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Posted: 7/5/2014 2:12:51 PM EDT
[#1]
Sometime between 28 & 29, but I saved a lot early.
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Posted: 7/5/2014 10:27:45 PM EDT
[#2]
I think I was 42.
Better late than never eh? |
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Posted: 7/5/2014 11:42:48 PM EDT
[#3]
Um. Around age 36. Of course, I didn't finish school and get a real job until age 31.
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Posted: 7/6/2014 8:43:09 AM EDT
[#4]
Mine would be a roth. 55
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Posted: 7/6/2014 12:52:18 PM EDT
[#5]
32, and now we will see how long it takes for $1,000,000!
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Posted: 7/6/2014 6:54:19 PM EDT
[#6]
Quote HistoryQuoted:
32, and now we will see how long it takes for $1,000,000! Just remember - The 1st Million is the hardest. |
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Posted: 7/6/2014 8:45:56 PM EDT
[#7]
Quote HistoryQuoted:
32, and now we will see how long it takes for $1,000,000! So I was looking at TRowe price, they have special funds that are very high yield but it is something like a $250,000 buy-in. Basically for investors that have more money, they can make more interest? |
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Posted: 7/8/2014 12:47:24 PM EDT
[#8]
Quote HistoryQuoted:
So I was looking at TRowe price, they have special funds that are very high yield but it is something like a $250,000 buy-in. Basically for investors that have more money, they can make more interest? Quote HistoryQuoted:
Quoted:
32, and now we will see how long it takes for $1,000,000! So I was looking at TRowe price, they have special funds that are very high yield but it is something like a $250,000 buy-in. Basically for investors that have more money, they can make more interest? usually a minimum is established to help reduce costs of dealing with excessive investors with "tiny" amounts. By reducing those costs they can in turn provide a better yield to the investors. Just think about how much it costs to mail out a statement/ prospectus to each customer. That guy that wants to invest $50 is going to cost the fund more than they can earn on his money. |
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Posted: 7/8/2014 4:00:56 PM EDT
[#9]
Well, I'm 24 now and have been working since May 2012. I hope to reach $100,000 by the time I'm 28 or 29. It should be possible by at least 29 at my current rate.
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Posted: 7/8/2014 4:04:25 PM EDT
[#10]
I only contribute 4% now before co. matching. They use Fidelity. I'd guess somewhere in mid 30s as I am 27 now and started exactly a year ago.
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Posted: 7/8/2014 4:11:57 PM EDT
[#11]
Quote HistoryQuoted:
Just remember - The 1st Million is the hardest. Quote HistoryQuoted:
Quoted:
32, and now we will see how long it takes for $1,000,000! Just remember - The 1st Million is the hardest. True |
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Posted: 7/8/2014 4:23:10 PM EDT
[#12]
I was probably 29 when I hit 100K. I chip in 7% the company throws in 8%.
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Posted: 7/8/2014 4:27:17 PM EDT
[#13]
I was pretty close to your age when I hit number. Things have been good to me since then though, my investments have tripled since 08.
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Posted: 7/8/2014 4:35:26 PM EDT
[#14]
Quote HistoryQuoted:
Sometime between 28 & 29, but I saved a lot early. I was stupid. Should hit it this year but I'm 39. I have other assets invested but the 403B alone is just now heading towards 94K, at my contribution rate it'll get to 100 before New Years on contributions alone. I wish I had been more of a saver in my early career. |
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Posted: 7/8/2014 8:16:21 PM EDT
[#15]
Quote HistoryQuoted:
I was stupid. Should hit it this year but I'm 39. I have other assets invested but the 403B alone is just now heading towards 94K, at my contribution rate it'll get to 100 before New Years on contributions alone. I wish I had been more of a saver in my early career. Quote HistoryQuoted:
Quoted:
Sometime between 28 & 29, but I saved a lot early. I was stupid. Should hit it this year but I'm 39. I have other assets invested but the 403B alone is just now heading towards 94K, at my contribution rate it'll get to 100 before New Years on contributions alone. I wish I had been more of a saver in my early career. I never liked to spend money, even for shooting. I have always been a frugal saver probably because of the fights I remember my parents having over money. |
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Posted: 7/9/2014 8:00:23 PM EDT
[#16]
About 41-42 years old. I was maxing out every year and investing on the side. I also enjoyed life (plenty of travel to Europe/Asia and later on the U.S.A.)
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Posted: 7/9/2014 8:06:12 PM EDT
[#17]
I'm 34 and not far away, although my wife and I have 4 different retirement accounts (she is on state, I have a 403(b), a Roth IRA, and a Mutual Fund that I started when I was 15). I didn't enter the work force until I got out of grad school at the age of 27.
