What does that 'millionaire moment' feel like?

[scfr]

I can't wait for the day I become a millionaire.

May I ask YOU a question? If you are married, will you consider yourself a millionaire when your household has a net worth of $1M? Or will it not be until you hit $2M, since the household net worth is a number that represents the combined net worth of 2 adult individuals?

[MakeAStash]

The journey can be far more interesting than digits in an account.

[rennigade]

May I ask YOU a question? If you are married, will you consider yourself a millionaire when your household has a net worth of $1M? Or will it not be until you hit $2M, since the household net worth is a number that represents the combined net worth of 2 adult individuals?

I cant speak for OP...but for me since im married it will be when my household has $1M combined...which is nice since it will happen much much sooner.

[ronb]

May I ask YOU a question? If you are married, will you consider yourself a millionaire when your household has a net worth of $1M? Or will it not be until you hit $2M, since the household net worth is a number that represents the combined net worth of 2 adult individuals?

Great question!!!

[Goldy]

Getting close! Last I checked I'm at 955,000 and hope to hit the 1M number by November if everything works out well.

I remember the goal of 1M being such a big thing and when it was far off thinking about what I would do and all of my grand plans and how great it would feel to have that much cash. Now that I am close it has lost a lot of that glam and is just another number.

[disneysteve]

May I ask YOU a question? If you are married, will you consider yourself a millionaire when your household has a net worth of $1M? Or will it not be until you hit $2M, since the household net worth is a number that represents the combined net worth of 2 adult individuals?

For me, definitely the household number. My wife and I are in this together. Our money is all joint (except for retirement accounts of course). There's no such thing as "mine" and "hers" in our relationship.

[DecisiveParadox]

Compounding is great, but not the engine of wealth creation

This isn't true at all thanks to the miracle of compounding. Your money grows faster the more of it you have.

How could it be 9x harder? The more money you have the more your money can grow...or shrink depending on market. Not to mention most people earn more as they get older. You have more money coming in.

I too love and enjoy compound interest. However it does not do the heavy lifting.
After 12 months of being in business, when I reach 300K cash savings in 2 months' time, less than 2k will be from interest. You need the raw horse power of income.
None of the Forbes richest rely on their interest, it's their income that makes them wealthy. Compounding is just a small part of it.

If you started with $100K and deposited $1000 a month @ 4% (being generous)
It would take you 30 years to GROSS $1M. This of course doesn’t account for the taxes.
Good luck with that.

The ONLY way to go from 100K to a million before using up your life and being too old to enjoy it, is to increase income to a factor of ten above your expenses.
You cant spend your house.

It is harder to get to a million, hence why most people do not become millionaires until they're in their mid 50's. ('96, Thomas J. Stanley and William D. Danko.)
That’s why we look at people who achieve this earlier in life as, in general, more fiscally successful than the rest.

We celebrated 100K @ 1 am in the morning with MacDonald’s
We celebrated 250K by going to Ihop for breakfast
We will celebrate 300K and 12 months in business by spending a day at a resort water park.
500k will be first quarter next year, probably and overnight somewhere local.
$1m? Definitely a nice week long cruise, probably to coincide with my 31st birthday (all plans of mice and men)

I was fortunate to have some great mentors (young) who were very successful in business and liquid wealth teach me about money and Income. I have tested their advice and never found it lacking.
If someone in their later years offered me advice about asset appreciation and saving, I would thank them but politely pass as that strategy is not for me. I'm interested in young wealthy people and their strategies. For me, its about income, and increasing it. As always YMMV

DecisiveParadox

[rennigade]

If you started with $100K and deposited $1000 a month @ 4% (being generous)

Sigh...I had to stop reading when saw a 4% return as being generous. Are you just pulling a number out of thin air? You could have at least checked on the historical rate of the S&P...which is around 7% adjusted for inflation.

Compounding interest article

This is a very basic article laying out the power of investing early and letting compounding interest do the rest of the work for you. In this example 3 people of varying ages invest $1k/month for 10 years then completely stop contributing. The results vary quite a bit. Of course if you keep investing the numbers go off the chart.

