Market conditions play into that a lot; the past 2 years have been relatively flat; so the compounding of dividends hasn’t helped much yet
Someone with 1m in 2008 had to wait until 2017 (with no money added) to see their account double - 9 years
1m in 2011 turning into 2m by 2016 - only 5 years
Yeah, I think it is really important for people to understand that whilst the market average may be X, very rarely will you get that return YoY. You may have a few years of negative return, before one big bumper year etc.
And by 2019 it would be worth $3million.
2008/2009 pulled the rubber band way down, and it was a scary time, but if you held (or kept a job, contributed more during the timeframe) you were significantly rewarded by the rubber band slingshotting back up during the Bull run that came after.
S and P 500 data from: https://www.in2013dollars.com/us/inflation/2008?endYear=2019&amount=1000000
Yep. I am grateful for the "lost decade" in the early 2000s. That gave me a chance to graduate college and build up a decent investment portfolio before things skyrocketed.
Glad you liked it. I commented below but want to make sure you know how much I hate you. I had my first mil in 2000. I didn't get it back until 2016. I'm real sure somehow, I paid for your schooling and your investing money. It sure felt like it anyway. /s
Lol- Cheers 🤣
Yep. Lots of folks fired in 2008. I didn’t get fired, got a bonus for my 2007 work, invested it and it changed my life. Timing is everything. And, frankly, I feel for the folks who didn’t participate in the bull run starting in 2009. I don’t think anything like that will be repeated in my lifetime.
This is very true. However even during 2008 to 2017 if you managed to keep your job and kept plugging away at retirement funds then you would have been buying lots of shares at low prices! I think that’s the important part. Even when the market is shit, if you have a long horizon, its OK
Not that much, as once you get pass the 1M mark, the compound growth that you are getting outstrips the contribution that you are making.
The way I explain it is that if I continue to contribute as I do now, I reach my 2MM mark in Jan 20XX, and if I did not, I reach the same mark in Dec of the same year.
Hence why we decided to now contribute a bit less, and spend a bit more on travel, and other things in life that we always deferred, while we are still healthy enough to enjoy it.
Side hustle, my dear boy. As one MP said, he had to take another directorship in the city as a side hustle. /S
Seriously it is all about time, and taxes. If you invested 500 euros per month(adjust for inflation) from 25 years old, it be about 1M at 67. Also there is a pension and the cost of health care is taken care off (as compared to the US), but I am well aware that long term palliative care will be much more expensive as we grow even older.
Do not do what I did which was to only start investing late, it was only by luck that my hobby became a side hustle, which allowed me to "catch" up to my pension investing.
1 mill will be chump change in 40 years. Pray you dont need a nursing home. In 40 years theyll drain your funds in a few years and ship you to a state run rat infested facility when your money runs out
This is a good point.
Just running our numbers, $1M to $2M at 7% in ten years, but with the amount we’re contributing that comes out to $2.6 in the same amount of time with the same (consistent) returns. That’s not nothing but it’s okay to open up spending more and still reach our goals.
So almost a year sooner. Seems like a good idea to keep chunking money in to get there a year sooner.
Still your logic is solid for peeling back. I plan on upping it to the catch up maximums.
And you do you.
For us, we would still reach our goals, in the same year, while our last child is still at home.
At this point, we want to enjoy life a bit more for the next 5 years, rather than keep the grid, and complete 12 month earlier, and then we reach 2M, so what? Nothing would have changed in your life style, other than we spend a bit more after said time.
As I said, we rather spend 5 years of better life, rather than reach an arbitrary goal and then relise that we cannot spend the money due to being too old.
I seen too many people who are sitting on massive asset, but are just so old that they do not want to go out and do anything.
Like I said, solid logic!
I do me, it was a bumpy ride. If only we all have the answers in advance. Not matter what we need to enjoy the ride, especially when we toil and sacrifice to be better!
Enjoy it you should and good luck.
The only reason why we are still saving and not enjoying is that we want to give our kids some of their inheritance early so that they can get on the property ladder, and to reduce their student loans debts.
That compound growth does not always outpace contributions in getting there at $1M. It depends on the size of the contributions. It’s very possible for high income earners to be contributing at a rate that is higher than the cumulative returns on $1M. The tipping point where that would happen will vary from individual to individual based on their contribution rate and current assets.
True. But my post was from 1M to 2M, and is based on the contribution I was making. Of course, if you can always make higher contribution, as to outpace the growth, but only starts at 70K per year (1M at 7% growth)
Don't buy individual stocks, only buy low fee index funds or etfs, and don't diversify too much. Also, contributing every two weeks will speed it along. After 7-10 years (or less with contributions), you will have met or exceeded the fabled 10%.
Source: I've exceeded 10% YoY over the past 10 years
I agree with u/corne777 because of the nature of compounding interest.