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Posted: 7/9/2014 8:33:31 PM EDT
[#18]
Look at it this way, a small video on Yahoo Finance said that the average balance of a checking account in the US is $3,000. The average retirement account for ages 25-32 is $12,000 and for ages 35-44 is $61,000. You're ahead of the game.
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Posted: 7/9/2014 9:08:11 PM EDT
[#19]
Hit a 100k?
Which time?   
I was a victim of those lost years of investing. What was it 2001/2 crash? I knew one guy who saw the first couple shaky drops then. He put all his stuff in the stable income fund before the bottom dropped out of the market. Compared to the rest of us, he made out like a bandit. Avg is 61k? Damn, I feel better now. Still doubt I'll have enough for what things are going to cost the way the economy is going. |
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Posted: 7/9/2014 10:26:58 PM EDT
[#20]
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. |
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Posted: 7/9/2014 10:58:00 PM EDT
[#21]
Quote HistoryQuoted:
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. You're doing something right for both of you to by hitting $100K in each account at 30. Good for you. |
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Posted: 7/10/2014 12:05:57 AM EDT
[#22]
Quote HistoryQuoted:
You're doing something right for both of you to by hitting $100K in each account at 30. Good for you. Quote HistoryQuoted:
Quoted:
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. You're doing something right for both of you to by hitting $100K in each account at 30. Good for you. Thanks 
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Posted: 7/10/2014 12:22:50 AM EDT
[#23]
One thing to consider is that back in the '90s, you could not contribute as much as you could today. It was only $7.5k a year max which has since then doubled or perhaps is even more.
A second consideration is that some employers did not offer matching contribution. Mine didn't. Congratulations to those who save! I know people who didn't and now they whine about how "others" are rich and that it isn't fair. Boo hoo. |
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Posted: 7/10/2014 12:29:10 AM EDT
[#24]
i was probably 27-28.
started when i was 20. but Co. stopped contributing a few years ago. I still add in 4% but Im around $180 now, at 35. |
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Posted: 7/11/2014 11:09:20 AM EDT
[#25]
Quote HistoryQuoted:
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. Yes exactly. This isn't bragging rights it's for discussion and support. People who are 30 years old right now are being told to expect $0/month from social security that they have been paying into. That is my expectation moving forward, anything I might get will be a bonus, but SS will be means-tested later which sucks. Get those Roth IRAs going too. Someone said something about the first million. I was looking at an investment simulator. Took something like 22 years to make the first million, and 5 years to make the second million. Eventually your contributions are miniscule and it's the interest and dividends that are really significant. |
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Posted: 7/11/2014 12:28:04 PM EDT
[#26]
Quote HistoryQuoted:
Yes exactly. This isn't bragging rights it's for discussion and support. People who are 30 years old right now are being told to expect $0/month from social security that they have been paying into. That is my expectation moving forward, anything I might get will be a bonus, but SS will be means-tested later which sucks. Get those Roth IRAs going too. Someone said something about the first million. I was looking at an investment simulator. Took something like 22 years to make the first million, and 5 years to make the second million. Eventually your contributions are miniscule and it's the interest and dividends that are really significant. Quote HistoryQuoted:
Quoted:
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. Yes exactly. This isn't bragging rights it's for discussion and support. People who are 30 years old right now are being told to expect $0/month from social security that they have been paying into. That is my expectation moving forward, anything I might get will be a bonus, but SS will be means-tested later which sucks. Get those Roth IRAs going too. Someone said something about the first million. I was looking at an investment simulator. Took something like 22 years to make the first million, and 5 years to make the second million. Eventually your contributions are miniscule and it's the interest and dividends that are really significant. Albert Einstein is said to have called "the power of compound interest the most powerful force in the universe." I expect nothing from SS later in life. I am planning everything as if its just me and my wife saving money. We have Traditional IRAs from past 401K rollovers, a couple of Roth IRAs that need some more attention, a Money Market Account for our emergency funds and she has a 401K at her present employer as well as full life insurance policies that get 4% per year. If I get anything from SS, I want it to be for hookers and blow. |
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Posted: 7/13/2014 5:39:58 PM EDT
[#27]
I totally agree with PKT1106, Social Security will just be gravy if there's any.
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Posted: 7/14/2014 6:44:57 PM EDT
[#28]
I should be there by the time I'm 37.
