We recently found a worksheet from 2013 listing our assets when we updated our Wills. Guess how much we had to our name when we were 26 years old, made a little more per hour than fast food workers, with a second child on the way? Our Net Worth was a measly $18,000. We were living in a small rental, had one old car, and no real career direction.
We realize 26 years old isn’t that late a start, but given we are only 7 years since that “reboot”, use our example as what you can accomplish within 5-7 years, regardless of your starting age, if you’re motivated, even frustrated, with your past mistakes or inability to get ahead.
Life wasn’t handed to us on a silver spoon. We paid for our first cars and cell phones ourselves, couldn’t afford college, didn’t have a career plan, but knew we wanted a family and would work hard to carve out a life.
So we chose to continue working diligently, commuting 2 hours round trip for a whole year, and working 100’s of overtime hours to hone a marketable skill. After four years and two companies, we found a new job finally making $42,000 per year with good benefits!!! At the same time, we also picked up a second job that matched a passion plus would pad the income. Between career advancements inside both organizations, our income has grown rapidly thanks to hard work, consistent 70-80 hour work weeks since 2013, and did I mention hard work.
But from 2013 to 2020, our Net Worth has increased by 23x! Thanks to hard work, following opportunity, and saving with investing…
Besides hard work… ultimately it comes down to trust and diversification. Trusting that what’s happened historically will be the most likely future + diversification for the upsets.
We were always concerned about investing in the stock market. But with low fees and diversification (like a Vanguard Index fund), there isn’t anything else as passive with as large a potential. Sure, the stock market could fall, and even stay low for years. But over decades, that buy-and-hold compounding is so incredibly powerful. And you can and should diversify into other asset classes as well, including real estate and even multiple active income streams.
Say it with us… Timing the market doesn’t work!
There will be many times where your investments drop and keep dropping. Let’s review a few recent examples from our own Personal Capital dashboard, shall we:
In both of these timeframes, we were still contributing over $1,000 every two weeks. And yet for a month straight, we were either “losing” money or saw the zero growth. But you know what we didn’t do? We didn’t stop investing nor did we sell, fearing the worst. There was plenty of negative news, with fears of bubbles and inflation to concern us. Instead of focusing on recurring speed bumps, we remained invested in low-cost Vanguard index funds, even buying more, as we are in this for the long haul. We focus on what we can control. And yes, we are diversified into real estate and other assets too; not solely trusting in the stock market. But it would require a massive change in the structure of our government and global economy to nullify the ongoing long-term growth the stock market has seen for over a century now.
We include all this to preface next month’s Net Worth Update post where even we are surprised by our Net Worth’s growth. Sure, a long bull market doesn’t hurt, but it is our relentless saving and trusting in the method that is the main driver. Stay tuned…