Portfolio milestone - 800K/ Net worth $1 mil

[sv2007]

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.

Gold is simply another category of investment; it doesn't prevent drawing 2/3/4% annually while keeping principal intact. I have a feeling that you may be defining principal incorrectly thus your above comment. Principal is simply what you've put into it.

Gold may not be my go-to retirement savings as it historically has too big a volatility for my taste; but that's not to say it can't work for others. And definitely gold can provide a regular retirement distribution without loss in principal at the right times (just like stocks and bonds).

[sv2007]

Congrats on the $1m milestone.
Frankly, I'm surprised that you only have $1m net worth; thought you'd have more. Anyway, keeping an eye on the portfolio value isn't bad, just don't act rashly.

[disneysteve]

Frankly, I'm surprised that you only have $1m net worth; thought you'd have more.

I''m not sure what about that surprises you.

One thing that has kept our net worth on the lower side is that we bought a pretty modest home in an area that hasn't seen any crazy appreciation. We paid $142,000 in 1994 and it's worth about $240,000 today 22 years later. I know in some areas prices have climbed far faster than that.

[corn18]

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.

I use the Flexible Retirement Planner that runs the monte carlo sims. I have also used FireCalc to do the same. I have no idea what they use, but they sure spit out a lot of lines.

[LivingAlmostLarge]

Congratulations! Good work.

[sv2007]

I use the Flexible Retirement Planner that runs the monte carlo sims. I have also used FireCalc to do the same. I have no idea what they use, but they sure spit out a lot of lines.

Monte carlo is a method and not a description of how the numbers used are derived from. From what I see about the flexible retirement calc posted by another member a while back, it looks like they used the normal distribution. You may want to read up on the fat tailed distribution, which some think is better for this (e.g brexit) and lognormal distribution which some think models stock market better than normal. You can also wait for my program, which will let you simulate with numbers better than normal, should take a couple of days if I get some time.

[sv2007]

I''m not sure what about that surprises you.

One thing that has kept our net worth on the lower side is that we bought a pretty modest home in an area that hasn't seen any crazy appreciation. We paid $142,000 in 1994 and it's worth about $240,000 today 22 years later. I know in some areas prices have climbed far faster than that.

I'm just surprised because due to your age, that's all. Somewhere I thought you are 50ish years old.

I think a 60% home appreciation in 22 years isn't bad. My Austin homes (they were our ex-homes and we recently sold them) only appreciated 10%, 20%, 50% in ~12 years. Our current homes are about 20% of our net worth.

[corn18]

Monte carlo is a method and not a description of how the numbers used are derived from. From what I see about the flexible retirement calc posted by another member a while back, it looks like they used the normal distribution. You may want to read up on the fat tailed distribution, which some think is better for this (e.g brexit) and lognormal distribution which some think models stock market better than normal. You can also wait for my program, which will let you simulate with numbers better than normal, should take a couple of days if I get some time.

I'll wait for your program. I like looking at my plan from all directions.

[disneysteve]

I'm just surprised because due to your age, that's all. Somewhere I thought you are 50ish years old.

I am 51. Keep in mind, however, that I'm a doctor which means I didn't really start earning an income until I was 29. I also went into the very lowest paying specialty, Family Practice. So that million dollar net worth has been built in about 23 years. Plus I paid off over 100K in student loans during that time,too.

[rennigade]

I am 51. Keep in mind, however, that I'm a doctor which means I didn't really start earning an income until I was 29. I also went into the very lowest paying specialty, Family Practice. So that million dollar net worth has been built in about 23 years. Plus I paid off over 100K in student loans during that time,too.

This is just another example of the ignorance of people. When someone is a doctor most still think that person is magically rich. Its just one of those professions where that thought process will never change.

[disneysteve]

This is just another example of the ignorance of people. When someone is a doctor most still think that person is magically rich. Its just one of those professions where that thought process will never change.

Yep. Drives us nuts. I constantly hear comments about, "Oh, he can afford it. He's a doctor." People don't understand that everyone from computer programmers to financial professionals to small business owners and more all out-earn many physicians. Plus most of those people have been working for 8-12 more years due to less schooling required. And with all of the changes and challenges in medicine today, running a profitable practice has gotten harder and harder. That's a big part of why I'm now working a part-time job in addition to my full-time practice.

[feh]

I use the Flexible Retirement Planner that runs the monte carlo sims. I have also used FireCalc to do the same. I have no idea what they use, but they sure spit out a lot of lines.

By default, firecalc uses historical data. I prefer that to monte carlo simulations.

[DaveInPgh]

Yep. Drives us nuts. I constantly hear comments about, "Oh, he can afford it. He's a doctor." People don't understand that everyone from computer programmers to financial professionals to small business owners and more all out-earn many physicians. Plus most of those people have been working for 8-12 more years due to less schooling required. And with all of the changes and challenges in medicine today, running a profitable practice has gotten harder and harder. That's a big part of why I'm now working a part-time job in addition to my full-time practice.

How can you blame us Steve? Starting at age 8, we have been told you guys are the top earners.

[corn18]

How can you blame us Steve? Starting at age 8, we have been told you guys are the top earners.

That's a very socialistic tax rate they have going there. Free college for everyone!

[DaveInPgh]

That's a very socialistic tax rate they have going there. Free college for everyone!

Steve and his colleagues can afford to foot the bill

Thanks Steve