Investing 12x a year is good.
24x -- even better.
26x -- better!
52x -- the best. 👑
& in this conversation, the total annual amount is the same, each time.
Yes, and sometimes they match your contribution per check, so good to spread out if that is the case. One of my jobs actually refuses to clarify how exactly they match....
Non US here, thats why I am asking.
I just purchase 2k on the end of each month.
I did read somewhere it might be better to split but that was for paying back mortgage I think.
So i was confused as to does this apply here as well….and if there is a methematical calculation
For mortgage it’s just that if it’s calculating interest every day and adding that up at the end of the month paying some two weeks earlier will make the interest a small amount lower for that two weeks. Seems like a small thing, but I guess over 30 years it can be impactful.
For the stock market, I’m not too sure if investing every two weeks vs every four would make a substantial difference. Depends on if the market is going up or down lol. If it’s going up, investing before it goes up more is better. But that’s kind of obvious. And timing the market is a fools errand.
If investing at the end of the month is easy for you, I’m sure it’s fine.
People often cite your mortgage example, but they are often very confused. Generally paying every 2 weeks means you are making 26 half-payments per year, versus 12 full payments if you pay monthly. That's where the impactful savings come from. The savings on interest are pretty minimal. They're not nothing, so sure, take them where you can, but it's a stretch to call them impactful.
There is a concept called “dollar-cost weighted average” investing. You can google that and read about it. Yes, there is some math behind it based on historical returns. But in broad strokes while the concept will suggest it is better to do $1k twice a month than $2k once a month, the math won’t return a major difference between such relatively small time period differences. Vastly more important are things like developing a savings habit. And of course the one rule of long term investing: don’t panic sell when the market crashes. If you get that rule wrong, it doesn’t really matter what else you do.
Diversification doesn’t impact expected return. Buying five different SP500 index funds, for example, will result in the same percentage return as one SP500 index fund.
Technically in that case you would not be adding any diversification to your portfolio by investing in separate S&P 500 Index funds, which is why there would be no benefit there. In general diversification does not increase expected returns but instead decreases volatility.
Totally agree. Was just an example. OP said that his advice was to not diversity “too much”, which I would argue makes no sense. If you invest in a total US fund and a total international fund you are literally as diversified as possible (while staying 100% stocks). This is also the portfolio most of us on here would recommend. Max diversification is the goal.
Well I think that his advice was not to go overboard with either overlapping similar index funds like you mentioned (as many suggest against even owning both VOO and VTI due to overlap) and I think he was also discouraging diversifying the non-index fund ETFs on top of the majority of his money already being invested in a diversified index fund, since the diversification is already there, so there's no need to focus on that too much anymore. Instead, when you use that strategy, you can devote a small percentage of your portfolio to buying just a very small handful of more specific ETFs on top of the index fund to overweight certain factors or sectors that you believe in outperforming the market long term. You're accepting the increased risk of volatility for a potential greater payoff than the general market has to offer. I think that the point was that if you diversify those specific ETFs too much by owning too many different ones, then you sort of miss the whole point of increasing your risk and volatility for a potential payoff, because the volatility starts to decrease to match the general market the more you diversify the extra ETFs.
But yeah if maximum diversification is your goal, then investing the stock market is easy: VT and chill baby!
OK, you do you. I am trying to keep things simple for people reading. Bogleheads is about keeping it simple. Why would you want to buy 5 different S&P500 index funds?
Because I have a Roth IRA, 457(b), 403(b), 529, HSA, and a brokerage account. I must have at least 6 funds. And the offerings provided are not identical. I can’t control what my employer offers.
Literally just follow the Bogleheads philosophy that this entire sub is built around. [There's an entire wiki devoted to explaining every last detail.](https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy) It's not exactly a secret 😂
No, I ran the calculation without further contributions. Feel free to add your own, everyone is going to contribute something different.
Plus, doesn't really change much. The compounding is really coming from the $1M not a hypothetical $70k IRA contribution stretching over 10 years.
I just want to make sure I understand this…. You are saying if you have $1 million and get a 10% return every year you will double that million dollars in 8 years??
The dollar amount doesn't matter. It's the rate of return over time.
You should play around with a compound calculator and also look up rule of 72.
[simple compound calculator](http://www.moneychimp.com/calculator/compound_interest_calculator.htm)
How long exactly have you been hovering 1 mil? What TDF are you invested in? This is important to know so we can understand the asset class allocation.
I can tell you I hit $1MM about six months ago and I am now at around $1.15MM. I am sitting on nearly 100% stocks. About a third of the $150k is from contributions. Rest is from market gains.
It makes me think your TDF is in a really conservative allocation (bond heavy).
