This will probably come off to some as a humble or not so humble brag, but I hope there are some lessons here. I am age 53 and recently crossed 10.2m nw with a 1.1m house so about 9.1 liquid currently invested 85/10/5.
I’m a high earner but started entry level. Climbed the corporate ladder and continually invested all I could each year for over 30 years now.
I tracked the numbers since the beginning of this journey, and the acceleration of compounding - even though I understand it - is unbelievable to me as I look back at my liquid net worth trend.
The first half of my wealth came from increasing my ability to earn and maintaining a highly disciplined investing plan, while avoiding lifestyle creep. The second half came from allowing a large, equity heavy portfolio to compound while continuing to invest consistently.
What’s crazy is that it took me almost 20 years to get to my first million. Then it doubled over the next four years. Again over the next 3-4, and now most recently it added about $3 million in the last 15 months bringing my liquid net worth to $9.1m.
I didn’t inherit money, hit crypto, or own a business. I had student loans, an entry level job that slowly grew into a very high income. Starting pay was $25k, and slowly climbed to $800k today. The high numbers are only very recent. There were levels to this. Your career can compound just like your money does, but that’s another post for another day.
I maxed my 401(k) every year, invested as much as I could into taxable accounts, and kept my lifestyle well below my income. Looking back, I estimate I’ve invested roughly $4 million to $4.5 million of my own money over my career - most of it back end loaded given my earnings growth - and the rest is just market appreciation and compounding.
At 25 a $10k portfolio growing 10% a year felt pointless. At $2 million, a good year might add a couple hundred thousand. At $9 million, a 10% year is now $900k. The dollar swings start to feel surreal. Couple that with some decent stock picks as hot sauce on top of my mostly index fund approach, and strategically shifting my weight from 60-40 up to 90-10 during dips as I bought all I could, then back to something more conservative again when markets felt overheated. I’ve always been at least 50% equities, and never less than 10% cash and bonds.
I’ve averaged about a 12% CAGR on my investments while adding roughly the equivalent amount of my own money over time.
Focus on your income. Grow your value so you can command a premium for your work. You can’t invest what you don’t have, and you cannot likely get here without a steady, growing income in parallel to your investment timeline.
Invest all you can of the rest. Make it mostly a passive activity. Just let time do its thing as you focus on growing your career or your business and raise your family if you choose to have one.
When you’re 30 and trying to pay off student debt, pay down a mortgage, change diapers and juggle a career, it is hard to believe that compounding eventually takes over. Maybe your number is not $10m. That’s fine. Everyone’s path is different. But it almost certainly takes a lot longer than you expect… and then it happens much faster than you ever imagined.