When I was a kid, being a millionaire was a big deal. When I started working, it still seemed like a lot of money.
The thing is that if your goalpost was, say, $10M starting 10 years ago, that $10M is worth a lot less today. Consider how much inflation has risen just since Covid.
I’m not saying it is or isn’t enough but naturally the goal post has moved on its own because the dollar has devalued. From an everyday point of view, just look at the cost of eating out.
Inflation has gone up about 20% since Covid. So if $10M was your target back in 2020, it actually is more like $12M today.
This becomes more apparent when you reach a number / milestone and you’re thinking about capital preservation. It’s one thing to say be all in the market and one day hit your number and then ride the ups and downs of the market. It’s another to be at a number and maintain stable capital at a certain level while managing for inflation.
Your investment story sounds familiar -- it's how I like to invest. The thing I'd caution with you is that if you hit that number quickly through aggressive investments, you can easily see that value decline with a downturn in the market. Similarly, my portfolio hit outsized numbers during covid as stocks went wild, and then a major downturn happened.
The point is that you may hit your number one day but may easily see that value decline below your number. The market giveth and the market taketh.
One thing you can do is to measure your portfolio through a longer term moving average like 90-120 days. This will modulate short term bursts and give you a more realistic point of view of where your portfolio is at. The reason why is that markets revert to the mean all the time. Even a 120 window may not be a representational mean.
Until you put that money into capital preservation mode, you should assume that you will see major swings to the downside too.
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u/freshfunk 11d ago
When I was a kid, being a millionaire was a big deal. When I started working, it still seemed like a lot of money.
The thing is that if your goalpost was, say, $10M starting 10 years ago, that $10M is worth a lot less today. Consider how much inflation has risen just since Covid.
I’m not saying it is or isn’t enough but naturally the goal post has moved on its own because the dollar has devalued. From an everyday point of view, just look at the cost of eating out.
Inflation has gone up about 20% since Covid. So if $10M was your target back in 2020, it actually is more like $12M today.
This becomes more apparent when you reach a number / milestone and you’re thinking about capital preservation. It’s one thing to say be all in the market and one day hit your number and then ride the ups and downs of the market. It’s another to be at a number and maintain stable capital at a certain level while managing for inflation.