Thoughts on Rounding the $300,000 Portfolio Milestone

I’ve made a lot of mistakes in life and in personal finance, but the one thing I did right was invest in my 401(k) immediately upon starting my first career-building job in 2008. At that time, I didn’t understand the stock market and it was terrifying to trust a system that had just crashed. But I started anyway. Sure, I made some rookie mistakes. I panicked and sold low and bought high. I made too many trades and messed with my money too actively. But I learned how to strategize and manage my own portfolio as time went on, while contributing diligently with every paycheck. I invested while paying down my student loans aggressively. I encourage pursuing multiple financial goals concurrently.

Ten years later, I am a month away from hitting a big milestone — a $300,000 portfolio. As of this writing, I am at $297,991.34. This is a significant milestone because, with the magic of compounding interest, I am actually halfway to a $1 million portfolio (rather than a third of the way there). I’m a 33-year-old woman, so I anticipate having my million dollar portfolio before I turn 40.

Every personal finance expert says that the first $100,000 is the hardest to accumulate. I would absolutely agree. It took several years to amass $100,000, in part because it requires intense and aggressive saving. There is almost no help from compound interest. However, things get exciting after reaching the six-figure milestone: without any additional effort, a chart of your gains starts to resemble a hockey stick.

I wish I’d kept track of the exact timeline, but with job moves and rollovers to traditional IRAs, I am unable to look backwards. I’ll estimate that it took about five years to pay off my student loans and break the six-figure barrier. With this achievement, I found a sense of security. I had established a good habit of saving and living below my means and I’d seen results that encouraged me to keep moving forward. Psychologically, I felt empowered and confident in taking on more risks in my life and my career. I continued to pursue multiple financial goals: retirement and saving a down payment for a house.

The second $100,000 came relatively quickly and easily, in about three-and-a-half years. This shift in my financial position was astounding. The experts were right — my money was working for me. That’s when my interest in FIRE (financial independence, early retirement) grew. There were people out there in the world leaving the workforce with relatively lean portfolios, retiring early to live a Spartan lifestyle. I knew this path would not be for me (I enjoy beautiful things and living in a high cost-of-living city), but the possibility was still exciting. I was encouraged by the idea that I could frontload my savings early in my career as a gift to my future self. I wanted a future full of options. At this stage, I believed this could be my reality.

A few factors played a role in boosting my portfolio from the $200,000 mark to nearly $300,000. I had a work-related windfall of about $25,000 and the stock market rose to historic heights. It took an unprecedented year-and-a-half to increase my portfolio nearly by $100,000 — which brings me to the present. According to the four percent rule, I could withdraw $12,000 annually without touching my principal balance. To put this into context, the current poverty line for a one-person household is $12,140. Learning this statistic both shocked and saddened me. With the pure dumb luck of securing an entry-level job with benefits during the Great Recession, and the encouragement that came from early successes in investing, I was lucky enough to position myself so that I would never live in poverty. It’s an unfair thought that the circumstances that bore compound advantages in my life aren’t accessible to many hardworking Americans. I now understand how easy it is for the rich to get richer, passively.

I feel a deep sense of gratitude for my upwardly mobile trajectory. I didn’t have health insurance until I secured it for myself in adulthood. I looked for low-cost college options because I came from a lower-class background, and graduated with only minimal student loans. (Plus, education was significantly cheaper in the 2000s than it is now.) My lifelong fear of financial insecurity propelled me to make a new life for myself — and, most surprisingly, I had an intrinsic belief that it was in the realm of possibility. Where this confidence came from, I don’t know. I had no life experiences or historical data to support this notion.

As a Millennial, I appreciate the challenges stacked against us. We are the first generation who will likely accumulate less wealth than the generation before us. Housing, education, and healthcare costs are enormous and, frankly, unprecedented barriers. We are solely responsible for securing our retirements and we are chastised for derailing our financial futures by eating one too many avocado toasts or springing for fancy coffee drinks.

I know things are harder for us. I just hope that belief and stupid, unfounded optimism can help us overcome the harsh realities of being an adult in 2018. I want to encourage you to keep doing the next right thing. Developing a good habit of saving and investing, coupled with time and compound interest, will help you reach your financial goals.

Anonymous is single, loves Vanguard funds, and long walks on the beach.

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