[feh]

Sigh...I had to stop reading when saw a 4% return as being generous. Are you just pulling a number out of thin air? You could have at least checked on the historical rate of the S&P...which is around 7% adjusted for inflation.

Yes, but that's only relevant if 100% of your portfolio is in the S&P 500.

If you throw in bonds and a more sensible allocation of 40-70% equities, 4% real seems pretty good to me. There's also no guarantee US stock markets will continue to return what they have in the past.

Better to be a little conservative in your estimates of future returns than to be unpleasantly surprised.

[scfr]

For me, definitely the household number. My wife and I are in this together. Our money is all joint (except for retirement accounts of course). There's no such thing as "mine" and "hers" in our relationship.

But why should it be twice as easy (take half the time) for a married couple to hit the $1M mark than for a single person? I think this is where some of the "married couples have it easier than singles" thinking comes in and it is part fallacy. It is true that couples tend to have higher household net worths than singles, but that is because there have been 2 people contributing. The $1M nest egg of a single only has to sustain 1 person, while the $1M nest egg of a couple has to sustain two.

For OP: hitting any milestone that is meaningful to you is a nice feeling. But for me hitting financial milestones has been more of a quiet moment of satisfaction & reflection on the work that went in to getting there than a "woo-hoo let's throw a party" feeling. And then it's on to the next goal!

I've hit two financial milestones that I consider pretty significant. The first was paying off the mortgage; that happened right around 40. The second was hitting the number that means my household is "Balance Sheet Affluent" (has to do with your net worth relative to your age & income); that happened just shy of 50.

The third major milestone I'm working towards and am close enough that it is clearly in sight is the Retirement Number; I hope to hit that sometime around 55 and worst-case-scenario should hit by 60 at the very latest.

OP, if hitting the $1M mark is a meaningful goal for you and you're willing to work to get there, then I hope you are able to experience for yourself what it feels like some day!

[disneysteve]

I too love and enjoy compound interest. However it does not do the heavy lifting.
After 12 months of being in business, when I reach 300K cash savings in 2 months' time, less than 2k will be from interest.

Of course compounding won't have accounted for much in 2 months. The value of compounding comes over time - years and decades, not weeks and months.

I'm 50. We've been investing since 1992 when we got married. At this point, our portfolio grows way more from dividends, interest, and capital gains than it does from new money going in. In 2014, just one of our mutual funds paid out more in capital gains than all of the money we saved for the year combined. We keep saving, of course, but the net worth grows exponentially relative to what we're putting away. That's why it is so vitally important to start saving early in life.

[disneysteve]

The $1M nest egg of a single only has to sustain 1 person, while the $1M nest egg of a couple has to sustain two.

And that's exactly why our target isn't $1 million but something north of $2 million.

As for celebrating milestones, the only one I really acknowledged in any tangible way was paying off my student loans. We celebrated that by finally getting cable TV. I think we were the last family in the state to do that .

[rennigade]

But why should it be twice as easy (take half the time) for a married couple to hit the $1M mark than for a single person? The $1M nest egg of a single only has to sustain 1 person, while the $1M nest egg of a couple has to sustain two.

If your partner does not work, then yes...it will probably be more difficult to sustain 2 people.

In my case, both myself and wife work. We have 1 apartment we rent, we have 1 vehicle we share. If we were both single we would both be renting our own apartments and each would have their own car. Just factoring those two alone will save you thousands a year.

In my case...its much easier with 2 people.

[disneysteve]

We have 1 apartment we rent, we have 1 vehicle we share

If I was single, I would not be living in a 3-bedroom house on a 1/4 acre lot. I'd be in a 1-bedroom condo somewhere.

We have 2 cars so being single wouldn't change my car expenses.

When we go out, I'm feeding 2 (3 if our daughter comes). When we go to a show, I'm buying 2-3 tickets. When we do any recreational activity, I'm paying for 2-3 people.

It would be far, far cheaper to be single and much easier to hit that $1 million mark.

[rennigade]

It would be far, far cheaper to be single and much easier to hit that $1 million mark.

It seems that being single for some and not for others would help in getting to 1M quicker. There doesnt appear to be a one size fits all for this scenario.