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self made millionaire

Discussion in 'Personal Finance' started by spooks, Feb 10, 2018.

  1. spooks

    spooks New Member

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    Hello all,

    I somehow stumbled upon this website: http://www.themoneyhabit.org/about/
    (see an article about it here: https://www.forbes.com/sites/mayaka...et-worth-of-more-than-2-million/#d3582b2491d1 )

    I saw a little article about it in a local newspaper and got trigged so I checked it out a bit, but to me it just seems like the same crap you always read: the less you spend, the more you can save.
    Now this is logical, however I have a hard time to understand how people would all of a sudden make (in this case) 2 millions by living like a scrooge.

    I find it hard to believe that , even when investing, she can make 2 millions like that.
    One option however is LUCK. Perhaps she invested some money in a stock that had a gigantic climb, but how is this a sign of knowing what to do?

    She mentions she started working at 60000 dollar a year and spending 24000 every year on rent and so on.
    This means 36000 dollar to be saved.
    Lets say (in her page she explains that she could make up to 100000 dollar a year) she worked 2 years at 60000 (meaning 2 times 36000 dollar , 72000 dollar "gains") and 6 years at 100000 (meaning 6x76000 dollar, totaling 456000 dollar).

    this is in total: 456000+72000 = 528 000 dollar of earnings.

    Now I am even very "polite" here because she retired at 26 and studied 3 years at harvard (so she would have been 21 starting to work, and retiring at 28 would only be 6 to 7 years of work and not 8 as I calculated.

    so she turns half a million into 2 million..... even with the good stock years behind us it seems far fetched for me she was able to do this like that.
    Ok, granted, she worked with an investment firm but still I smell something off here.
    (and yeah, I know she makes or made money with the blog too, but still something smells off here..)

    What are your ideas about blogs/people like this?
     
  2. StockJock-e

    StockJock-e Brew Master
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  3. spooks

    spooks New Member

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    Haha
    exactly my feeling when I listen to those TedEX talks about self made people!
    They always leave out one detail: "LUCK" ! haha
     
  4. T0rm3nted

    T0rm3nted Moderator
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    @spooks Here's my math.

    If your savings #'s are correct for her in your generous example, in 8 years she would need a return from the stock market every year of 33% in order to make it to $2M. The #'s will be off a little because I just did a % based on the savings for a year, and not the fact that some of that money would have been saved/invested throughtout the year. But it should get us pretty close.

    Here's the spreadsheet I quickly made in Excel.

    upload_2018-2-11_7-12-16.png

    In Year 1, if she saved $36,000 from rent and returned 33%, she would have $47,880 by the end of the year.
    In Year 2, she would start with $47,880 and save another $36,000. Add those together and make 33% again, and she would have $111,560.40.
    In Year 3, she would start with $111,560.40, save $76,000 more, and make another 33% on that total bringinger her to a quarter million dollars.

    Continue to Year 8 with the same model, and she would just break $2M.

    SO IT'S SIMPLE, JUST RETURN 33% A YEAR AND SAVE LITERALLY EVERY DOLLAR YOU MAKE EXCEPT FOR WHAT YOU SPEND ON RENT. DON'T WORRY ABOUT EATING, OR CLOTHING, ETC.
     
    BermudianOption and bigbear0083 like this.
  5. StockJock-e

    StockJock-e Brew Master
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    Its a good thing that the stock markets return 33% every year!

    Can you imagine if one day that stops happening?
     
    OldFart and T0rm3nted like this.
  6. spooks

    spooks New Member

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    Wow you actually did the math!

    I did not bother to do so because I knew it would make no sense at all.
    Who is going to get 33% return each year?

    The story is just b*llshit.
    Now she is making money off idiots that believe her crap.