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Posted: 7/14/2014 10:06:15 PM EDT
[#29]
29. I'm 31 now.
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Posted: 7/17/2014 9:48:47 AM EDT
[#30]
Quote HistoryQuoted:
Albert Einstein is said to have called "the power of compound interest the most powerful force in the universe." I expect nothing from SS later in life. I am planning everything as if its just me and my wife saving money. We have Traditional IRAs from past 401K rollovers, a couple of Roth IRAs that need some more attention, a Money Market Account for our emergency funds and she has a 401K at her present employer as well as full life insurance policies that get 4% per year. If I get anything from SS, I want it to be for hookers and blow. Quote HistoryQuoted:
Quoted:
Quoted:
Hey, cool thread
I hit it last week (30). Wife will sometime this year, also 30. We both contribute 11% with a 1% automatic increase in January and the company matches to 6%. For the record, I started this for educational purposes. Neither of my parents (or step parents) amounted much financial wealth so I do what I think is logical and financially sound. This forum is my soundboard. I never meant for this to be a "look at me", but rather a place to share, encourage, and reflect. Yes exactly. This isn't bragging rights it's for discussion and support. People who are 30 years old right now are being told to expect $0/month from social security that they have been paying into. That is my expectation moving forward, anything I might get will be a bonus, but SS will be means-tested later which sucks. Get those Roth IRAs going too. Someone said something about the first million. I was looking at an investment simulator. Took something like 22 years to make the first million, and 5 years to make the second million. Eventually your contributions are miniscule and it's the interest and dividends that are really significant. Albert Einstein is said to have called "the power of compound interest the most powerful force in the universe." I expect nothing from SS later in life. I am planning everything as if its just me and my wife saving money. We have Traditional IRAs from past 401K rollovers, a couple of Roth IRAs that need some more attention, a Money Market Account for our emergency funds and she has a 401K at her present employer as well as full life insurance policies that get 4% per year. If I get anything from SS, I want it to be for hookers and blow. Agreed - I've been saving on my own since I started work. I graduated college on a Saturday and literally began 401K and work on Monday. That was the 80s for you! I sure wish they would have had a system where you let them keep half of that Social Security we and our employer give and invest it on your own and don't rely on them at all in the future. We would all be better off. Their are those that were foolish. I told my peers to save and invest and they would adjust to a little less money every week. Many didn't listen, they had a few extra bucks for beer and living and pissed it away, now, they are trying to live a life of saving every penny - so much better to save young and take the pressure off later in life. Encourage your kids to save young and don't count on social security. |
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Posted: 7/26/2014 2:44:16 PM EDT
[#31]
My dad helped my open an IRA when I started working at 16. He taught me to save something every time I got paid. I continued to contribute to my IRA and then the TSP once I joined the Army. I hit $100,000 at about 26 years old. Thankfully my Dad taught me save, because I am cruising towards retirement. I still save 11% in my 401k (just shy of the max) plus 6% from my employer.
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Posted: 7/27/2014 1:45:21 PM EDT
[#32]
I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years.
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Posted: 7/29/2014 12:54:58 PM EDT
[#33]
Mine is not even close to that because no 401K match at 38. Actually the plan was canceled last week and I'm sitting on a big check about to roll it over to an IRA. The majority of my retirement is in a Roth IRA.
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Posted: 7/29/2014 1:07:23 PM EDT
[#34]
Quote HistoryQuoted:
I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich did so with some form of leverage either directly or indirectly. I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. |
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Posted: 7/29/2014 1:27:29 PM EDT
[#35]
I think I hit that number when I was 27 or 28.
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Posted: 7/30/2014 1:16:32 AM EDT
[#36]
10 years ago at 29, it basically took me 9 years to get to 100k... just passed 600k last month.
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Posted: 7/30/2014 1:13:46 PM EDT
[#37]
Really glad to see all the activity in this thread. Tons of great ideas and encouragement going around. Keep it up
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Posted: 7/30/2014 8:14:11 PM EDT
[#38]
I'm 29 and knocking on $75,000 in a Roth 401k. I would rather pay taxes now then later. I only put 6% which is the min my company with match with 6%. I like todo my own investing, but I don't want to pass up free money. My own trade accounts I have well over the 100 mark in stocks as well as cash.
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Posted: 8/1/2014 11:36:36 AM EDT
[#39]
Well, my Small Cap funds have been taking quite a hit. I am now at 0.77% this year on my portfolio. Back under 100k, despite adding more money to the pot.
