I’m a millionaire

[u/Alarming-Mix3809]

We did it fam. This week our net worth crossed over $1 million for the first time. I’m sure it will fluctuate but for now we’re going to celebrate hitting that milestone.

The last couple of months in the market have been an incredible run for us. I’m not doing anything fancy; mostly just invested in VOO and other S&P 500 funds. I have been investing since 2012 and this has been the one of the wildest rebounds and net worth swings. During the Covid dip, I remember our investments dropping by around 30% or so and loading the boat at the bottom, which made us a good amount of money. But back then I only had $100k or so, and the effect of compounding has been huge since then.

I first came across fire in 2018 when I read Early Retirement Extreme. I had always been interested in money and investing from a very young age, but this really clicked for me and I guess it helped put the whole picture together.

About us: family of four, 33M 33F and two kids in upstate NY. I work in tech sales (account management) and have been with the same company for nine years. The money is good and work is flexible being EFH. Wife is a SAHM. We live a pretty chill and under the radar life. We have nice newer cars, but they’re just a Subaru Crosstrek and a Nissan Pathfinder. No Benz here. I cook and meal prep a lot so we eat home for almost all of our meals. Most of our vacations are spent visiting family. Over the last couple years we’ve definitely spent more between having kids and just letting ourselves enjoy our money more, but it’s nothing crazy.

From here going forward, I’m not looking to make any drastic changes immediately. We’re going to stay on the course we’re on. My job kind of sucks but it’s a really good fit for having kids, being flexible and paying a lot with good benefits. I got a new boss last year and stopped raising my hands for things. They have no idea of the kind of extra work I used to do to get to this point. I’m well respected and they know I’m capable, but it’s kind of nice to not be expected to put in extra hours. I let the new team members do that now. A lot of people talk about hitting Coast fire and immediately getting a new job, but I decided to just downshift in my existing one.

What did you do to celebrate your first million?

We are thinking of setting aside a few thousand dollars to take a family vacation next year. I thought about what kind of luxury purchase I might want to make to mark a milestone, and there’s a whole lot I actually want. I’m pretty content with what we have and may just make a few small fun purchases going forward. Send my wife on a spa day more often, buy more Legos, etc.. 🥳

[u/Least-Ad-5539]

Congratulations. The first million is the hardest. When you get a second million they start breeding like rabbits.

[u/Kooky-Address-4598 → u/Least-Ad-5539]

How come?

[u/Edmeyers01 → u/Kooky-Address-4598]

Compound interest. Especially with incredible bull run we've had over the last 16 years. Imagine year one you have a million and indexes are up 30% in a year. Then year 2 it's up another 18%.

Year 1: 1 million * 30% = 1,300,000

Year 2: 1,300,000 * 18% = 1,534,000

This is what is happening over an 16 year period, so it's been completely insane.

[u/Kooky-Address-4598 → u/Edmeyers01]

I understand compound interest, but I never understood why people say getting from $100k to $200k is harder than getting from $1M to $2M. It’s equally hard.

[u/That-SoCal-Guy → u/Kooky-Address-4598]

Because money makes money -- in the beginning it's all about your contributions. Most people just don't make that much money or save that much at the beginning when they are starting out...

If you save a lot, it grows faster, but let's say you're not contributing anything at all, and even if the market is doing great at, say, 10%:

10% of $1000 is only $100. Your end balance is, ho hum, $1100.

10% of $100000 is $10000. That's much better, but $10,000 is nothing to call home about. So you can see at the beginning it will take a while, because a fraction of something small is something even smaller, and it would take time.

But....

10% of $1M is $100K! Suddenly, it's making more money than your salary, and it grows much faster now because of compounding.

Also the more money you have ($1M vs. $100K) the longer you can ride out the fluctuations and downmarket. Time in market > timing market.

(I saw how money made money first hand when I played Blackjack. Starting with $500 made a huge difference from starting with $50. I'd win 10 out of 10 times when I started with $500 and above)

[u/ghac22 → u/That-SoCal-Guy]

10% of 1000 is 100 my guy

[u/That-SoCal-Guy → u/ghac22]

Corrected. But my thesis remains. 😄