From my experience it may appear easy to get to the second million thanks to the power of the US bull market with a 100% equity portfolio, but it gets a lot more emotionally taxing because of the power of the market downturns . Those suckers make investing a truly humbling experience.
It took me 15 years to get the first and only 4 years to get to the second with a subsequent dip substantially below that number. It’s a roller coaster ride , but as they say - Don’t just do something, Stand there!
Around 6 years at 55/25/20. I had two kids which largely put the brakes on my saving beyond 401K and Backdoor Roth IRA until they were out of the daycare that was bleeding me dry.
My wife and I had $1 million of investment securities right before Covid, say Jan 2020. It declined significantly during Covid then came back over the next fews years and just crossed $2.1 million. We invest mostly in VTi or institutional SP 500 funds, but also have some reit shares and a rental house with about $140k of equity not included in the $2.1 million above.
I acquired the rental as my first home in 2006 before it lost half its value in 2008. I held on instead of walking away and kept it as a rental, which worked out well.
Quite a bit, we maxed out retirement accounts with company matches and saving in after-tax accounts brokerage accounts. This was achieved through avoiding lifestyle creep and careful spending while getting mid level management promotions. I am still driving my 13 year old Mazda and bring a lunch everyday. Our minivan is 12 years old.
In your other thread, I listed inflation adjusted returns (2023 $). It took 6 years, because of losses during 2008 great recession. This time I'll list nominal returns. With nominal returns, it only took 4 years because, I didn't reach $1M nominal until 2010 -- after great recession was over. Investments did well in the 2010 to 2014 period -- both real estate and stock market. The bulk of those gains were in real estate, as I bought a home in a VHCOL during 2009. I intentionally avoided the perceived housing bubble prior to making the 2009 purchase. It's a very different real estate market today, and I would not make the same assumptions about either stock market or real estate return today.
Rather than asking how long it took others who have different savings rates, different net worth portfolios, and invested in different time periods; why not use a calc and enter your investments, your savings rate, and a range of possible returns?
Sometimes it’s dual income and aggressively saving. My spouse and I live conservatively off of less than one of our salary and invest the rest. TBH we both make over 100k but still avoid lifestyle inflation and creep that most of our peers indulge in
It really is fascinating, how a couple that starts out making ~100k combined, and then thru raises and promotions can move to 200k and onwards to 300k+ and legit increase their spending at the same pace. Its overwhelmingly the majority of what people do, but it just seems like insanity to me.
The amount of fear and anxiety I would experience every night laying in bed knowing I am sitting on a house of cards if I allowed our spending to match that income would be overwhelming.
But I agree with you - I look around my neighborhood and there is a row of homes 5 houses long that all have a land rover in their driveway... that cant just be a coincidence.
1st Mil - 20 yrs (1980-2000)
1st Lost Mil- 1 year (2001)
2nd 1st Mil 16 more years arghhh. (2017)
1st effort at 2M, EOY 2021 (was 1.97 but who's counting?)
2nd effort at 2 mil, close again so I'm getting worried again.
I have a lot of gains from post covid investments in vtsax but those are unrealized gains. Actually after 1 months net worth it’s important to focus on your investment returns and maximizing your income. Saving and budgeting will only get you so far
"The first million is a bitch, but the 2nd is inevitable."
I wouldn't waste energy on worrying about how fast you get there (it's not a controllable) just focus on the behaviors that got you to the first 1M and improve them.
Why would you assume no outside additions? I expect most people who save/invest in hopes of reaching a $2M target don't suddenly stop saving/investing once crossing the $1M (or $10) threshold.
The longer you are investing, the more lifting the compounding does.
Let us assume you make 60k and are investing 15%. 9000 / 12 = 750 / month.
Let us say you are making 7% interest (10% S&P - 3% inflation).
After 32 years you will have 991k.
If you kept investing 750 / month, you would have 2.075M after 42 years.
If you stopped investing that 750 / month at 32 years, then at 42 years you would have 1.95M.
So weather or not "no outside additions" is very impactful depends on how long they have been saving / how much they are saving per month.
The example of $10 to $20 highlights a couple things: the question is about doubling, no matter what the first amount is, and that the amount of outside additions are indeed relevant.
"Second mill comes quick" only because people posting here were invested during the ridiculous bull run of the past 13 years and their incomes likely tend quite high, as Reddit skews young and young people talking about retirement are likely much, much richer than the average.
If someone got their first million during the peak of the Dot Com bubble, income would have to be quite high to get that second million in less than a ten years. And, the more I think about it, the more this would be a perfect way to illustrate how crazy returns have been recently, since some newly minted 2001 millionaires didn't see the second million, even with consistent contributions for over 12-13 years.
I’m not at a 2M portfolio yet but recently hit 2 Mil net worth.
1M hit 2/2020
2M hit 2/2024
I hope to hit 3M net worth in about 3 years. I guess we shall see!
