Portfolio milestone - 800K/ Net worth $1 mil

[disneysteve]

I just updated our portfolio spreadsheet and the total has topped $800,000 for the first time.

I was amused to see that with all of the panic after Brexit, we've actually made money since then.

The regulars know I don't generally think in these terms but counting our home equity, our net worth is now definitely over the $1 million mark.

[Jluke]

Congratulations - great achievement!

Brexit really didn't do much for long term holders - maybe a buying opportunity, but we'll see what happens next after the latest run up.

Any idea what dividend income/capital gains your portfolio generates?

[rennigade]

Wow Steve...those are some big numbers. Congrats on the milestone.

Yea the short term panic of the brexit didnt hurt us at all. My portfolio was up $3500 for the month of June. Not a lot but nice to see it wasnt down at all.

[97guns]

yep, they always say 1 mil really isnt that much but why does it feel so good when you hit it?

[disneysteve]

Any idea what dividend income/capital gains your portfolio generates?

Not entirely. I know that according to our 2015 taxes, we reported taxable income of about $16,000 but that doesn't include earnings in tax-sheltered accounts.

yep, they always say 1 mil really isnt that much but why does it feel so good when you hit it?

For us, $1 million definitely isn't that much, and home equity really doesn't count since that isn't spendable money. It's a far cry from what we need to retire. Still, it's a nice mile marker on the journey.

[greenskeeper]

The lesson here is to always live below your earning capacity, as DS has done and now has the wealth to show for it.

[Jluke]

For us, $1 million definitely isn't that much, and home equity really doesn't count since that isn't spendable money. It's a far cry from what we need to retire. Still, it's a nice mile marker on the journey.

how are you determining your target goal for retirement?

will you do the 4% approach? 25x expenses? other?

[bjl584]

Congrats!

Our portfolio has been doing very nicely as well. I'm approaching the half million mark including home equity.

[disneysteve]

how are you determining your target goal for retirement?

will you do the 4% approach? 25x expenses? other?

Yep. That's pretty much the yardstick I'm using. I do not include SS payments in the calculation though.

[97guns]

why is the model of a retirement fund to draw down from it? why dont more people use income from savings which is a retirement fund to sustain retirement?

ive havnt worked in 7 years and have not touched a penny of my principal savings, my retirement plan was not to draw down on my savings but to make my savings make me income. if i had planned with the draw down approach id still be punching the clock

another issue with this draw down retirement is you will have much less assets to pass to your children

[rennigade]

I know many people who have retired and their principal hasnt been touched. Their diversified portfolio keeps going up even when they take money out. There are more ways to do it than just real estate. I dont understand why you cant get that through your head?

That is the reason why that model is so popular. You can withdrawal 2%/3%/4% every year and still not touch the principal. But you're going to come back with a remark how you retired early, how people are stupid for punching a clock, how everyone hates their jobs, how you do not have to worry about the market, how buying gold is so much better. Did I miss anything? Please feel free to elaborate if I did...im sure you'll think of something.

[DaveInPgh]

I just updated our portfolio spreadsheet and the total has topped $800,000 for the first time.

I was amused to see that with all of the panic after Brexit, we've actually made money since then.

The regulars know I don't generally think in these terms but counting our home equity, our net worth is now definitely over the $1 million mark.

Congrats Steve!

I stated it on here before, regardless of how far away from our goal I love when I reach a new milestone.

[disneysteve]

That is the reason why that model is so popular. You can withdrawal 2%/3%/4% every year and still not touch the principal.

Exactly. Draw 3-4%/year and the principal keeps growing. That's the great thing about it.

[corn18]

why is the model of a retirement fund to draw down from it? why dont more people use income from savings which is a retirement fund to sustain retirement?

ive havnt worked in 7 years and have not touched a penny of my principal savings, my retirement plan was not to draw down on my savings but to make my savings make me income. if i had planned with the draw down approach id still be punching the clock

another issue with this draw down retirement is you will have much less assets to pass to your children

Well, i guess the answer comes in how the money is invested. While the average return over the life of the markets might be around 7% real return with dividends, there have been 20 year periods where if you retired on the exact wrong day, you would not see any return for 20 years. The 4% rule of thumb (safe withdrawal rate) is a result of back testing all periods during the history of the markets. If you do average, you'll end up with what you started with in real terms. If you do below average, you have a 95% chance of not running out of money, but you may not have any left. If you do above average, then you may very well double your savings. This is all computed over a 30 year period.

But this is isolated to those of us that are invested in the markets. If you have alternate income streams, then the 4% rule may not apply. You can retire with much less and generate enough income to live comfortably, forever. I'm not as familiar with those, so I can't comment on their efficacy. I do know there are several on this site that are doing just that and are very happy.

What the 4% SWR has lead me to is a number. I now have a plan to get to that number by age 60. If I decide to take some risk and go another route (investment real estate), I may be able to reduce that number. Or even make it not relevant, like you and Texas have done. I wish I had started thinking about this before I was 50. Time is not my friend now.

If you're interested, my number is $1.7M by age 60. If I hit that number, there is a 100% chance I will not have to draw down on that money in retirement. There is a 50/50 chance it will grow to over $3M by the time I am 90. There is a 10% chance it will be over $8m when I am 90 and a 10% chance it will be $1.2M when I'm 90. I'm good with that. As I get farther along in retirement, I can adjust my withdrawal rate to match my performance. If I'm ahead of schedule, maybe I spend a little more that year. Behind, I tighten the belt and spend a little less.

Regardless, I am where I am and I understand where I am, where I want to go and how to get there. In order to replace my current income, I would need to find a business that delivered $550,000 a year in profit. That's $5.5M @ 10% return on sales. Not likely to happen in the next 10 years.

Tom

[sv2007]

chance I will not have to draw down on that money in retirement. There is a 50/50 chance it will grow to over $3M by the time I am 90. There is a 10% chance it will be over $8m when I am 90 and a 10% chance it will be $1.2M when I'm 90. I'm good with that. As I get farther along in retirem

Which probability distributions are you basing your projections on? Does it make sense? If you based it on the normal distribution, then it may be too optimistic; which may not be a too good thing for retirement planning.