It will come back, I am sure. |
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Posted: 8/2/2014 10:38:06 AM EDT
[#40]
Quote HistoryQuoted:
Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich did so with some form of leverage either directly or indirectly. I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. Quote HistoryQuoted:
Quoted:
I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich did so with some form of leverage either directly or indirectly. I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. I don't really disagree with your math but you are not including the risk factor. What happens when you are leveraged up to your eyeballs and some properties sit vacant for a while and you have difficulties with payments? What about the constant pressure of needing to have them occupied so you end up renting to subpar tenants and the places get tore up? I have two paid for rent houses. I would prefer to have these two paid for than twenty leveraged. I know I could potentially make more with twenty but I could also go bankrupt that way as well if things didn't go according to plans. I prefer the slow and steady method of doing things. To the guy with the two mortgaged rent houses that does not have much in his retirement accounts I would recommend rethinking your strategy. I like real estate and I own some as a part of my retirement plan but I would not count anything other than your equity in those houses toward what you have for retirement. |
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Posted: 8/4/2014 1:29:22 AM EDT
[#41]
Quote HistoryQuoted:
I don't really disagree with your math but you are not including the risk factor. What happens when you are leveraged up to your eyeballs and some properties sit vacant for a while and you have difficulties with payments? What about the constant pressure of needing to have them occupied so you end up renting to subpar tenants and the places get tore up? I have two paid for rent houses. I would prefer to have these two paid for than twenty leveraged. I know I could potentially make more with twenty but I could also go bankrupt that way as well if things didn't go according to plans. I prefer the slow and steady method of doing things. To the guy with the two mortgaged rent houses that does not have much in his retirement accounts I would recommend rethinking your strategy. I like real estate and I own some as a part of my retirement plan but I would not count anything other than your equity in those houses toward what you have for retirement. Quote HistoryQuoted:
Quoted:
Quoted:
I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich did so with some form of leverage either directly or indirectly. I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. I don't really disagree with your math but you are not including the risk factor. What happens when you are leveraged up to your eyeballs and some properties sit vacant for a while and you have difficulties with payments? What about the constant pressure of needing to have them occupied so you end up renting to subpar tenants and the places get tore up? I have two paid for rent houses. I would prefer to have these two paid for than twenty leveraged. I know I could potentially make more with twenty but I could also go bankrupt that way as well if things didn't go according to plans. I prefer the slow and steady method of doing things. To the guy with the two mortgaged rent houses that does not have much in his retirement accounts I would recommend rethinking your strategy. I like real estate and I own some as a part of my retirement plan but I would not count anything other than your equity in those houses toward what you have for retirement. I was going to post something like this. But basically, you have to calculate what level of risk you are comfortable with. I personally would rather have 14% ROR on a rental property, and have the ability to lower the rent if I had trouble getting tenets, than a higher rate and not be able to lower the payment. |
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Posted: 8/8/2014 11:07:45 AM EDT
[#42]
With the current conditions in the stock market all my gains are sliding back again. I just hope I can end this year up at least 4%.
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Posted: 8/23/2014 5:12:31 PM EDT
[#43]
Not sure when I hit $100k but I started putting 10% in my 401k with my very first paycheck 17 years ago and have continued to do so since. Now at 40 y/o I'm just north of $450k in my account. For you young guys out there, do it right off the bat and you won't miss the extra take home pay.
Posted Via AR15.Com Mobile |
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Posted: 8/25/2014 11:12:38 PM EDT
[#44]
I started at the bottom in 2009, 5 years ago. After putting it off for a few years I went to the max company match of 4% into moderate-high risk investments and rode it up. Over the last year I've upped to 6% and now to max allowable, while balancing it out a bit to a sizable percentage in guaranteed investments but the majority in moderate risk. All new contributions going in to moderate-high.