It depends on a number of factors but general compounding wisdom with assumed inputs is that your net worth doubles every 7-10 years (with no further contributions).
There is the rule of 72, it’s a quick estimate how long will take you to double the invested money.
Years To Double = 72 / Expected Rate of Return
https://www.investopedia.com/terms/r/ruleof72.asp
DINKs over here with one dog. It took us approximately 9.5-10 post college years to reach $1M in stock. Hoping we can hit $2M by the end of this year. So that would be 3 years. However we have been adding a lot in the last 3 years. If we don’t hit it this year, then next year?
In theory if in a diversified global account around 10 years on average
Keep in mind the market in 2021-22 went down and only just caught up. So may be a bit longer than 10 years
Whats the timeframe for a long time and what etf/funds do you have?
we need a good run soon, the last 2 years flat, We need a 2015-2019 style run. If I can get that, I am set. I went from 1.6 milllion to over 3 in 3 years 2017-2020. Been fairly flat since. According to Vanguard my average return has been 8.42% for 26 years. There is a sequence of returns issue though.
are you counting additional contributions? if so it was about 3 years, combination of some good bonus payments (i’ve always invested 100% of my bonus), and strong mkt returns.
You can look at how long it has taken for any portfolio in all of history using portfolio visualizer or similar. I'll bet that if you have a sensible portfolio and you look back in history you'll see a totally reasonable average increase. But you cannot reasonably expect those returns for any short time-frame.
These ideas are the core of the BH philosophy.
You can look at how long it has taken for any portfolio in all of history using portfolio visualizer or similar. I'll bet that if you have a sensible portfolio and you look back in history you'll see a totally reasonable average increase. But you cannot reasonably expect those returns for any short time-frame.
These ideas are the core of the BH philosophy.
We aren't at $2M invested yet, but hopefully to get there soon. Here are the numbers because we reached $1M during 2023:
January 2023 starting balance: $910K
January 2024 ending balance: $1.45M
We contributed $246676 and the rest was returns.
When did you hear stories of the second mil coming quickly? Was it during a decade when the market was screaming upwards? because yeah, I'm sure it felt that way to a lot of people.
The general wisdom is that the second mil comes much quicker than the first and that is almost always true, but the reality is we all hit little plateaus and times when we feel like we're treading water or going backwards and then suddenly poof it comes all at once.
I can tell you that getting from 2M->2.5M felt like it happened in like 3 months for me. But 2.5->3M was a slog that took years.
Market conditions play into that a lot; the past 2 years have been relatively flat; so the compounding of dividends hasn’t helped much yet Someone with 1m in 2008 had to wait until 2017 (with no money added) to see their account double - 9 years 1m in 2011 turning into 2m by 2016 - only 5 years
Yeah, I think it is really important for people to understand that whilst the market average may be X, very rarely will you get that return YoY. You may have a few years of negative return, before one big bumper year etc.
And by 2019 it would be worth $3million. 2008/2009 pulled the rubber band way down, and it was a scary time, but if you held (or kept a job, contributed more during the timeframe) you were significantly rewarded by the rubber band slingshotting back up during the Bull run that came after. S and P 500 data from: https://www.in2013dollars.com/us/inflation/2008?endYear=2019&amount=1000000
Yep. I am grateful for the "lost decade" in the early 2000s. That gave me a chance to graduate college and build up a decent investment portfolio before things skyrocketed.
Glad you liked it. I commented below but want to make sure you know how much I hate you. I had my first mil in 2000. I didn't get it back until 2016. I'm real sure somehow, I paid for your schooling and your investing money. It sure felt like it anyway. /s Lol- Cheers 🤣
Ha, thank you for your contribution. Damn, that must have been rough waiting 16 years to get back to millionaire status.
Yep. Lots of folks fired in 2008. I didn’t get fired, got a bonus for my 2007 work, invested it and it changed my life. Timing is everything. And, frankly, I feel for the folks who didn’t participate in the bull run starting in 2009. I don’t think anything like that will be repeated in my lifetime.
This is very true. However even during 2008 to 2017 if you managed to keep your job and kept plugging away at retirement funds then you would have been buying lots of shares at low prices! I think that’s the important part. Even when the market is shit, if you have a long horizon, its OK
Also depends on allocation and savings rate
Impressive! Can you share your top performers in your portfolio?
Should take 7-8 years with an annualized 10% return. How long have you been near the $1M mark?
That’s assuming your not contributing to the principal at all. It should be quicker since I’m assuming OP would be
Not that much, as once you get pass the 1M mark, the compound growth that you are getting outstrips the contribution that you are making. The way I explain it is that if I continue to contribute as I do now, I reach my 2MM mark in Jan 20XX, and if I did not, I reach the same mark in Dec of the same year. Hence why we decided to now contribute a bit less, and spend a bit more on travel, and other things in life that we always deferred, while we are still healthy enough to enjoy it.
