What stage are you at (on th e path to wealth)

[97guns]

I had a brief discussion with a coworker who held a lot of hard assets distributed over the world. In my motorcycle forum, there were a few people heavily invested into gold/silver too and they mostly used bank deposit boxes (esp for silver, one of them mentioned that the bank associate almost killed her foot because it was so heavy). A few also just hold shares in mining companies ETF and claims to hold hard assets (which IMO isn't technically correct). So, whenever I meet people holding significant hard assets, I'm always curious.

i hold nothing but hard assets because i dont trust or like the banking system and at 1% interest its not worth my time, so with that said i dont use bank deposit boxes, i only trust myself to take care of my money

[dawnwes]

What does that mean exactly? Doesn't everyone work until retirement? That's what retirement is - when you no longer need to work.

We're certainly in stage 2. Most years (unless the market is down), our investments generate more than we actively save. It's been that way for years.

It seemed that the poll was saying that there is a stage where you don't work, you just live on your investments, it didn't specify retirement, so I assumed it just meant independently wealthy. We won't ever be that.

But I do see people say they retire at 40 or whatever. We will be working at least until 65. I will be working until my "formula" gives me 80% of my retirement for life, and offers me health insurance (although that is a benefit given now that may or may not be around when I am ready to retire.)

[tripods68]

We're definitely in stage 1. Starting to build our savings & retirements. I won't have access to my pension until age 55. The plan have a portfolio balance of at 1.5 to 2.0 million in taxable & retirement balance even if it means retire at age 60 and do something else but work.

[bjl584]

Somewhere between 1 and 2.

while my investments do generate a considerable amount, my income still outweighs it.

[sv2007]

Somewhere between 1 and 2.

while my investments do generate a considerable amount, my income still outweighs it.

Stage 2 doesn't need to equal your income because it'll never be since investment income is your income too. It only neesd to equal your target savings amouont (an amount that you'd save every year to achieve your savings goal).

The idea is that stage 2 is the point where savings from investments becomes equal to your target savings.

For example if your target is to save $10 per year, once income from investments goes to $10 /yr , that's stage 2 according to the authors.

[sv2007]

We're definitely in stage 1. Starting to build our savings & retirements. I won't have access to my pension until age 55. The plan have a portfolio balance of at 1.5 to 2.0 million in taxable & retirement balance even if it means retire at age 60 and do something else but work.

The key is after stage 2, income from work importance is relatively diminished because income from investments will be larger. This is a key to building wealth because you only have 24hrs /day of life to work. Got to put money to work.

[sv2007]

Oh, one more thing that was kind of important that I forgot to mention (I've lived thru those stages hence was able to read the book very quickly) and which I completely agree is that the gap between stage 1 and stage 2 is critical.

If you are in this gap, be sure to learn about investing that matches your personality (e.g. risk tolerance, type). Like in another thread, someone mentioned that they are the "set-and-forget type" this is a very dangerous type UNLESS you are also paying for financial management.

The author's reasoning is that at this time, your job income is still significant and you can use investment losses as a learning curve. Once you've past stage 2, losses will become bigger.

And I totally agree. There are many ways to invest; I'd also expand upon the author's views. Between stage 1 and stage 2, you have to also decide whether your investment strategy can yield the returns to achieve your goals. When you can't achieve it, you can ask for help from professionals (beware to pick good ones, although I remember reading a law is coming for planners to have fiduciary responsibility, but still, how are you going to sue them when you've got nothing.

[TexasHusker]

I'm at stage 3 but have no desire to move on to stage 4. That would just give the kids something to fight over. If I really hustled I could get there but what is the point?

[sv2007]

I'm at stage 3 but have no desire to move on to stage 4. That would just give the kids something to fight over. If I really hustled I could get there but what is the point?

Generally, stage 4 is a natural progression from stage 3 given time because you've already have the investment knowledge to move from stage 2 to 3, i.e. make your money work for you; the amount of time depends on what you do.

What is author didn't talk about (or I missed/don't remember) was inflation. Although your money is the same amount at stage 3, its purchasing power diminishes.

Another thing is market crashes, the author does talk about preparing for short term (1yr) corrections with fix-income diversifications, but having more $ helps smooth out the bumps.

Also, there's no need to leave money for your kids if you don't want to. We planned to give the kid a college/grad school education. Wife now wants to give him his first house but I'm resistant. You can do anything, the extra money is a cushion to rest more easily.

[Drake3287]

Stage 4 although I don't really live like it. Maybe that's why I'm at stage 4.

[LivingAlmostLarge]

since we have no income but not quite enough to generate our living expenses well we do have "enough" but not enough by our standards. I say 2