about them (the words, not the cookies) at least once a week (who the hell am I kidding, I could go for one of those cookies right now!).
The sad fact was this: All of those 60-year-olds in the room? Their opportunity was long gone. $1 invested at 25 means a helluva lot more than $1 invested at 65. Plus, you can’t take risk when you’re older because your working years are short.
The best time to start investing was the day you were born. Back then, you were laying around loading up your diaper. Unfortunately, you were only thinking about food, sleep, and whatever the hell babies think about.
The next best time is whenever you have some spare dimes to rub together.
Focus on happiness.
Yeah, it’s important to learn how to invest, but it’s equally important to learn how to be happy. Here are some tips:
- health: It doesn’t cost anything to go for a walk or run around your town.
- sleep: Free, yay! I started paying attention and realized that I’m a different person when I sleep poorly. And by different, I mean ornery and unhappy.
- community: You can’t go wrong when you surround yourself with fun, thoughtful, people.
- money security: Worrying about money sucks. The best part about having money is that it frees you from having to worry about money,
- good food: Food costs money, but you have to eat. The good news is that you can eat premium food at home for way less than eating crappy food out.
- meaningful work: This is the hardest nut to crack. We’re all happier when we’re working at something we love. What that something is is different for everyone. I love to create. Here is the last thing that I built, just a couple of weeks ago:
They say that you can’t buy happiness, but I wouldn’t mind being know as the melancholy guy driving the Lamborghini.
-a wise human
Here are some things that won’t make you happy:
- shiny new things: Well, a new gadget or car will make you happy, but not for long. And when your happiness has worn off, you don’t get your money back.
- staring at your phone: Put it down and talk to your kids.
- big homes/vacation homes: More toilets to clean.
- most things that consume mental bandwidth: My NSX was fun to drive, but was another thing to worry about, so now it has a new home. Life is better when it’s simple.
Double Double Comma Club
The Double Double Comma Club is an exclusive one. We’re in the top 10% in the United States. Yippee!
I must say that it feels fine. Even if the stock market dropped by 50%, we’d have nothing to worry about. A money security blanket is a fantastic luxury. In my opinion, it’s the best luxury:
- If I get a horrible disease and croak, at least I’ll do so knowing my family is taken care of.
- On the flip side, if I go nuts and want a Ferrari, I could have one.
I hope that neither happens.
*What is the best passive income source? It’s a working spouse! I feel like a bit of an FI Fraud because I have a wife that went back to work. I don’t have to worry about withdrawing money yet. But it gets even better because we’re still saving. So, am I retired or just a stay at home dad? Or maybe, I’m just a deadbeat. It’s complicated! 🙂
But, when I started this blog, I didn’t think Mindy would go back to work. It so happens that the perfect gig came up. She loves her job and will quit the moment she no longer does.
Join the 10s who have signed up already!
Subscribing will improve your life in incredible ways*.
*Only if your life is pretty bad to begin with.
Congrats Carl!
The guy who said “Dude, you’ve made all of your money in the past couple of years.” obviously needs to go back to a remedial math class and actually pay attention.
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Thanks Dave!
Yeah, that math isn’t complex!
People won’t remember that if you didn’t start 22 years ago you wouldn’t be where you are right now. Congrats on the Multimillionaire title!
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Yep. So slow at first, but now, watch out!
The lambo quote reminded me of the this Daniel Tosh gem:
“Money doesn’t buy happiness.” Uh, do you live in America? ‘Cause it buys a WaveRunner. Have you ever seen a sad person on a WaveRunner? Have you? Seriously, have you? Try to frown on a WaveRunner. You can’t!”
Congrats on the second million!
Haha, I’ve been on a waverunner and Tosh may have a point!
Sitting here with a net worth (not including our house) just shy of $500k, and realizing FIRE is still probably ten years out, this sort of post is inspirational. Thanks for reviewing what you’ve learned! It’s really nice when someone ELSE buys the NSX, discovers the mental hassle might outweigh the joy, and tells the rest of us. 😉
Haha, the NSX was pretty cool, but you can just rent one for a day!
our accumulation has only taken about 13 years and it’s never felt like a money sacrifice. sure, we burned up some quality time trying to get going but you have to do SOME work and endure a FEW turd-burgers.
the process is simple but not easy. plus i enjoy it and that makes it easier to care about investing.
freddy smidlap recently posted…11 Months on the Retirement Glide Path – Here’s What We’ve Learned
Congrats on smashing the two million! Compounding is truly a magical thing.
