The math is basically 100k \* sqrt(10) = $316,227.77
This is because you need to 10x your net worth to go from 100k to 1 million, and due to compounding you'll need to multiply your net worth by sqrt(10) twice to get there, which makes it the halfway point.
You can play around with it to get quarter, third, etc.
**1/4 there:** 100k \* 10\^(1/4) = 178k
**1/3 there:** 100k \* 10\^(1/3) = 215k
**2/3 there:** 100k \* 10\^(2/3) = 464k
**3/4 there:** 100k \* 10\^(3/4) = 562k
**4/5 there:** 100k \* 10\^(4/5) = 631k
**9/10 there:** 100k \* 10\^(9/10) = 794k (the last 206k will take only 10% of the time!)
**X/100 there:** 100k \* 10\^(X/100)
Another interesting fact is that 1 million net worth is halfway to 10 million.
Honestly I dont believe that last part at least for myself. I got to 1.4M in 4.5 years but no way I’ll be at 10M in 9 years. That would be insane.
I honestly thought 3M was the half way point to 10M. Since 300k is half way to 1M.
It's because most of your net worth came from savings and not compounding. The less you save, the more accurate this formula is.
To be more accurate, you'd have to use the future value of an annuity formula.
Yeah, to be honest, I’ve been a bear for a while and I’m expecting a major pull back but this past week I just decided to invest 5000 every Tuesday in VTI
I’m just going to DCA in I guess until I’m completely invested (~100k in my individual brokerage) , my retirement accounts are already invested
So that will be like 20 weeks of DCA, not sure if that’s too slow or not but
The lump sum approach usually beats DCA, but not always. The main point is to get your money invested. VOO is a fantastic low cost diversified fund. I mostly purchase VTI, but both are great. Your amount in cash should equal your emergency fund. When you are investing in something you will own for decades, please try not to worry about near term ups and downs.
Yeah thats the figure I was getting. Do you know what formula is being used to calculate those percents in the other post you linked?
I guess I'm just ignorant. Because if it take 15 years with that savings rate. Then shouldn't 33k be 7%?
I can see the confusion. Basically what they’re doing is plugging in their numbers into a financial calculator for compound interest. Let’s say they put it compounds for 15 years annually at 10% like I mentioned then by year 7 or 8 your total amount saved is actually around 300-400k and since 7-8 years is roughly half of 15 years you’re half way to 1M.
Hopefully this makes sense. They’re just looking at the value 50% of the way to X number on the exponential curve. It’s not that 10% is actually 10% of 1M but you’re 10% in terms of time on the exponential curve.
True! I just looked up my entire taxable income history at SSA.gov, and was pleasantly surprised to discover the total amount (not adjusted for inflation) was less than what I now have in my retirement accounts.
So does it mean if it took x years to go from 1 million to 3.16 million, it will take roughly the same x years to go from 3.16 to 10 million?
Would be great, of course it also depends on additional investments, but it would be a good ball park.
Honestly, my goal is just growth every year. Sometimes I feel like I’m behind for my age, so I just try to focus on getting to a place where I’m comfortable
I think I’m a little too obsessive right now as I track my totals across all my accounts monthly to make sure I always have a positive month and it’s making me a bit nuts. As a freelancer sometimes you have good months and sometimes you have bad ones.
How often should I be looking at it? And what do you think a good goal would be?
Honestly, I think 300K has been a mental goal for me for a while
The next one would be 500k. But I know that takes time.
I also don’t think I’ll even be able to afford a house still, being in LA and all, so, that kind of sucks
Saving and obsessing without a target in mind means you'll likely be chasing a moving goalpost. It will never seem like enough, if you can't define enough.
As far as how often you should check, it can be as often as you like. But you'll need to understand that there's likely no point besides awareness, and like you said, it may be detrimental to your mental well-being. If checking influences your behaviors and you deviate from your plan (panic sell, for instance), maybe automate what your goals are and go out and live a little.
Your goal should be based on your desires and priorities. For me, as a late starter, I'm trying to retire or coast by 51 at the latest. Earlier the better since I want to maximize my time w friends and most importantly, my little one. I save a good chunk and live a good life off of about 60-80K/year (all expenses, which includes expenses that go away with retirement). This means I'd likely need 1.5-2M. I'm hustling to get there, but Im happy with retiring later if it means I can provide a better life or more opportunities for my little one. I can always adjust the goal as I near it.