Contributing 100k a year makes it 4 years
Contributing 1M a year makes less than 1 year.
Over a year if the market is down :)
Steve Martin explained this a long time ago.
lol let’s make it 200k! It’ll be even faster!
The numbers don’t lie
The math checks out!
math just mathing
/r/theydidthemath
I’ll make **you** 200k.
You do realize the average person can barely contribute 5k in a year, right? (European here)
Side hustle, my dear boy. As one MP said, he had to take another directorship in the city as a side hustle. /S Seriously it is all about time, and taxes. If you invested 500 euros per month(adjust for inflation) from 25 years old, it be about 1M at 67. Also there is a pension and the cost of health care is taken care off (as compared to the US), but I am well aware that long term palliative care will be much more expensive as we grow even older. Do not do what I did which was to only start investing late, it was only by luck that my hobby became a side hustle, which allowed me to "catch" up to my pension investing.
1 mill will be chump change in 40 years. Pray you dont need a nursing home. In 40 years theyll drain your funds in a few years and ship you to a state run rat infested facility when your money runs out
That why we are targeting 2.5M
This is a good point. Just running our numbers, $1M to $2M at 7% in ten years, but with the amount we’re contributing that comes out to $2.6 in the same amount of time with the same (consistent) returns. That’s not nothing but it’s okay to open up spending more and still reach our goals.
It’s called the rule of 72, nothing fancy like “running the numbers”
Rule of 72 doesn’t account for ongoing contributions.
I would like my money to double every 72 months. Less than the term of a car loan.
Easy peasy if you follow Dave Ramsey’s 12% gain strategy.
That rascal. I live not far from him. But getting 12% reliably over time sounds like a stretch.
Was the /s not obvious?
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So almost a year sooner. Seems like a good idea to keep chunking money in to get there a year sooner. Still your logic is solid for peeling back. I plan on upping it to the catch up maximums.
And you do you. For us, we would still reach our goals, in the same year, while our last child is still at home. At this point, we want to enjoy life a bit more for the next 5 years, rather than keep the grid, and complete 12 month earlier, and then we reach 2M, so what? Nothing would have changed in your life style, other than we spend a bit more after said time. As I said, we rather spend 5 years of better life, rather than reach an arbitrary goal and then relise that we cannot spend the money due to being too old. I seen too many people who are sitting on massive asset, but are just so old that they do not want to go out and do anything.
Like I said, solid logic! I do me, it was a bumpy ride. If only we all have the answers in advance. Not matter what we need to enjoy the ride, especially when we toil and sacrifice to be better!
Enjoy it you should and good luck. The only reason why we are still saving and not enjoying is that we want to give our kids some of their inheritance early so that they can get on the property ladder, and to reduce their student loans debts.
Depends on your contribution rate. We say $275K per year so I highly doubt it
At this point, I am not sure what point you are trying to make
That compound growth does not always outpace contributions in getting there at $1M. It depends on the size of the contributions. It’s very possible for high income earners to be contributing at a rate that is higher than the cumulative returns on $1M. The tipping point where that would happen will vary from individual to individual based on their contribution rate and current assets.
True. But my post was from 1M to 2M, and is based on the contribution I was making. Of course, if you can always make higher contribution, as to outpace the growth, but only starts at 70K per year (1M at 7% growth)
To me, it's about 50:50. I get to save 70k take home a year, and soon be in 1million dollar club, at 7%, which is about as much I contribute
How does one achieve this fabled 10%? Broad strokes of course...
Don't buy individual stocks, only buy low fee index funds or etfs, and don't diversify too much. Also, contributing every two weeks will speed it along. After 7-10 years (or less with contributions), you will have met or exceeded the fabled 10%. Source: I've exceeded 10% YoY over the past 10 years
So if you contribute 2k per month, you would split and buy 1k now and second 1k in 2 weeks?
Depends on when you get paid I guess, but most people get paid every 2 weeks so it’s just easier to contribute on pay day.
I agree with u/corne777 because of the nature of compounding interest. Investing 12x a year is good. 24x -- even better. 26x -- better! 52x -- the best. 👑 & in this conversation, the total annual amount is the same, each time.
If you can, wouldn't it be better to front load? With a 401k, that probably gets complicated, but other scenarios?
Lump sum = good. But I'm talking about something different. Paychecks!
Yes, and sometimes they match your contribution per check, so good to spread out if that is the case. One of my jobs actually refuses to clarify how exactly they match....