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Thanks!
Congrats on the milestone. That is a wonderful place to be!
Life. Is. Good.
Why does your Net Worth snapshot show Zero Liabilities when you’ve made a point to keep your mortgage? When you bought the new house did you pay off the mortgage?
Hi Barb!
That’s just how I have everything setup on the dashboard:
New house: This is all paid for!
Old house: I value it at $550,000, but owe $90,000 on the primary mortgage and $200,000 on the HELOC. The latter is how I paid cash for New House. So, $550,000 – $290,000 equals the $260,000 that you see on the PC dashboard.
On 1/2/2020, I’ll sell stocks and pay off half of the HELOC. On 1/2/2021, I’ll sell more stocks and pay off the other half. I’m doing it this way to avoid capital gains.
I still think the financial independence community needs a better term than millionaire. Few have inherited the money and it masks the journey taken. Ah well, double comma will work I suppose.
Yeah, millionaire has all kinds of connotations. I also dislike the word retirement!
Congrats, Carl – you guys are really killing it! I don’t think I’ll be hitting the multimillionaire club anytime soon, but you’re definitely an inspiration to chase it!
Your points about focusing on happiness were always my biggest struggle. I focused too much on getting to the “finish line” of FIRE that I didn’t concentrate on the happiness part enough. Sure, now I have more time to focus on working out, eating better, sleeping better, etc., but I do wish that I hadn’t pushed all that to the backburner along the way.
Good luck on getting to the big $3 mill – maybe you’ll hit that in 2020!! 🙂
Yeah, probably the biggest thing I learned is that FI (and no job) will make your life better, but it may not make you happier. That is up to you!
Congrats, Carl! You’re an inspiration. Keep the YouTube videos and awesome posts coming….
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Thanks Joe!
Welcome to the multimillionaire club Carl! I think you’re right not to focus too much on the number though. Mr. Market will inevitably take his dump “someday” and you could be back in the single millionaire club.
Same goes for me. So instead of telling myself “I’m a multimillionaire”, I mentally shave off 50% and tell myself that’s what I really have to work with.
Hopefully it keeps my spending sane, and keeps me focused on things that are more important — like health and happiness.
Mr. Tako recently posted…Waiting for Patience
Congrats! And thanks for the mention! Sequence Risk is tough for retirees, indeed.
But: 2 years of cash sitting around will not be enough to hedge against a bad enough bear market. In fact, it’s a catch-22: either the bear market is shallow and short enough where 2 years of cash wouldn’t make a difference. Or it’s a really bad bear market where you would need much, MUCH(!!!) more than 2 years. In the worst-case more than 15 years to recover back to the old market peak plus CPI inflation:
https://earlyretirementnow.com/2019/10/30/who-is-afraid-of-a-bear-market/
EarlyRetirementNow recently posted…How much can we earn in retirement without paying federal income taxes?
ERN: I think 2 years plus the ability/willingness to make your living expenses more efficient so you don’t have to draw down as much of your principal (or even touch the principal) in combination would help a lot. But being able to streamline expenses and cut out unnecessary crap when you are “still doing fine” is hard- like many other things, it’s a skill.
I agree. I try to keep living a streamlined lifestyle even though things are good now and I dont have to. I think it gives me a buffer and I feel better about it. One of my outlooks is: Things are good and we need to keep it that way. No sense in wasting money on things just because you can. If another crisis hits, Im already running pretty efficiently.
Congrats Carl and Mindy. We are still waiting for the $2M mark. People say the first million is the hardest. I say the 2nd million is the hardest, because you lose all motivation after you get the first. Definitely took the foot off the gas after the first million, but wouldn’t have it any other way.
Haha, I think that your lost motivation is a good thing. The fact that I still think about this crap so much is proof that I still haven’t moved on to using my brain to think about better things!
I’m struggling with that right now! Cracked a million in investments last year and now I just don’t wanna work. Which is far too easy to do b/c I’m self employed. My spouse has a corporate job that she loves, so I’m sort of in a similar situation as you. Weird thing is, I actually really like what I do, I believe it adds tremendous value to the world and I don’t plan to quit for a while yet.
Perhaps you just need to work less hours at it?
Interesting article.how does one join up
Congrats on your achievements – those 2 million are the result of a lifelong hard work and dedication.
But are you sure that the floating desk is at your house?
Not a single dinosaur could be spotted there..
Dividend Growth Investor recently posted…Six Companies Rewarding Their Thankful Shareholders With a Raise
Oh man, the dinosaurs were on vacation and have since demanded a pay raise. They’ve even threatened to unionize.