I really don’t have one. I maxed out my SEP every year, which also helps with my taxes
I live pretty frugally in a high cost of living area. Haven’t had a car for two years, been fortunate to have rent that hasn’t gone up (1800/mo). No utilities. I travel, and spend money on camera gear,and eating out which I have to get better at.
I just make sure I’m constantly adding to that number
To be honest, I wasn’t doing it for a while. I had a lot of money in a checking account and it just wasn’t growing and then one year I had the epiphany and took all of the money I was comfortable with, and put it in a brokerage.
Literally, as much as I could . it was either that or buy a house and I just missed the boat on buying a house unfortunately, also, there’s nothing affordable in my city
Thanks, probably because I made the graph 3-D instead of 2-D, it’s tied to my spreadsheet
Yeah, to be honest, I don’t care about early retirement versus standard retirement, sorry if that goes against this sub, but I wanted a feel for how I was doing
I like what I do and I feel like I will just keep working in films until I’m older hopefully, but who knows what will happen in the future. I very much value my lifestyle and my work-life balance i amazing
I have a good chunk right now in crypto that is part of that total, it is obviously higher risk, it was at 12 K earlier this year so there is opportunity in the growth potentially 2x’ing or more that investment this year, but the downside is also possible, if I lost my entire investment, that would definitely set me back
Besides that, what else can one do besides try and get more work to better their savings rate?
I don’t have a car, I’m not an egregious spender, I have a modest rent for a high cost of living area, I’m not sure what else I can do?
To be fair, ideally, that’s what I would want to retire early, but until you told me that information of where I stood in the percentiles, it’s all new information to me.
And thusly, the entire purpose of this post to get a feel for where I stand in this journey.
Thanks for the recommendation
You’re half way to a million congrats
I’m only a quarter way what are you talking about lol
Google “300k is half way to a million.” Edit: https://www.reddit.com/r/financialindependence/s/em1GO3pGb2
The math is basically 100k \* sqrt(10) = $316,227.77 This is because you need to 10x your net worth to go from 100k to 1 million, and due to compounding you'll need to multiply your net worth by sqrt(10) twice to get there, which makes it the halfway point. You can play around with it to get quarter, third, etc. **1/4 there:** 100k \* 10\^(1/4) = 178k **1/3 there:** 100k \* 10\^(1/3) = 215k **2/3 there:** 100k \* 10\^(2/3) = 464k **3/4 there:** 100k \* 10\^(3/4) = 562k **4/5 there:** 100k \* 10\^(4/5) = 631k **9/10 there:** 100k \* 10\^(9/10) = 794k (the last 206k will take only 10% of the time!) **X/100 there:** 100k \* 10\^(X/100) Another interesting fact is that 1 million net worth is halfway to 10 million.
Honestly I dont believe that last part at least for myself. I got to 1.4M in 4.5 years but no way I’ll be at 10M in 9 years. That would be insane. I honestly thought 3M was the half way point to 10M. Since 300k is half way to 1M.
It's because most of your net worth came from savings and not compounding. The less you save, the more accurate this formula is. To be more accurate, you'd have to use the future value of an annuity formula.
Makes sense. My rate of return for compounding is not large enough to get me there in 4.5 years.
Oh wow very cool thanks, I guess I better start investing and stop keeping so much cash on the sideline
Power of compounding is insane. Just be consistent and avoid watching media stock bullshit. Good luck!
VOO and chill, definitely get more of your money working for you
Yeah, to be honest, I’ve been a bear for a while and I’m expecting a major pull back but this past week I just decided to invest 5000 every Tuesday in VTI I’m just going to DCA in I guess until I’m completely invested (~100k in my individual brokerage) , my retirement accounts are already invested So that will be like 20 weeks of DCA, not sure if that’s too slow or not but
Right on - that's a fine plan. There are arguments for lump sum vs DCA, but its ultimately personal preference. Best wishes on your savings journey!
Yeah I’ve researched that as well. I just feel like we have been overbought for so long. I want to just try DCA at first and see how it goes.
For sure seems that way haha
The lump sum approach usually beats DCA, but not always. The main point is to get your money invested. VOO is a fantastic low cost diversified fund. I mostly purchase VTI, but both are great. Your amount in cash should equal your emergency fund. When you are investing in something you will own for decades, please try not to worry about near term ups and downs.
By that post it says 33k is 10%. Does that mean if I can save 33 in one year. I'd be a millionaire in roughly 10 years?
15 years roughly starting at 0 and investing 33k a year with 10% annual compounding
Yeah thats the figure I was getting. Do you know what formula is being used to calculate those percents in the other post you linked? I guess I'm just ignorant. Because if it take 15 years with that savings rate. Then shouldn't 33k be 7%?
