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I lost $2 million dollars

I lost $2 million dollars

Well every goal I set for myself on this blog I not only met, but in many cases vastly over achieved. As you can see from my last post I brought up that I made the comment in my 2018 report that

My goal some day is to lose $1 million dollars in portfolio value.

Well in January of this year I made a post letting everyone know that I had indeed accomplished that goal and now in the same year I’ve now managed to lose a second million dollars in portfolio value!

My portfolio had grown at absolutely insane rates the last couple of years and now it’s going the other direction having lost two million dollars over the last 12 months.

In some ways thats almost mind boggling as it took me 41 years to amass $2M and then just two years later I’ve lost more than $2M. This would be absolutely devastating for me if I hadn’t also hit $3M and $4M shortly after I hit $2M so basically where I sit now I am back to where I was 2 years ago. Easy come / Easy go and also where I was 2 years ago was absolutely incredible and mind boggling.

My absolute stretch goal for my nestegg set when I was just starting out was to hit $1M in nestegg value before I turned 40. Not only did I hit that goal 1.5 years early I was then able to run my portfolio well above $4M in the next 3-4 years. Compounding is powerful big numbers get bigger and the flip side can be said – big numbers drop bigly when the portfolio shrinks. It’s best to think in terms of percentages as dollar amounts can mess with your mind when numbers get big as those dollar amounts are mind boggling. The other thing to remember is the price to pay for those returns is risk & volatility. It cannot be avoided so it’s best not to get too high or too low. This is a long term game and the short term fluctuations don’t mean anything in the grand scheme of things. Draw downs like this will happen all of the time, and while it hurts to be down 50% from some arbitrary all time high, if I zoom out and look at where I have come from I am still incredibly proud of where I am.

I also know that with such a big draw down, the level of risk of further massive drops likely becomes less likely and there will be good days again in the future.

Now one thing I have learned from this draw down was that despite my constant insistence that being 100% invested in stocks all of the time is clearly the only smart play long term as it guarantees the largest long term gains and that volatility does not matter as long as you have a large enough margin of safety. Now I still logically believe this, I do think the idea of having a cushion of stable investments makes a little more sense to me now and I’ll try to explain why.
I have not ever touched any of my investments as I am young and do not rely on them to pay bills or make purchases. I am however constantly moving closer and closer to a day when I will likely start tapping into this huge pile of money for the freedom that it can provide. While I know I will have a large margin of safety built in when I do this, I do realize that the optimizer in me would have a hard time pulling money from the market when things have fallen so much as I know in the next couple of years todays prices will be extremely attractive and I would be dumb to sell. This is why I need to get better at building a large cash reserve when things are going extremely well. Yes I will cost myself somewhat in performance, but I will greatly increase the freedom buying power of that money. Meaning I can basically do whatever I want whenever I want with my money and whether the market is up a lot or down a lot will not affect those plans in any meaningful way.

To to this I’ve arbitrarily decided that I would need about 5 years of spending money with a good margin of safety and that in that case I would almost always be set regardless of what the market is doing or what my needs will be met and I would have cash on the sideline to take advantage of any major discounts. I am not sure if this goal should be a percentage or dollar amount as my spending would be a set dollar amount, but it probably makes sense to have a percentage of my portfolio. I think somewhere around 10-20% makes sense with maybe a cap on the dollar amount. Obviously it doesn’t make sense to raise cash now with the markets down, but as the market recovers and we get back to previous highs or close to it I think it makes senes for me once or twice a year look at my portfolio and raise some cash off of it – kind of like a self imposed dividend. This would give me my 5 years of cash that I would never touch and as the market continued to rise I could pull some additional off up to 20% and then when things fell I would have an additional margin of safety and could reinvest some of that money.

For those that knew TomE from the Motley Fool this is how he ran his portfolio. Like I said I was always invested and always in full growth mode, so I never saw the point and considered it at some level trying to time the market, but I now see the potential benefits for someone like myself. The additional financial gains really arnen’t that life altering at this point, but the loss of freedom of not having enough cash/safety and not wanting to touch depressed stocks to raise it is way worse than having a few less dollars total in the nestegg.

Holy crap I’m 40! My 30s financial review.

Holy crap I’m 40! My 30s financial review.

Dang time flies. It seems like just a couple years ago I was starting the blog and my career and I swear just last year I was writing my holy crap I’m 30 post.

Well the bad news is time flies and the good news is well nearly everything has gone exactly according to plan.