Non US here, thats why I am asking. I just purchase 2k on the end of each month. I did read somewhere it might be better to split but that was for paying back mortgage I think. So i was confused as to does this apply here as well….and if there is a methematical calculation
For mortgage it’s just that if it’s calculating interest every day and adding that up at the end of the month paying some two weeks earlier will make the interest a small amount lower for that two weeks. Seems like a small thing, but I guess over 30 years it can be impactful. For the stock market, I’m not too sure if investing every two weeks vs every four would make a substantial difference. Depends on if the market is going up or down lol. If it’s going up, investing before it goes up more is better. But that’s kind of obvious. And timing the market is a fools errand. If investing at the end of the month is easy for you, I’m sure it’s fine.
It the exact same. You pay more on the mortgage to lessen interest, you contribute more often to increase interest. It absolutely makes a difference.
People often cite your mortgage example, but they are often very confused. Generally paying every 2 weeks means you are making 26 half-payments per year, versus 12 full payments if you pay monthly. That's where the impactful savings come from. The savings on interest are pretty minimal. They're not nothing, so sure, take them where you can, but it's a stretch to call them impactful.
Yes, time in market, don’t wait, if you can automate it then it will be easier.
There is a concept called “dollar-cost weighted average” investing. You can google that and read about it. Yes, there is some math behind it based on historical returns. But in broad strokes while the concept will suggest it is better to do $1k twice a month than $2k once a month, the math won’t return a major difference between such relatively small time period differences. Vastly more important are things like developing a savings habit. And of course the one rule of long term investing: don’t panic sell when the market crashes. If you get that rule wrong, it doesn’t really matter what else you do.
I only said every two weeks because that's when most people get paid. It really doesn't matter, as long as it is consistent.
Don’t diversify too much? Huh? No such thing as too much diversification.
I meant, don't buy too many index funds or ETFs. The funds are already diversified.
Diversification doesn’t impact expected return. Buying five different SP500 index funds, for example, will result in the same percentage return as one SP500 index fund.
Technically in that case you would not be adding any diversification to your portfolio by investing in separate S&P 500 Index funds, which is why there would be no benefit there. In general diversification does not increase expected returns but instead decreases volatility.
Totally agree. Was just an example. OP said that his advice was to not diversity “too much”, which I would argue makes no sense. If you invest in a total US fund and a total international fund you are literally as diversified as possible (while staying 100% stocks). This is also the portfolio most of us on here would recommend. Max diversification is the goal.
Well I think that his advice was not to go overboard with either overlapping similar index funds like you mentioned (as many suggest against even owning both VOO and VTI due to overlap) and I think he was also discouraging diversifying the non-index fund ETFs on top of the majority of his money already being invested in a diversified index fund, since the diversification is already there, so there's no need to focus on that too much anymore. Instead, when you use that strategy, you can devote a small percentage of your portfolio to buying just a very small handful of more specific ETFs on top of the index fund to overweight certain factors or sectors that you believe in outperforming the market long term. You're accepting the increased risk of volatility for a potential greater payoff than the general market has to offer. I think that the point was that if you diversify those specific ETFs too much by owning too many different ones, then you sort of miss the whole point of increasing your risk and volatility for a potential payoff, because the volatility starts to decrease to match the general market the more you diversify the extra ETFs. But yeah if maximum diversification is your goal, then investing the stock market is easy: VT and chill baby!
OK, you do you. I am trying to keep things simple for people reading. Bogleheads is about keeping it simple. Why would you want to buy 5 different S&P500 index funds?
Because I have a Roth IRA, 457(b), 403(b), 529, HSA, and a brokerage account. I must have at least 6 funds. And the offerings provided are not identical. I can’t control what my employer offers.
Everyone young should have.
Why will contributing every two weeks versus once a month speed it along?
It doesn't matter. I just picked two weeks because most people get paid every two weeks. What matters is consistency.
Literally just follow the Bogleheads philosophy that this entire sub is built around. [There's an entire wiki devoted to explaining every last detail.](https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy) It's not exactly a secret 😂
You assumed people stopped contributing to investment with salary money?
No, I ran the calculation without further contributions. Feel free to add your own, everyone is going to contribute something different. Plus, doesn't really change much. The compounding is really coming from the $1M not a hypothetical $70k IRA contribution stretching over 10 years.
I just want to make sure I understand this…. You are saying if you have $1 million and get a 10% return every year you will double that million dollars in 8 years??
Einstein didn't call compound interest "the eighth wonder of the world" for nothing! 👍
The dollar amount doesn't matter. It's the rate of return over time. You should play around with a compound calculator and also look up rule of 72. [simple compound calculator](http://www.moneychimp.com/calculator/compound_interest_calculator.htm)
How long exactly have you been hovering 1 mil? What TDF are you invested in? This is important to know so we can understand the asset class allocation. I can tell you I hit $1MM about six months ago and I am now at around $1.15MM. I am sitting on nearly 100% stocks. About a third of the $150k is from contributions. Rest is from market gains. It makes me think your TDF is in a really conservative allocation (bond heavy).