So, do you get a sticker or pin or something for the double double comma club? If we were to include our house equity (which I don’t because I’d have to sell it and then I’d have nowhere to live), our “net worth” is close-ish to the double comma club.
It’s truly amazing how compound interest and reinvesting dividends works. It’s money you won’t miss anyway because you didn’t really have it to begin with.
My engineering economics professor would always start his lectures with a word/phrase of the day (I remember “post hoc ergo propter hoc”) and “Always save 15%”. I never asked him if that was gross or net. But I’ve always followed his advice-which has put us in a very good position.
It’s 3 Dec, you still starting at 2 comma?
I like to look at my asset change in terms of $50k pick up trucks in my driveway. So when the wife asks, “how did the market do today?” I usually reply with, “oh, three trucks just pulled up,” or “yeah, well, one and a half trucks got repossessed.”
Haha, I got kicked out of the club fast. Oh well. Hopefully, I’ll be readmitted soon!
I’ve used your same pickup truck metric, only with Teslas!
Love those quotes from failed stock market predictions. I’ve been seeing a lot of similar predictions this year and saw a lot of panicked talk about this on the Singles in Pursuit of FI Facebook page I was in.
Most aren’t as specific of those two, for good reason. Saying a downturn is coming is like saying it’s going to rain. Eventually you will be right.
Many panic, and I understand the feeling. The first investment I made, the market dropped a lot right afterward and I lost a lot of money. “I remember thinking ‘seriously?'” Not a good start. But I had educated myself and just kept adding money as I could. Now I have a lot of money sitting in that account I did nothing to earn other than leave my other money there. And that’s a good feeling, and one to carry over when tougher times hit.
To me it’s about long-term versus short-term thinking. In general I see so much knee-jerk, the sky is falling reactionism – I don’t think these are the people who will do well investing, unless they completely insulate themselves from what’s going on with their own money. The ability to see the bigger picture, recognize the small blips for what they are, is a skill that pays off in many areas, including investing.
BC | FrugalWheels recently posted…There’s a recession coming! And other bullshit fearmongering
Serious question: what does your “average” day look like between the hours of 9pm and 11pm? While I have had days where I’ve worked from 8am-11pm – an average day for me can’t possibly be filled with that much work, however rewarding it is. Maybe replace “work” with “productivity” in the previous sentence if that helps you respond. I think I watch like 80% less TV/movies/visual entertainment than the average north American but I still partake in passive entertainment here and there.
“Serious question: what does your “average” day look like between the hours of 9pm and 11pm?”
I’m not sure what you mean here? These days, I usually go to bed at 9pm! 🙂
Five years ago, my life looked a lot different. I had a full-time job, 2 children, a home remodel, and this blog. Looking back, I was completely insane. My kids wake up very early (6am), do so I’d often wake up at 5am or before to get some construction in (being careful not to make too much noise and violate city ordinances). I’d also stay up after they went to bed to get more construction in. In between, I worked a full-time job and wrote on this blog. I wouldn’t be surprised if the sleep deprivation took some years off of my life.
I’m not trying to brag. This was very stupid of me to give up life for money. There are no trade backs, but if I could do it over again, I would have slowed it all down.
I’ve slowed everything down now. I only work on the house and blog when the kids are in school. Life is slower which is much better.
I think you accidentally answered my question, thanks ;). Current-day-you sounds like you’re doing the work at the right times and being the dad at the right times. Five-years-ago-you was a more similar situation to me lately (minus the blog part). However, some nights around 9pm I feel the need to shut off and be brainless for an hour before bed because I know the next day could be a slog. What ends up happening is I try to do a little of everything every day which is often at the expense of sleep which can result in doing things less effectively. Going to bed at 9 would be great and probably easy knowing I had the next day to get back to the things I want to do instead of dreading the things I feel I *have* to do. If you’ve ever read or watched the “wait but why” where Tim talks about optimism leading to procrastination, that’s me. I am optimistic I can do more with the finite time I have – almost always at the expense of sleep or being in a rush. Now before I start ranting about the unnecessary concept of the 40 hour work week I’ll just say thanks again. Slow down. Point taken.