Here are things that I accomplished in my 30s

  • Had two more children to bring the total to 5
  • Added over $345,000 in contributions to our nestegg
  • Grew our retirement nestegg by over $1 million dollars
  • Able to have my wife stay home with our children
  • Remained debt free other than mortgage and student loans at very low rates
  • Built our dream house with basketball court
  • Resisted the Tesla urge and still driving a crappy car
  • Achieved a 7 figure retirement nestegg at age 38
  • Started partial early retirement at age 39 (summers off)

Obviously the huge amount of contributions we made in our 20s and 30s got us to where we are today. Ultimately though living well below our means allowed us to do this basically on 1 income for the vast majority of our 20s and 30s while supporting 5 kids and to be perfectly honest it wasn’t all that difficult.

Simply prioritizing things in our life that lined up with our values made things just fall in place without really ever feeling like we were sacrificing something for the future. We went through two decades of life probably spending less on all of our vehicles combined than a lot of people do on one new vehicle.

We probably spent less on eating out and drinking in those two decades than most people do in one year. Probably same with clothes or a host of other material examples.

We did spend money on things we knew we would enjoy like family vacations, but even there our lifestyle allowed us to enjoy those vacations at a lower cost and I’d argue an increased enjoyment than the average family.

Ultimately the thing that I am most proud of was hitting that partial early retirement goal this year at age 39 as that was the whole point of everything since this blog was started. That idea even predates the blog in that I always knew that I would want work to take a back burner to spending time with family.

I now have an arrangement where I don’t need to work in the summer going forward and my wife’s job also allows her to be off in the summer so we have a maximum amount of time to spend when our kids are off school. The best part about this is the retirement nestegg giving us the freedom that if for whatever reason this arrangement with the employer went away we could just find another arrangement that worked without fear of affecting our finances or our future or our kids future. This freedom is what this financial journey is all about and as time goes on that freedom will continue to expand.

Financial Mistakes I have made or areas where I’ve fallen short

  • Sitting on too much cash
  • Putting my health on the backburner
  • Likely spending too much money on our house
  • Don’t have a will

Honestly I made some mistakes in hindsight. I was overly conservative with my cash holdings where if I had more of that money invested I would clearly be more wealthy than I am now. Probably not the worst flaw to have in that I have too much money saved on the sidelines in emergency funds.

We did spend a lot of money on our dream house and have continued to throw lots of money at it. If we had not splurged here I’d have many millions of dollars no questions asked, but my quality of life probably not affected too much other than I would have likely started early retirement a few years earlier.

Now the two areas that I would for sure have changed. We have 5 kids and a large net worth and have no will. This is probably pretty stupid especially if my wife and I die.

Probably the biggest thing I’d change is probably not directly a financial item, but a health one. I’ve worked a desk job my entire life and while I was athletic most of my life and generally ate healthier than most people I basically got to my late 30s as a broken down old man. I had serious back issues and basically had 18 months where it was difficult for me to even play with my kids. All of this was self induced by sitting on my butt for 20 years and gradually removing all forms of exercise from my life as I was chasing my 5 kids around.

I recently rectified this in the last year and even built a weight room in my basement. I feel 15 years younger and honestly probably consider this a bigger accomplishment than anything I have done for myself financially. Combining them both leads to a pretty happy low stress life.

In my holy crap I’m 30 post I wrote

In general I think by the time I hit 40 things should really be in cruise control. I hope to have most of my house paid off and a very nice cushion in my retirement accounts. When I hit 40 my oldest kid will be 14 years old and I hope that at this point in time since money will be less of a concern that I can become a free lance consultant, become a teacher, or do something that will afford me considerable free time where I can enjoy summers off and vacations with my family.

–30 year old MFJ

That was the rough idea a decade ago and for the most part I think things came together exactly as planned. I spent this entire summer with my kids. Took them on a trip to Europe and can confirm that money is less of a concern for our family at this point where we can concentrate on things that matter without money being the primary deciding factor.

As I look forward to my 40s I would expect that my wife and I will continue to trade less work for less money. Time and freedom will be more important than the size of our paycheck. I hope we will use this next decade to truly enjoy our kids as a few of them will leave the house this decade. From a financial standpoint I expect our nestegg to continue to do all of the heavy lifting and the only wild card out there will be helping 5 kids attend college. I expect at some point one of us will look into starting a business in something we are passionate about and if things go really well I could see both of us retiring fully before we hit 50.

