"It's just magical how your money can grow and compound over time"

44 year-old in Atlanta, GA with $2.6 million net worth

Jun 19, 2024

Exploring the Hidden Aspects of Wealth

Welcome to this week's newsletter, where we show you real numbers from real people and get a glimpse into their personal finances. In this issue, we're exploring the financial journeys of individuals from their 20s to their 50s, across a range of professions, from a young design studio founder in Phoenix to a 44-year-old sales engineer in Atlanta. We'll see how a 28-year-old Australian accountant turned a negative net worth into a financial success and how a couple who started their life as refugees amassed a net worth exceeding $2M. We also feature a 53-year-old payroll department manager who overcame personal adversity to build a net worth of over $1M. These inspiring stories highlight the importance of saving, investing, financial education, and how these key strategies have contributed significantly to their net worth.

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In their 20s:

$73,300 net worth - A single 23 year-old founder and owner of a design studio living in Phoenix, AZ is earning $70K annually. Her accumulated net worth is 82nd percentile for her age group. Her net worth consists of 82% in investments and 18% in cash/savings. She currently lives at home to save more, and her future financial plans depend on the growth of her business. She appreciates the financial safety net her family provides and acknowledges the importance of the higher education her family was able to fund, as well as their teachings on the importance of saving and investing. “I try to remind myself I am young and do not have to have it all figured out right now.”

TAKE-AWAY: The importance of saving and investing from a young age.

AUD$149,405 net worth - A 28 year-old accountant living in Australia earning ~AUD$95K annually. They share 9 years of monthly financial details starting in September 2015 with a negative (AUD$15,951 net worth) on Networthshare.com. Their accumulated net worth is 76th percentile for their age group. Majority of their net worth is in retirement accounts and other investments less remaining student debt.

In their 30s:

$484,978 net worth - A married 30 year-old risk manager working for a commercial real estate developer in Dallas, TX is earning $125K annually (her husband earns $130K annually). Their accumulated net worth is 88th percentile for their age group. About 1/2 of her net worth ($243,000) is in an inherited trust. The remaining part of their net worth consists of $59,283 in retirement accounts, $140,000 in home equity and $33,000 in cash (checking/savings). She discusses her experience with passive and inherited income, including a trust fund from her late grandmother. She and her husband manage both joint and separate financial accounts. "…my Mom always emphasized frugality and how long she had to save for things like travel and Christmas gifts so she could avoid debt."

TAKE-AWAY: The importance of being intentional about your spending (saving where you can and spending only on things that align with your values). Also, avoiding consumer debt will allow you to retain optionality on how to spend your future income vs having monthly payments for previous purchases.

In their 40s:

$2,091,000 net worth - A married couple (age 41 and 42), share their their journey from growing up as refugees to now exceeding $2M net worth. Their accumulated net worth is 95th percentile for their age group. The majority of their net worth (72%) is in retirement accounts (401k, Roth, Pension, HSA). This is 3-4X the amount they have in visible assets (i.e. home equity). Home equity is 19% of their net worth, 4% in taxable brokerage and 4.5% in cash. As refugees who grew up without any knowledge about investing, they began contributing to their 401k retirement accounts immediately after starting their professional careers post-undergrad, which led to significant growth over the years due to compounding. They also purchased 10 acres and built their home shortly after 2010. “If there is ever doubt about the American dream, it is alive and well. We all just need determination, a little luck, and to avoid spending our money lavishly.”

TAKE-AWAY: The importance of starting to save and invest early in your career. The power of compound interest and market gains over time can significantly increase your wealth.

$2,600,000 net worth - A 44 year-old sales engineer living in Atlanta, GA. He shares how becoming a millionaire around age 40 changed his life, his mindset and his purpose. His accumulated net worth is 95th percentile for his age group. His net worth composition consists of $800K in retirement accounts, $1.15 million in real estate (primary home and investment real estate), $420K in taxable brokerage and $32K in cash (checking/savings), $54K in 529s, and $35K in cars. His investment journey started a couple of years after college. Inspired by successful professionals around him, he decided to start saving and investing, despite not having a clear direction or objective. Initially, he was heavily focused on saving and investing with the primary goal of achieving financial independence and retiring early (FIRE). However, after hitting the million-dollar mark around age 40, he realized that reaching this milestone didn't drastically change his life. This realization prompted him to reassess his goals and priorities. His approach to money shifted from a relentless pursuit of wealth to a more balanced approach, appreciating the education and understanding that came with his journey. Also, he shares his initial steps as buying a few shares of individual stocks, including Starbucks, and consistently setting money aside each month. Over time, he realized the benefits of saving efficiently and understanding the mechanisms of the stock market, including the power of compounding. "Time is your best friend. It's just magical how your money can grow and compound over time. You don't have to make these huge bet investments and try to win the game as quickly as possible, but just slow and steady, that's what's winning the race for me."

TAKE-AWAY: The importance of balancing saving and spending. The goal is not just accumulating money but understanding how you want to use your money as a tool to live your life and help others.

In their 50s:

$1,005,028 net worth - A 53 year-old payroll department manager living in a Southern US city earns $145K (plus bonus). She worked her way up in the same company over the last 20 years starting as in an office clerk position. She had to overcome many obstacles, such as her parents' serious drug and alcohol problems and financial instability. She dropped out of high school and had two children by the age of 24. However, she recognized the need for a better life and returned to college at the age of 31, completing her degree at age 38. This led to her being promoted from supervisor to manager, thus increasing her salary. She has kept her finances separate from her husband's due to their blended family situation. She prioritizes saving and invests in low-cost index funds. She is frugal and disciplined, not caring for status items or excessive possessions. “Don’t spend money trying to keep up with your friends, save your raises and bonuses, and automate transfers from your pay into savings.”

TAKE-AWAY: We see that many that become successful at saving really don’t just spend on things because they see others are doing it, they develop an intentional savings and spending plan. They buy things only after saving for them and don’t buy things if they don’t have the cash (that means no consumer debt, no credit cards, no home equity for consumer purchases or vacations).