My path to a $50,000,000 net worth
Without goals and a plan to reach those goals, you will never get there. Today I want to tell you about my goal of achieving a $50,000,000 net worth and my progress so far.
Fifty million dollars is a big number. It sounds daunting and un-achievable at first. You might be thinking that only some young tech entrepreneur could achieve this level of wealth only by creating the next best social media platform. I'm here to tell you these sort of numbers are very achievable, if you start early.
Luckily for me, I fell in love with investing in early high school when I read a copy of The Snowball by Alice Schroeder for the first time. For those of you who don't know, that is a biography about Warren Buffett, the greatest investor of all time. I recommend you read the book, numerous times. Getting started with investing at that age greatly increased my odds of achieving a $50,000,000 net worth.
I got started right in the middle of the 2008 financial crisis by handpicking stocks. After reading about Warren Buffett I was convinced I could pick stocks like the Oracle himself. I remember purchasing Ford stock for less than $2 per share and GE for $5 per share. Looking back knowing the things I know now, I would have backed up the truck to purchase as much stock as I could in a lot of those companies.
“Based on a 4% dividend yield, my stock portfolio will yield over $2,000,000 per year in dividend income alone.”
How's my progress so far?
Currently, I'm working on building my multiple sources of income. We've all heard the saying "the average millionaire has at least 7 sources of income." I work as an insurance broker, own my own portable storage business, sell pop through my pop machine, collect dividends from my stock investments, and collect rent from my rental real estate business. I also have the ability to earn an insurance commission off my own investments and businesses, so I'm going to count that benefit as well. If you're counting, that's only six sources of income. My goal in 2018 is to make $100 from my blog and $100 from YouTube. I know it's a tiny goal, but I know when I get past those two small milestones then the sky is the limit. I've been thinking about this a lot lately. The fact that it's 2018 and I consider myself an entrepreneur and yet, I don't have a major source of revenue coming from the internet. THAT'S MY FAULT and there is no one else I can blame for that.
My savings plan is to achieve the $50,000,000 net worth solely based on my stock and real estate portfolio. I'm not counting my businesses in these plans and figures because I believe it's important to be conservative. I look at the businesses I'm building as a bonus. Plus, I like to keep it simple. With my income from work, I take advantage of my 401(k) plan. My employer, Rossbacher Insurance Group, will match my contributions dollar for dollar up to 6%. So by only putting away 6% of my pay, I'm effectively saving 12% of my overall pay each year. I don't stop there, however. I'm actually contributing 9% total from my own pay and they continue to match the 6%. So, currently I'm at a 15% savings rate just through my 401(k) and I increase that contribution by 1% per year no matter what. What's nice about the increase I just made this year is that I was expecting my net pay to decrease slightly since I increased my savings rate, but thanks to President Trump's new tax plan, my net pay actually still increased due to lower taxes.
Again, I do not stop there. I take $680 out of every single paycheck and invest it directly into my Vanguard account, no matter what. This is the idea of "paying yourself first." By paying yourself first, you don't miss the money because you didn't have it to begin with. You learn to live on what is left over and that money you invested goes to work for you night in and night out. If you read my article on house hacking, you also know that I'm using the cash flow from that to reinvest into more properties and my stock portfolio.
As you can imagine, I pay close attention to my fiances' finances as well, since we will soon be sharing everything when we are married. She works as an early childhood special education teacher, which I'm extremely proud of. It takes a special person to do that work and I know it's something I could never do. She's passionate about it and she loves what she does. But, she doesn't care about finances and she knows that's my passion. So, little by little I have these financial discussions with her and I stress the importance of saving and investing has on our family's future. I've opened a Vanguard account for her and had her start "paying herself first" as well. She currently takes $250 out of every paycheck and puts it directly into her Vanguard account. I'm trying to get her to increase this amount all the time, but you have to choose your battles sometimes!
Lets do some math. I contribute $680 twice per month to my Vanguard account. I also contribute about $280 twice per month to my 401(k). My fiance also contributes about $500 per month to her Vanguard account. She also has a pension, but I'm not factoring her pension into these figures. Adding all of that up totals about $2,420 per month that we contribute to investment accounts. I'm going to use Dave Ramsey's investment calculator again to keep it simple. I'm using the following facts and assumptions:
I'm currently 26 years old
I'm using a retirement age of 70, although I doubt I will ever fully retire as I will be doing what I love.
I'm assuming a long term annual return of 10%. Over the history of the stock market, 11-12% has been the average.
We will continue to contribute $2,420 per month towards our investment accounts (and we will contribute more as we start making more money)
I currently have over $110,000 in stocks that I have built up to this current point.
Using those factors, we will be worth $28,749,005 by the time I'm 70 years old. Now remember, this doesn't include my business income or business assets. Along the way, I will collect a lot more real estate and businesses. But nonetheless, I'm not on target for my stated goal so I need to increase my income to increase my monthly contributions. I plan to do that through selling more insurance and increasing my income through this blog and YouTube. To reach my stated goal of a $50,000,000 net worth solely in the stock market, I need to get my monthly contributions to approximately $5,000 per month. But to be conservative and to make sure I achieve my goals, I want to hit $10,000 per month in contributions. The reason for that is I don't want to wait until I'm 70 years old before I start enjoying my work, so at some point I will stop reinvesting 100% of my investment earnings. To make up for that I will need to maintain a higher savings rate. So there it is, my goals are public for all the world to see so hopefully you guys can help me stay on track! My intentions with this article is not to brag and showboat about where I'm at and where I'm going. I hope this article inspires many and I hope it helps keep myself on track! I'm also sharing all of this information to show that financial independence is very achievable even on modest salaries. I'm a new insurance broker and my fiance is a new school teacher. We both make very average incomes and we live in a depressed old manufacturing town, yet we are still on pace to become multimillionaires.
“If we change nothing, maintain the status quo, and our incomes don't increase at all we are on pace to achieve a $28,749,005 net worth.”
Why is fifty million dollars my number?
That's a great question actually. At first I always wanted to achieve the $1,000,000 mark, but once I realized how easy that is to do over time I thought I had better set my sights higher. Then the next number I had in mind was $5,000,000. Then I read Grant Cardone's book, 10X, and realized I need to 10X all of my goals. It's important to aim high and dream big. This was always easy as kids, but somewhere along the education path we are taught to lower our expectations and dull our lives down to "reality." Frankly, I think that's bullshit. Dream big and achieve big.
With a $50,000,000 stock portfolio earning a 4% dividend rate, my annual income from dividends alone would be $2,000,000 per year. That is the type of financial freedom I'm looking for. That will give me the ability to live a great life with my family, but also to help those in need and to contribute to organizations I'm passionate about.
My other financial goals
I glossed over my other real estate and business goals, but don't worry I have big plans for those portions of my financial plan as well. I currently own a portable storage business that I started in 2011 in my sophomore year of college. My goals with that business include owning storage facilities in every state in the US. I also have goals to own over 100 multifamily rental properties through my rental business. I hope as this blog progresses I can look back at this blog and find that I need to increase my goals again.
What are your goals?
I hope this inspires someone reading this. What are your goals? I hope you have plans and dreams even bigger than mine! I would love to hear your story and progress so far in the comments below. Share this article with your friends and connect with me on social media. Help spread the word that financial freedom and independence is achievable by anyone. If I can do it, so can you.Thanks for reading. Until next time, I'm Nick with Coin Stack Financial, cashin' out!