Sharing this in case it helps any of you kids experiencing a correction / bear market /potential recession for the first time. I lived through 2008. I was “consulting” through an H1B shop making $50/hr. First, rates were cut to $35/hr, then contracts were canceled. No one was hiring for almost 2 years. I was bad with money. I started working in 2005 and had saved maybe $100k but I used it to buy an investment property in India (bad decision in general) and had $20k cash. I bought a BMW out of school ($1000 inch insurance per month) and rented a luxury apartment ($2500 in Chicago) and bought the latest gadgets. Had to move into someone’s basement for a year but I survived miraculously. Learned a lot of hard lessons though. IT WAS VERY VERY STRESSFUL FOR VERY VERY LONG. This time round, I have $5M in the bank. I’m down $1M since Jan so I’m at $4M but I’m not worried. Here are the decisions and learnings that led to a much better situation this time round: 1) COMPOUND GROWTH: I learned the power of compound interest. I set a goal to get to $1M invested. I realized it was going to take 10 years at my savings rate. So I looked for a new job and moved to the Bay Area. Got to $1M in 5 years due to a good stock market run and RSUs appreciating. 2015 - $1M (TC $250k, started buying rentals) 2017 - $2M (TC ~ $350k, invested in real estate, non FANG L9) 2019 - $3M (TC ~$750k, FANG L7) 2020 - $4M (TC ~ $1.5M, real estate continues appreciating, FANG L8) 2022 - $4.5M after being down $1M. Was at 5.4 in Jan. You notice the power of compound growth above? Investments compounding, real estate compounding, investing in my career and networks compounding over time. 2) SAY NO TO LIFESTYLE INFLATION: Since 2010, I have saved more than 50% of take home salary and all of bonus and RSUs. This was hard. My friends and peers were buying Model X and traveling business class. I said no to lifestyle inflation until I hit FU money. I did upgrade stuff along the way like buying an entry level Lexus and a better home, but we’ll below what I could afford. 3) TO STARTUP OR NOT TO STARTUP: Did not join startups even though a couple friends made it big. FANG is half the money but less than 1/10th the risk. Unless you enjoy working at a startup, it makes absolutely no financial sense from an odds of success perspective. 4) BALANCE RISK AND REWARD: I said no to FB couple years ago and went to Google even though FB was offering $500k more. Yes, half a million more. Risk and reward are tied and at some point you have to find your balance. 5) DON’T PICK INDIVIDUAL STOCKS: Did not chase any individual stocks. I was already tech heavy from RSUs. I set a limit of 10% of my NW to go in speculative investments like TSLA and BTC. Everything else is broad ETFs. I could’ve made an extra million or lost two. So 🤷🏼♂️. I also bought a rental property every year or whenever I could. It’s all about passive income at some point. 6) This one is subjective. I left the Bay Area to be in a more laid back location. It’s a bonus that it’s cheaper (pretty much everything is compared to Bay Area) and does not have California’s state tax rate. My house costs less than one years TC and a similar home even in South Bay is probably $5M. So what is FU money anyway? FU money is the money that gives you peace of mind from a financial perspective. No emergency is generally big enough to destroy you and you’re unaffected by your environment. You can actually make better decisions and fight for impact at work when you’re not constantly worried about your job. Some of you are in a great place making $200k out of school and $400k+ with 3-4 years of experience and have only seen the market go up all the time. March of 2020 probably made you think that dips are super temporary. They are, but can last 2-3 years. My advice is simple, focus on building your FU money chest. TC was $1.5M when I joined but probably $1.2M due to the recent stock dip. L8 with 17 YoE. Did buy a Model X eventually after hitting $4M and I travel biz class now if it’s reasonably priced. Also, AMA. #personalfinance #investments #fire
This is a gem. But since housing market will likely stagnant in the next three to five years, what to do now to compound and hit that FU money?
You were believable until you said you are L8! They don’t just hand L8 offers like that!
? How do they hand them? I got mine in an email after a very nice call from the recruiter 😀
Tldr, just make 1.5 mil TC and you won't need to worry about recession.
You missed the point. If your savings are low and you lose a $1.5M job, you’re still screwed if your expenses are not in control. Focus on putting together a significant amount of money so money serves the most important purpose in life - giving peace of mind.
Thanks I missed that Tldr, just make 1.5 mil TC, don't spend it all, and you won't need to worry about recession.
All of us are not making $200k out of school, or $400k+ with 3-4 YOE. Nor can we expect the same stock market or RSU appreciation that you benefited off. Do you even acknowledge that other people exist.
Then it’s even more important for you to cut expenses and save more. Btw, this is the best job market the world has seen. Do you leetcode for six months and interview at ten companies. Even a 10% success rate will get you a great job and offer.
lol at this. Do you realize that not all are in SW? No amount of efforts will increase your TC in core jobs. Best you get is a 10-15% hikes. And that too with a major relocation.
Great post. Thanks for sharing your wisdom. Wish I knew this 5 years ago.
Wow. These are facts!!
Great positive content in Blind after so many negative posts these days. Congratulations. What year did your marital status changed in this journey and how it changed your strategy? Including kids.
2009. Two kids. That didn’t change anything. Helped that my spouse worked for a few years before calling it quits by choice. She had a $100k job so it didn’t make sense for her to work just for money.
This is golden advice
Pretty useless post. Most people are doing the classic compounding index etfs and not buying Ferraris. They’re just not making 1.5m so their worth isn’t growing to such levels at such a rate. You did something unique with your career growth. You’re not doing anything special with money management
This
50% of Americans are in credit card debt. Half the new hires I had in 2019 bought a Model 3 as their first car. My advice is to simply focus on building FU money.
Congrats and FU! Enjoy the fruits of your labor sir!
Thanks! Lots of work still left to get to $12M (my retirement number).