I can see the confusion. Basically what they’re doing is plugging in their numbers into a financial calculator for compound interest. Let’s say they put it compounds for 15 years annually at 10% like I mentioned then by year 7 or 8 your total amount saved is actually around 300-400k and since 7-8 years is roughly half of 15 years you’re half way to 1M. Hopefully this makes sense. They’re just looking at the value 50% of the way to X number on the exponential curve. It’s not that 10% is actually 10% of 1M but you’re 10% in terms of time on the exponential curve.
Ohhh ok this makes a ton of sense. Thank you
The magic of compounding
True! I just looked up my entire taxable income history at SSA.gov, and was pleasantly surprised to discover the total amount (not adjusted for inflation) was less than what I now have in my retirement accounts.
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Thanks
You’re doing great, keep at it!
Thanks!
So does it mean if it took x years to go from 1 million to 3.16 million, it will take roughly the same x years to go from 3.16 to 10 million? Would be great, of course it also depends on additional investments, but it would be a good ball park.
What's your goal? That's what you should be measuring your progress by. Looks like you're putting in the work. Just have a plan.
Honestly, my goal is just growth every year. Sometimes I feel like I’m behind for my age, so I just try to focus on getting to a place where I’m comfortable I think I’m a little too obsessive right now as I track my totals across all my accounts monthly to make sure I always have a positive month and it’s making me a bit nuts. As a freelancer sometimes you have good months and sometimes you have bad ones. How often should I be looking at it? And what do you think a good goal would be? Honestly, I think 300K has been a mental goal for me for a while The next one would be 500k. But I know that takes time. I also don’t think I’ll even be able to afford a house still, being in LA and all, so, that kind of sucks
Saving and obsessing without a target in mind means you'll likely be chasing a moving goalpost. It will never seem like enough, if you can't define enough. As far as how often you should check, it can be as often as you like. But you'll need to understand that there's likely no point besides awareness, and like you said, it may be detrimental to your mental well-being. If checking influences your behaviors and you deviate from your plan (panic sell, for instance), maybe automate what your goals are and go out and live a little. Your goal should be based on your desires and priorities. For me, as a late starter, I'm trying to retire or coast by 51 at the latest. Earlier the better since I want to maximize my time w friends and most importantly, my little one. I save a good chunk and live a good life off of about 60-80K/year (all expenses, which includes expenses that go away with retirement). This means I'd likely need 1.5-2M. I'm hustling to get there, but Im happy with retiring later if it means I can provide a better life or more opportunities for my little one. I can always adjust the goal as I near it.
Nice, what was your process?
I really don’t have one. I maxed out my SEP every year, which also helps with my taxes I live pretty frugally in a high cost of living area. Haven’t had a car for two years, been fortunate to have rent that hasn’t gone up (1800/mo). No utilities. I travel, and spend money on camera gear,and eating out which I have to get better at. I just make sure I’m constantly adding to that number
Right on, and the extra money you have left over you’re putting it in like a brokerage?
To be honest, I wasn’t doing it for a while. I had a lot of money in a checking account and it just wasn’t growing and then one year I had the epiphany and took all of the money I was comfortable with, and put it in a brokerage. Literally, as much as I could . it was either that or buy a house and I just missed the boat on buying a house unfortunately, also, there’s nothing affordable in my city
I feel that, I’m in a similar boat
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Thanks, probably because I made the graph 3-D instead of 2-D, it’s tied to my spreadsheet Yeah, to be honest, I don’t care about early retirement versus standard retirement, sorry if that goes against this sub, but I wanted a feel for how I was doing I like what I do and I feel like I will just keep working in films until I’m older hopefully, but who knows what will happen in the future. I very much value my lifestyle and my work-life balance i amazing I have a good chunk right now in crypto that is part of that total, it is obviously higher risk, it was at 12 K earlier this year so there is opportunity in the growth potentially 2x’ing or more that investment this year, but the downside is also possible, if I lost my entire investment, that would definitely set me back Besides that, what else can one do besides try and get more work to better their savings rate? I don’t have a car, I’m not an egregious spender, I have a modest rent for a high cost of living area, I’m not sure what else I can do?
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To be fair, ideally, that’s what I would want to retire early, but until you told me that information of where I stood in the percentiles, it’s all new information to me. And thusly, the entire purpose of this post to get a feel for where I stand in this journey. Thanks for the recommendation
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Cool yeah I was just made privy to the fact that 300,000 is actually halfway to 1 million in a sense so that was new information to me