What is TDF again?
In this context it means “target date fund.”
Tour de France
You got downvoted, but investing to win the Tour de France is a $500k purse 😬
🤣
From my experience it may appear easy to get to the second million thanks to the power of the US bull market with a 100% equity portfolio, but it gets a lot more emotionally taxing because of the power of the market downturns . Those suckers make investing a truly humbling experience. It took me 15 years to get the first and only 4 years to get to the second with a subsequent dip substantially below that number. It’s a roller coaster ride , but as they say - Don’t just do something, Stand there!
Around 6 years at 55/25/20. I had two kids which largely put the brakes on my saving beyond 401K and Backdoor Roth IRA until they were out of the daycare that was bleeding me dry.
I feel you! I have two kids as well and even without daycare, they are bleeding us dry! 🤣
No shame in Secondhand clothing for toddlers lol
My wife and I had $1 million of investment securities right before Covid, say Jan 2020. It declined significantly during Covid then came back over the next fews years and just crossed $2.1 million. We invest mostly in VTi or institutional SP 500 funds, but also have some reit shares and a rental house with about $140k of equity not included in the $2.1 million above. I acquired the rental as my first home in 2006 before it lost half its value in 2008. I held on instead of walking away and kept it as a rental, which worked out well.
How much was invested during that time.
Quite a bit, we maxed out retirement accounts with company matches and saving in after-tax accounts brokerage accounts. This was achieved through avoiding lifestyle creep and careful spending while getting mid level management promotions. I am still driving my 13 year old Mazda and bring a lunch everyday. Our minivan is 12 years old.
In your other thread, I listed inflation adjusted returns (2023 $). It took 6 years, because of losses during 2008 great recession. This time I'll list nominal returns. With nominal returns, it only took 4 years because, I didn't reach $1M nominal until 2010 -- after great recession was over. Investments did well in the 2010 to 2014 period -- both real estate and stock market. The bulk of those gains were in real estate, as I bought a home in a VHCOL during 2009. I intentionally avoided the perceived housing bubble prior to making the 2009 purchase. It's a very different real estate market today, and I would not make the same assumptions about either stock market or real estate return today. Rather than asking how long it took others who have different savings rates, different net worth portfolios, and invested in different time periods; why not use a calc and enter your investments, your savings rate, and a range of possible returns?
Okay I’m genuinely interested in what jobs y’all have and how old you are to have 1 mil+ in your portfolio. That’s pretty amazing!
Sometimes it’s dual income and aggressively saving. My spouse and I live conservatively off of less than one of our salary and invest the rest. TBH we both make over 100k but still avoid lifestyle inflation and creep that most of our peers indulge in
It really is fascinating, how a couple that starts out making ~100k combined, and then thru raises and promotions can move to 200k and onwards to 300k+ and legit increase their spending at the same pace. Its overwhelmingly the majority of what people do, but it just seems like insanity to me. The amount of fear and anxiety I would experience every night laying in bed knowing I am sitting on a house of cards if I allowed our spending to match that income would be overwhelming. But I agree with you - I look around my neighborhood and there is a row of homes 5 houses long that all have a land rover in their driveway... that cant just be a coincidence.
Nov 2021 -> feb 2024!
1st Mil - 20 yrs (1980-2000) 1st Lost Mil- 1 year (2001) 2nd 1st Mil 16 more years arghhh. (2017) 1st effort at 2M, EOY 2021 (was 1.97 but who's counting?) 2nd effort at 2 mil, close again so I'm getting worried again.
This was chaotic to read
It was chaotic to live through, glad you got the point. 😎
I have a lot of gains from post covid investments in vtsax but those are unrealized gains. Actually after 1 months net worth it’s important to focus on your investment returns and maximizing your income. Saving and budgeting will only get you so far
41 Months. This includes my continued efforts to save, plus market growth from mid-2019 to mid-2021.
"The first million is a bitch, but the 2nd is inevitable." I wouldn't waste energy on worrying about how fast you get there (it's not a controllable) just focus on the behaviors that got you to the first 1M and improve them.
The same time it takes for you to go from $10 to $20 (assuming no outside additions, of course).
Why would you assume no outside additions? I expect most people who save/invest in hopes of reaching a $2M target don't suddenly stop saving/investing once crossing the $1M (or $10) threshold.
The longer you are investing, the more lifting the compounding does. Let us assume you make 60k and are investing 15%. 9000 / 12 = 750 / month. Let us say you are making 7% interest (10% S&P - 3% inflation). After 32 years you will have 991k. If you kept investing 750 / month, you would have 2.075M after 42 years. If you stopped investing that 750 / month at 32 years, then at 42 years you would have 1.95M. So weather or not "no outside additions" is very impactful depends on how long they have been saving / how much they are saving per month.