Regardless of what the future holds I know that we have set ourselves up for a great future and I really look forward to time slowing down and being able to enjoy life to the fullest

–40 year old MFJ

Interim Retirement Nestegg Report $1.1M

Interim Retirement Nestegg Report $1.1M

Well it took a bit longer to hit this milestone than maybe I expected. In fact it this was the longest between 100k milestones since I went from $500k to 600k. At this point in my nest egg’s life the market is much more in control of that than I am so I shouldn’t get too worked up about how fast or slow I hit milestones. The work has been done and now I’m just the captain of a big growing ship with tiny rudder which I guess was the whole point.

Taxable Account- $57,861.00
Private Stock $72,000
Traditional Rollover IRA – 41,307.01
My Roth IRA – $270,628.96
Wife Roth IRA – $170,661.10
Wife 401k – $4,169.32
Traditional 401k – $483,562.00

Roth/Traditional % = 40.11% (tax free)

Total Retirement Nest Egg $1,100,189.39
Retirement Salary (4%) $44,000

$100,000 NestEgg Milestones

Date DOW Jones Value MFJ Nestegg
Oct 2008 10,000 $ 69,300
Oct 2009 10,000 (+0%) $100,000 (+44%)
Feb 2012 13,000 (+30%) $200,000 (+100%)
Jul 2013 15,423 (+19%) $300,000 (+50%)
Feb 2014 16,395.88 (+6.3%) $400,000 (+33%)
April 2015 18,084.48 (+10.30%) $500,000 (+25%)
August 2016 18,636.05 (+3.05%) $600,000 (+20%)
January 2017 20,068.51 (+7.69%) $700,000 (+17%)
June 2017 $21,182.53 (+5.56%) $800,000 (+14%)
January 2018 $25,484.72(+20.31%) $900,000 (+12.5%)
May 2018 $24,667.78(-3.21%) $1,000,000 (+11.1%)
April 2019 $26,234.34 (+2.94%) $1,100,000 (+10.0%)
Welcome to the two comma club

Welcome to the two comma club

Well today was a special day for me and my now 12 year old blog. I officially joined the double comma club and achieved another goal set forth on this blog. My $1,000,000 retirement nestegg by age 40 goal. I really thought was a bit of a stretch, but turns out I’ve had stellar returns and actually achieved this goal at the age of 38.

A couple of things stand out for me with this accomplishment. First I added $100,000 to my nestegg in less than 5 months which is the quickest I’ve added $100k. Makes total sense and with the power of compounding these 100k milestones will come quicker and quicker to the point where I will add $100k in a month eventually.

I actually added $100k while the market was down over 3% since my last milestone. My individual stocks have performed very well and have allowed me to best the market over the last 12+ years. I actually would not advise most people to own individual stocks or at least not a significant portion of their portfolio. I have questioned myself whether or not owning individual stocks was worth the effort and risk, but thanks to this blog and some tracking I’ve been able to see that somehow I did a pretty good job picking and managing my individual stocks. That being said I still have nearly half of my portfolio in vanguard index funds in our 401k accounts and that percentage will likely increase over time.

Writing your goals down has a very powerful affect. I started this blog very much for me so that I could look back at my thinking over time and learn from it. I also wanted to set out a vision for what my future would look like financially. This has actually been invaluable to me and I don’t think I would be where I am today without this blog. I also knew deep down that the path I had laid out in my youth was going to result in me becoming wealthy down the road and I wanted to have a good documentation of how I got there. I got there slowly over time through common sense saving and investing that anyone can do. It won’t come quickly and there were short term ups and downs, but in the grand scheme of things it actually was not that hard and anyone can do it given enough time. 12 years seems like an eternity when you are in your early 20s, but looking back from my late 30s the path from $0 to $1,000,000 went pretty darn quick.

I started this blog the year my oldest son was born. He just turned 13 this week, the same week that my nestegg got an extra comma. Life goes so fast and I want to do my best to enjoy it. My Financial Journey was a tool I used to put myself in a situation where I could enjoy life and have more freedom than I would if I took the standard approach to finance.

So what do I do now that I’m a millionaire? I’m not exactly sure, but I do know I have a lot more options having a 7 figure pile of F-you money. In theory I could tap $40k per year out of it and never run out of money (4% rule). I could do nothing and leave it invested and have roughly $3M by age 50, $8M by 60, $13M at age 65, etc.

