For the first time, I've really felt the elation (and had the numbers to back it up), that my money is actually working for me. And not just a little bit. My little green soldiers have been crushing it this past 12 months. When I first started tracking Net Worth, in January of last year, 2018, I had just crossed the $100,000 mark, and it'd taken me 34 years of life to do that. Now, to be fair, I hadn't been working all 34 years, but I had been working full time since age 22, and part time since age 11, so that's 23 years of employment in some form, and 12 years of full time work. I'd been decent with 2/3 of my money triangle for most of it, the savings and income sides, but didn't get a handle on the investing side until I heard Andrew Hallam speak in 2016. That's when I discovered the magic of Index Fund Investing and started cautiously putting my stored up savings (which had been doing nothing in a checking account except making me feel secure) into Vanguard funds.
I was finally on my way, having a decent understanding of the third leg of my financial triangle, the investing part. My Net Worth increased, but I wasn't actually tracking it on a spreadsheet. Once I did, I had just crossed the $100,000 mark, and I knew, on an intellectual level, that the first $100,000 was the hardest, but after that, compound interest should really start working for me, and each subsequent $100,000 should be easier. But, in my mind, I couldn't really conceive of that or really "get" it at an emotional level. After all, it'd taken me 34 years to get to $100,000, and my savings goal had been $20,000 a year, so it would take me around 5 years to get to the next $100,000, right? That sort of math I could understand.
What I hadn't realized was that a few things had aligned for me that would change that calculation. The first was my mindset about money had shifted, due to lots of exposure to the ideas of the Financial Independence community. I became more intentional about my spending and saving, and my savings rate shot through the roof, up into the high 60-75% range this year. That was assisted by some great side hustles which added an extra $7,500 of tax free income in 2018 and continued in 2019. I also got a raise and promotion at work, so my base salary went up by about 10% as well. Finally, the market has been good in 2019, and that added an extra tailwind, giving me a big push forward.
When I found out that my Net Worth had gone up over $40,000 in one year (April 2018-April 2019), from $102,500 to $144,000, my mouth dropped open a little, and some drool may have come out. I definitely went bug-eyed. Being a money nerd, I wanted to figure out how the heck that had happened, because that's almost as much as my entire base salary, and far more than I had saved over the same period (around $32,600). There was an extra $8,000 unaccounted for.
It was my little green soldiers! My investments had gotten me $8,000 in a year. To put that in perspective, all my side hustles combined (music, writing, photography) had gotten me $8,500 in the same period. That meant that my investments had given me nearly the same amount as all my other work! Now, I have no idea how much time I spent on my side hustles in that period, but it's a lot, probably averaging about 5-10 hours a week, or 250-500 hours a year. My investments, besides the time it takes to investigate things like Fundrise, took no work. NO work, compared to 250-500 hours of work for my side hustles, to bring in nearly the same amount of money. Don't get me wrong, I love playing music and writing and taking pictures, it's not a huge sacrifice to get to spend time doing it, but it was a fairly shocking realization that in a year where I made as much side hustling as I've probably ever made, my investments did the same amount of "work".
Now, I know that I got lucky with the market going up in that period, and if it had dropped 30% I wouldn't be feeling nearly so chipper about my investments. At some point, it will drop like that, and I'll probably not feel that great about it. But in this time period, the market has been anything but steady, and I didn't panic and sell, not even around Christmas when it looked like it was going to really plunge. It recovered, and is higher than ever.
That's not to say that I haven't made some more conservative moves. I moved my bond percentage higher in my asset mix, up to 25% from 20%, if there's a big drop in the market, that will cushion the blow and give me "dry powder" to take advantage of cheaper stocks. Also, I bought $15,000 of Real Estate with Fundrise, which also shouldn't be correlated to any stock market crash (at least that's the dream).
Right now, with dividends alone, I'm making about $300 a month, and that will hopefully only go up as compound interest and automatic reinvestment does its thing. If nothing terrible happens, I should be able to save A LOT of money in the next 15 months as well. More on that as it develops though. If the market doesn't crash, it would be possible for me to hit $200,000 in Net Worth in a bit more than 2 years after hitting $100,000. To go from taking 34 years to get to the first $100,000 to 2 years to get the next $100,000 would be pretty insane, but for the first time, I see the math of how it could happen, and it seems very real.
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Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.
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