Wait But Why! Yeah, I know what you’re talking about. I’m a CLIP too! 🙂 In fact, before not more than 10 minutes ago, I sent an email to the guy on Craiglist telling him I’d be at least 30 minutes late to pick up the snow tires. And here I am responding to you! 🙂
Yeah, try to take it slow. The struggle is real. I’ve spent the past week running around like a madman trying to get a tile job done in time for the party we’re having on Sunday. Last night, I’m like, “F*** it.” If I don’t get it done, the guest bathroom won’t be available to guest and they’ll have to use the girls’ bathroom. They’ll have to endure a lot of pink, but who cares?
I have to remind myself of this sh*t daily. The worst case scenarios are rarely bad.
Speaking of predictions, I was reading your “My Investments” page (last updated 2/2019 BTW) and you wrote under the “Balance” paragraph that “On the other hand, if the stock market were to grow 25% in 2019 (unlikely!), I’d look for new real estate investments to deploy money to.” As of yesterday VTSAX was up 30.45% YTD, showing even the mighty Mr. 1500 wouldn’t survive as a fortune teller. Thanks for the blog – keep up the good work!
Whoops! I blew it on that one! Ha! And that is why I don’t try to time the market much.
If I had to guess, 2020 will be a real clunker! No wait! Ahhh, never mind.
Question: What calculator do you use? The one I’m using is showing about a 25% return, but it probably isn’t accounting for this month:
I just looked on vanguards website. YTD return as of 12/20/2019 is 30.45%. YTD as of 11/30/19 is 27.16%, so maybe that’s what your calculator is reporting. Either way, I don’t think anyone accurately predicted this past year.
“Either way, I don’t think anyone accurately predicted this past year.”
No kidding. The markets have been nuts and anyone who says that they can predict these moves is full of sh*t.
I remember when I started the blog back in 2013, people were saying stuff like “the run was over” and “I’m moving to cash.” Whoops!
I know you say ‘Don’t time the market”, but your wife just talked about selling stocks to protect you from a market crash. Can you be more open about what you really do vs what one “should” do.
I dint think it’s bad that you pull back, but don’t pretend that you don’t fall victim to this type of thinking and acting on it.
Whoah, whoah, whoah! I’m not sure what you’re talking about. Mindy is still asleep and I don’t listen to the podcast. We’re gonna have a sit-down when she wakes up though! 🙂
“…but don’t pretend that you don’t fall victim to this type of thinking and acting on it.”
However, I would appreciate it if you’d try to get to the bottom of the situation before throwing out accusations (perhaps asking me about it first?).
I do think about market swings, but I don’t act on them. Here are the stock moves I’ll make in 2020:
–sell shares of Facebook on 1/2/2020. This isn’t because of fear of a pullback, but because I have too much of my net worth in the company and they have some sketchy data protection practices. I’m only selling about 150 shares to stay under capital gain limits.
–sell shares of Berkshire Hathaway. I’m moving from stocks to index funds and Berkshire is the next one on the chopping block.
–max out our 401(k)s. I’m fortunate because the blog makes money, so I can still contribute. So does Mindy. For both of us, it all goes into index funds.
That’s it.
As far as being more open, you need to look no further than here: https://www.1500days.com/my-investments/ Note that I need to update this page which I’ll do shortly after the first of the year.
Stay tuned for an update to this after I talk to Mindy.
Well, Mindy just woke up and she wasn’t sure what you’re referring to. Could you please mention the episode?
She thinks that you may have been referring to us selling individual shares of stocks and putting them into index funds which we’ve been doing. She also mentioned that we sold stocks to buy real estate. The coworking space is one example of this. Neither of these are examples of market timing though.
Great insight and congratulations on your multi-double comma achievement.
Three great points you make:
1. Focus on happiness. YOUR happiness. The problem is so many people focus on money when watching TV makes them happy. Others focus their attention on sports when they really want to be business owners. Too many of us are too distracted to know what we really want. Find your happy spot and get it rolling.
2. Even after you stopped trading your time for money, you still don’t watch much TV. The prevalent thought that “once I make my first million, I can sit around and do nothing” betrays the misguided mentality. A desire to do nothing will never motivate you to do what it takes to achieve anything.
3. Markets take a dump. Sometimes in a single day, sometimes over a year or two. That is NOT the same as gambling, as hard as some try to argue the point. Money does NOT equal value. You don’t lose money in the market just because the value of your shares have gone down. You only lose money when you try to cash out when values are down.
Keep up the great work. While I wish I had your drive in my earlier years, you continue to inspire even those of us in our later years who took a while to figure out what we really wanted.
All the best!
Todd
Todd! Thank you for the wisdom and kind words!
And it’s never too late. The thought I’ve had is that most never figure it out.