    PS. actually that 24.000 dollar a year she does spend is with all other expenses included (so not just rent :p)
     
  7. T0rm3nted

    T0rm3nted Moderator
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    Haha, ya. I'm not saying that she actually did it, just saying what she would theoretically need to achieve as an average return per year. I suppose she could have returned much lower, and then just got real lucky the last year with her money not diversified at all and just hit like all of her money on AMD in 2016-2017 and tripled her money for example.
     
    bigbear0083 likes this.
  8. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

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    It seems like a 65-year old should have $1M if they want to retire, that's to cover their medical expenses, "old folks home", etc. at that age. A lot changes when you get older and can't live on your own.
    If she does have $2M at 28 years, that's a good amount to have but I wouldn't try to retire with that. And I guess she's not having children. Just going to be a retired 28 year old, using your money to cover the bare essentials...seems depressing. But she's trying to use that as a selling point for books or something?
    Maybe she's one of those people that looks at Google Maps to simulate vacations.
     
    bigbear0083 likes this.
  9. T0rm3nted

    T0rm3nted Moderator
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    If I knew I could have $2M at 28 years old by not spending money before that after graduating college, I would make that sacrifice. I would also retire at 28 with $2M if I was not having kids. There's nothing to say you can't continue investing.
     
    bigbear0083 likes this.
  10. StockJock-e

    StockJock-e Brew Master
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    Those things are expensive!
     
  11. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

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    Well I was assuming that retirement meant you were out of risky investing as a means of growing wealth, and only doing investing as a safety against inflation. Otherwise she just quit her job to play the stock market.
     
  12. BermudianOption

    BermudianOption Active Member

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    Nothing about this story sounds unfeasible. We shouldn't shoot it down so quickly. I think there are assumptions being made that are incorrect:

    1) She may have started @ $60,000 but nothing suggests she stayed there:
    On her website it says that bonuses were almost equal to a yearly salary:
    2) Nothing suggests it is solely her money. She is married and says:
    If it were just her money, she would be more likely to say "my nest egg covers our expenses"
     
    T0rm3nted likes this.
  13. spooks

    spooks New Member

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    I never said that she stayed at 60.000 , in the calculation used by someone else, a higher amount of money was used.
    Yes, it is true, she could have gotten some nice bonuses but even then....


    My point is still valid: she is "selling" a stupid sales pitch that makes no sense!
    Her website is all about "saving" money and living sober to get 2 million after a few years.
    This is just idiotic.
    She is lying her ass out or she is so blind to the reality that most people do not make that amounts of money in a year + investing does not deliver you top % each year.

    BTW: if the married part is indeed true, she needs to simple say: I married a rich dude and he gave me X million... rofl.
     
  14. spooks

    spooks New Member

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    1million? is that even realistic ?
    I am not from the USA (but I know wages can be a lot higher there, depending on the job) but 1 million dollar still seems a lot for most people no?
     
  15. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

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    For one thing, the US has high health care costs. And health care costs is one of those things that outpaces inflation. The AARP (American Association of Retired Persons) says https://www.aarp.org/work/retirement-planning/info-2015/nest-egg-retirement-amount.html#quest1
    "But for a retiree to generate $40,000 a year after stopping work, he or she will need savings of about $1.18 million to support a 30-year retirement; this was calculated using average returns of 6 percent and inflation at 2.5 percent, according to Morningstar, a Chicago-based investment-research firm."

    You're right that $1M is a lot for most people still.
     
  16. T0rm3nted

    T0rm3nted Moderator
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    True, you need a lot more than you think. Gotta remember too, social security will be different now and whenever some people retire. Also have to factor in any sort of pension you can get, whether or not your houses/cars are paid off and how old they are, kids, etc. Are you married, etc. It's different for everyone, and greatly depends on where you live. If you live IN San Francisco, $1M will not get you any where near as far as if you live in the country side of Tennessee, etc.

    My house in Rockford, IL cost us $200K a couple years ago. If I relocated that house and my 1/3rd acre to Chicago IL, it would probably cost well over $600K. Just goes to show you how much worth your money has in different locations.
     
  17. spooks

    spooks New Member

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    I wonder how many people actually make this 1 million.

    The USA as a country is not really doing a great job in my opinion.
     
  18. Anny.M

    Anny.M New Member

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    Oh yes
     

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