It seems almost impossible at first but I hear so many people make it. After the first million, does it become easier to grow net worth significantly faster to 2m and so on? What was the turning point in making wealth or what change? I am genuinely curious about how it’s done, coming from a family who always lived a low income lifestyle, and dreaming of landing a tech job. It seems the promise of tech as a breakthrough moment to acquiring real wealth is a lie or I missed the bus. Everything I earn is taxed into oblivion and I barely have enough yoe 5 TC 145
People making 1mil in Bay Area live in 2million rundown houses and pay half of their salary to keep the lights on or remodel the house. If you make 150k in LCOL you are living better lives than them
Got rich dad? Or rich wife?
Neither🥲
Then get a rich husband
145k in TX(?) is king's salary, you should have no problem buying a house and affording a family. Here in the bay, paying the mortgage on a starter house with bad schools can still suck up your entire paycheck. It's good for single people renting an apartment with no obligation, but owning a house and starting a family is very difficult, even with high TC.
A “kings salary”, what are you talking about? Maybe in 2005 ha Have you been in Dallas or Austin? 145k is not going to help you buy any homes in anywhere but the worst areas there.
I think OP's office in TX isn't in one of those big cities you mentioned
Borrow $5m, lose $4m.
TC is back loaded. Takes time to build before reaping benefits. Another point, not all Tech jobs are created equal. Equity is where the gravy is. Join a FAANG or other company that pays in liquid equity, and lots of it.
This person gets it. I made ~100k/yr for almost 8 years in HCOL then got lucky and landed at Airbnb before IPO. TC jumped to ~550k and NW went from a couple hundred k to ~1.2mm. Max your 401k, mega backdoor if you can, and then invest all your RSUs in index funds. It’s not sexy, but it works. Keep grinding OP.
+1 to mega back door - roll it into a self directed Roth, and invest in tax inefficient vehicles ( high interest investments for example) without any tax hit.
Buy LEAPs of the magnificent seven and roll them before expiry. Keep this up and you’ll make your first million in a few years. Then swap to holding just stocks in the magnificent seven, and start over again with the LEAPs to make your second million. I did this myself and am financially free in under 5 years.
Isn’t this too risky to lose money?
You only lose money if you sell, or don’t have a stable income to perform rolls. I did this through the previous bear market.
I hit 1.5 like a few months after hitting 1
How do you do that? Say u have 1mn in stocks, that will become 1.5mn in acfew months without touching it? Or investing more on top of 1mn?
Timing + continued investing. Those "few months" is March - Nov. 2020, or even most recently Oct. 2022 - July 2024. He probably got a new job during those months too and was able to invest like 5K-10K /month. Then 1M -> 1.5M is super easy when market has an upswing for a few months.
Keep annual expenses under $30k (yes, in Bay Area), dump all savings into index funds and hope it goes up. My TC has slowly increased from 120k to 180k over the past decade. Crossed 1m NW in about 8 to 9 years.
Where do you live to have such low expenses? A cardboard box below an underpass?
Single, no kids, live with roommate in South Bay, travel once a year, eat out only on weekends. Splitting rent in half helps the most.
1st 100k is the toughest and it is generally faster growth if you are investing your money well. Looking at the math, if you have $100k invested, at a 10% return you make $10k a year. But at the same time when you have $1M invested and you make the same 10% return, you make $100k a year. And if you reinvest those returns then going from $1M to $2M will be much faster. It all depends on how you invest money. If you have the same money in hard cash you'll end up losing money to inflation. The best is looking at your personal situation and deciding what percentage you want in low medium and high risk investments and your NW will grow accordingly. Also look at tax saving investments as a good place to start.
I completely agree with the first $100k being the hardest. Once you have that, you have so many options for viable service-based businesses that are simply out of reach for most people. These service-based businesses aren’t glamorous, but returns of 24% are not uncommon for a well-run business. With that kind of acceleration, it’s a relatively simple manner to grow your wealth. Competition isn’t as difficult as these models are difficult to scale and don’t work well if supporting a lot of leadership bloat. With that said, there’s a ton of venture capital finally moving into this space. If you find a model that works and can rubber stamp it in multiple areas or multiple disciplines, then it can go for a long time. Once you reach your limit, you then turn to traditional investments that are proven to operate at scale. It took me six years to get to $100k. It took another six to get to a million. Seven years later, we’re coming up on five million and I’m starting to consider timelines for retirement. I love my job, but if it disappears tomorrow, it will make virtually no difference. But the trade off is that I socked back everything I could early career.
@ycCL50 - interesting take on service based businesses, I've mostly focused on stock and ETF investments coming up to $1M. Would be keen to know what type of service based businesses have worked for you and how much time investment is it on your end?
My opinion: 500k to 1million is 2x, 1mil to 2mil is also 2x, so no. It's only 2m to 3m, it becomes easier
2m is the new million u mean?
Inflation sucks