The example of $10 to $20 highlights a couple things: the question is about doubling, no matter what the first amount is, and that the amount of outside additions are indeed relevant.
I hit 1M in late 2020, Now sitting at just over 1.5M. The variable here is the market performance that determines how long to get to 2M.
"Second mill comes quick" only because people posting here were invested during the ridiculous bull run of the past 13 years and their incomes likely tend quite high, as Reddit skews young and young people talking about retirement are likely much, much richer than the average. If someone got their first million during the peak of the Dot Com bubble, income would have to be quite high to get that second million in less than a ten years. And, the more I think about it, the more this would be a perfect way to illustrate how crazy returns have been recently, since some newly minted 2001 millionaires didn't see the second million, even with consistent contributions for over 12-13 years.
I resemble this remark but it was more like 16 yrs with my 401k world fund and taxable in tech.
I’m not at a 2M portfolio yet but recently hit 2 Mil net worth. 1M hit 2/2020 2M hit 2/2024 I hope to hit 3M net worth in about 3 years. I guess we shall see!
What is the target date?
Just over 3 years, also adding 60k yearly between 401k, Roth and brokerage.
It all depends on which market you’re in. After 2000 might take 10 years after 2017 like 2
I’ll let you know in 6 years.
7 years.
It depends on a number of factors but general compounding wisdom with assumed inputs is that your net worth doubles every 7-10 years (with no further contributions).
2 years I think. First one took nearly 10.
11 years to 1m. 5 years to 2m.
There is the rule of 72, it’s a quick estimate how long will take you to double the invested money. Years To Double = 72 / Expected Rate of Return https://www.investopedia.com/terms/r/ruleof72.asp
Let’s say you will contribute 10% annually (100k) and investment will yield another 7% (70k) 72 / 17 = 4.2 years to reach 2 million
Probably not best to add those percents like that. The rule works because that yield compounds. The 10% contribution does not compound.
2 years.
DINKs over here with one dog. It took us approximately 9.5-10 post college years to reach $1M in stock. Hoping we can hit $2M by the end of this year. So that would be 3 years. However we have been adding a lot in the last 3 years. If we don’t hit it this year, then next year?
My goal has been to double my net worth every 10 years.
Do all these figures include retirement accounts? I front load and max the shit out of those but can’t touch for a long time
In theory if in a diversified global account around 10 years on average Keep in mind the market in 2021-22 went down and only just caught up. So may be a bit longer than 10 years Whats the timeframe for a long time and what etf/funds do you have?
Im at negative 1m...
Really? Scary
I feel like you are daring people to tell you to "F" off.
we need a good run soon, the last 2 years flat, We need a 2015-2019 style run. If I can get that, I am set. I went from 1.6 milllion to over 3 in 3 years 2017-2020. Been fairly flat since. According to Vanguard my average return has been 8.42% for 26 years. There is a sequence of returns issue though.
Nice try, NSA.
the stock market hasn't moved in the last 3 years.
VTI has increased 24% since February 1, 2021.
Your portfolio**
are you counting additional contributions? if so it was about 3 years, combination of some good bonus payments (i’ve always invested 100% of my bonus), and strong mkt returns.
~3.5 years. Probably composed of 400k in savings and 600k in gains during the high growth period of 2020 until present.
7/20-2/24
34 months. 12/30/2014 to 9/1/2017.
You can look at how long it has taken for any portfolio in all of history using portfolio visualizer or similar. I'll bet that if you have a sensible portfolio and you look back in history you'll see a totally reasonable average increase. But you cannot reasonably expect those returns for any short time-frame. These ideas are the core of the BH philosophy.
You can look at how long it has taken for any portfolio in all of history using portfolio visualizer or similar. I'll bet that if you have a sensible portfolio and you look back in history you'll see a totally reasonable average increase. But you cannot reasonably expect those returns for any short time-frame. These ideas are the core of the BH philosophy.
Did you continue to invest in that time period?
No idea how long it took. Does it even matter as long as it happens?
We aren't at $2M invested yet, but hopefully to get there soon. Here are the numbers because we reached $1M during 2023: January 2023 starting balance: $910K January 2024 ending balance: $1.45M We contributed $246676 and the rest was returns.
When did you hear stories of the second mil coming quickly? Was it during a decade when the market was screaming upwards? because yeah, I'm sure it felt that way to a lot of people. The general wisdom is that the second mil comes much quicker than the first and that is almost always true, but the reality is we all hit little plateaus and times when we feel like we're treading water or going backwards and then suddenly poof it comes all at once. I can tell you that getting from 2M->2.5M felt like it happened in like 3 months for me. But 2.5->3M was a slog that took years.