I'll reach $100k mid-next year at 39. |
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Posted: 8/26/2014 10:06:04 AM EDT
[#45]
Quote HistoryQuoted: Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich (quickly) did so with some form of leverage either directly or indirectly (at great financial risk). I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. Quote HistoryQuoted: Quoted: I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich (quickly) did so with some form of leverage either directly or indirectly (at great financial risk). I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. |
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Posted: 8/26/2014 10:20:01 AM EDT
[#46]
Quote HistoryQuoted:
Leveraging investments is great until it is doubling or tripling your losses. Quote HistoryQuoted:
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I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich (quickly) did so with some form of leverage either directly or indirectly (at great financial risk). I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. Leveraging your investments is not some get rick quick scheme. It's an established and tested way of making yourself money. Yes, things can go bad. Any investment has a risk of loss to it, unless it's so safe that the returns are miniscule. |
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Posted: 8/26/2014 10:28:00 AM EDT
[#47]
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I don't really disagree with your math but you are not including the risk factor. What happens when you are leveraged up to your eyeballs and some properties sit vacant for a while and you have difficulties with payments? What about the constant pressure of needing to have them occupied so you end up renting to subpar tenants and the places get tore up? I have two paid for rent houses. I would prefer to have these two paid for than twenty leveraged. I know I could potentially make more with twenty but I could also go bankrupt that way as well if things didn't go according to plans. I prefer the slow and steady method of doing things. To the guy with the two mortgaged rent houses that does not have much in his retirement accounts I would recommend rethinking your strategy. I like real estate and I own some as a part of my retirement plan but I would not count anything other than your equity in those houses toward what you have for retirement. Quote HistoryQuoted:
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I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich did so with some form of leverage either directly or indirectly. I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. I don't really disagree with your math but you are not including the risk factor. What happens when you are leveraged up to your eyeballs and some properties sit vacant for a while and you have difficulties with payments? What about the constant pressure of needing to have them occupied so you end up renting to subpar tenants and the places get tore up? I have two paid for rent houses. I would prefer to have these two paid for than twenty leveraged. I know I could potentially make more with twenty but I could also go bankrupt that way as well if things didn't go according to plans. I prefer the slow and steady method of doing things. To the guy with the two mortgaged rent houses that does not have much in his retirement accounts I would recommend rethinking your strategy. I like real estate and I own some as a part of my retirement plan but I would not count anything other than your equity in those houses toward what you have for retirement. No doubt there is a risk factor by being leveraged on real estate but in my mind that's the whole point of being in real estate. Lack of diversification is another risk. I would be very uncomfortable having that much money tied up in a single asset and only making the kind of returns one could make on a paid for rental. I'd rather be in the stock market at that point and have the ability to diversify. But, like I said before, it really depends on the situation. If I was able to net 15%+ on a rental property with minimal sweat equity required, I'd probably figure it was worth the exposure. If I was only able to net single digits and had to spend a big chunk of time managing the properties, I would consider it to be an waste of my precious capital. Since you are in that business, what kind of returns are you getting on your properties? I expect that it varies by area. In my area, I looked into rental properties and the returns were in single digits. It just makes no sense to own a rental property in my area unless you are using leverage. |
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Posted: 8/26/2014 10:43:26 AM EDT
[#48]
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Leveraging investments is great until it is doubling or tripling your losses. Quote HistoryQuoted:
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I'm 32.5 and I only have 30K between my 401K and Roth IRA. However instead of putting more money into these I invested in two rental houses which which already have a NET profit and will return about 14.5% per year once they are paid off. One has 27 years left and the other will be paid off in about 14 years. Just some food for thought, but your rental properties will generate higher % returns if you keep them leveraged. Example: $100k home (Paid Off) $14.5k in rents net of expenses (your 14.5%) 14.5% return on $100k $100k home (80% at 5% interest) $10.5k in rents net of expenses and interest 52.% return on $20k Using the example above where you have $100k to invest. You could have 1 property at $100k earning 14.5% or you could have 5 properties at $20k down each earning 52.5%. I am a firm believer that the only point of rental properties is your ability to buy them with leverage. I'm not saying this makes sense all the time, for every person, and under every market condition, but you should at least go through the thought exercise and decide for yourself. It's worth noting that damn near every person that ever got rich (quickly) did so with some form of leverage either directly or indirectly (at great financial risk). I bet I could shoot down most counterexamples that people would come up with to disprove that statement as the use of leverage is often buried deep down in the details. Try me. Depends on what you are leveraging. Buying real estate or building a business with leverage is entirely different than buying stocks on margin. You can poo poo this concept all you want, but you would have a hard time driving by any business park and finding a company in there of any size that wasn't built with leverage. It's the entire reason that banks ever came into existence in the first place. They weren't conceived as savings institutions but as sources of capital to enable growth. My company has used debt to finance our growth since our inception and you'd be hard pressed to find others that didn't do the same. If you are putting all of your own money at risk when growing a business, you'd be thought a fool. Despite your edits of "quickly" and "at great risk" that is not what this is about. Using leverage to grow a business isn't about getting rich quick at great risk by default. That depends entirely on how much leverage you are using. There are "reasonable" levels of debt for a business to carry to the point that in some cases not only is too much considered unhealthy, but also too little. The point of my post is that OP should look at his situation and determine if it makes sense to have all that capital tied up in a single asset just to make 14.5%. First, I bet his numbers are naively optimistic and second, that's a lot of exposure to take just for whatever that real number actually turns out to be. |
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Posted: 9/1/2014 2:38:48 PM EDT
[#49]
35yr old, joint $100k
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Posted: 9/3/2014 7:53:15 PM EDT
[#50]
Hit 100k around 28, currently at 236k at 32
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