The final goal in my financial journey will probably fall somewhere in between those two scenarios. I have 5 young kids who are growing up faster than I could have ever imagined and the whole point of all of this was to give me the freedom to spend more time with my family. I now need to spend some time to lay the groundwork for what this looks like and put some tangible plans in place for making this happen. Bottom line our retirement is secure and now I just need to figure out how much my wife and I need to work going forward to meet our short term expenses while our nestegg grows to some larger number that makes working entirely optional.


Taxable Account- $53,234.73
Private Stock $66,900
Traditional Rollover IRA – $29,822.55
My Roth IRA – $248,902.12
Wife Roth IRA – $158,073.85
Wife 401k – $3,905.71
Traditional 401k – $442,491.91

Roth/Traditional % = 40.68% (tax free)

Total Retirement Nest Egg $1,003,330.87
Retirement Salary (4%) $40,133

$100,000 NestEgg Milestones

Date DOW Jones Value MFJ Nestegg
Oct 2008 10,000 $ 69,300
Oct 2009 10,000 (+0%) $100,000 (+44%)
Feb 2012 13,000 (+30%) $200,000 (+100%)
Jul 2013 15,423 (+19%) $300,000 (+50%)
Feb 2014 16,395.88 (+6.3%) $400,000 (+33%)
April 2015 18,084.48 (+10.30%) $500,000 (+25%)
August 2016 18,636.05 (+3.05%) $600,000 (+20%)
January 2017 20,068.51 (+7.69%) $700,000 (+17%)
June 2017 $21,182.53 (+5.56%) $800,000 (+14%)
January 2018 $25,484.72(+20.31%) $900,000 (+12.5%)
May 2018 $24,667.78(-3.21%) $1,000,000 (+11.1%)
Financial Goal Checkup: My very own basketball court

Financial Goal Checkup: My very own basketball court

About 9 years ago I posted a kind of an unique financial goal on this blog – I wanted my very own full court basketball court.

In roughly 5 years time I want to have enough money put away so that I can build a house out in the country with a full court outdoor sportcourt basketball/volleyball/tennis/etc court. — MFJ 2007

Well I am here to report on the progress of this not often mentioned financial goal I had for myself. Well the good news is that I saved quite a bit of money for that house out in the country starting in 2007. In fact I ended up saving $180k+ in cash for our move to the country, new house, and of course basketball court.

The bad news is it took us a lot longer to find the perfect land out in the country and we didn’t actually build until 2016. This also happened to be one of the greatest times to invest in the market in my lifetime so that $180k probably cost me double that, but the good news is that I can now report that we have secured 15 acres out in the country, built our dream house, and if you open the oversized garage you will find my very own basketball court.


Now in my original post I had always envisioned an outdoor sport court type basketball court, but given the fact that I live in WI I figured the bigger bang for buck would be to move it indoors so that I can use it year round and cost constraints ended up making it a half court, but I am still very happy with how it turned out. Our garage is nearly 1500 ft and it is a great spot for the kids to play regardless of the weather.

The best part is I was able to pull this off while still accumulating a sizable nestegg despite having only one income and raising 5 young kids. I’m sure many people will view this as an extravagant expenditure that set my early retirement back years. And it is! It’s totally unnecessary and so is our mansion in the country, but it is also something that I have wanted for a long time (blog post in 2007) and something our family will enjoy for years to come. Life is about balance and we have put ourselves in great financial shape where we can afford anything we want, just not everything we want 🙂

We have five young kids and while I could have amassed a much larger nestegg or achieved Financial Independence much earlier if we had continued to live the status quo – it likely would have come at the expense of our memories we get to create with our children in the short period of time they are in our house. No sense in becoming financially independent eating rice and beans and try to get the kids to come over and play basketball with when they are 25 and I am 50 🙂

The biggest thing is we set ourselves on a very solid foundation in our early years where as I’ve said before that by setting and reaching goals in our 20s we put ourselves in such a good situation that it will be hard for us to wreck ourselves financially by wanton spending in our older years (30s & 40s). We still are spending money on things that bring us value and happiness and minimizing spending on things that do not. I still drive a typical MFJ pimp ride (wife’s used car we bought 13 years ago) and we are still saving a good portion of our income and on the path to financial independence in our early 40s. We just happen to have a basketball court in our garage 🙂


The path forward to two commas ($1M by age 40)

The path forward to two commas ($1M by age 40)

I’m sure I’m not unique and I’m sure every financially savvy person has contemplated the day when their net worth / account balance will surpass the magical $1,000,000 mark. When I started this blog in 2005 I put together a goal of having saved $100,000 in money for retirement by age 30, because as we all know saving the money while you are young allows compound interest to kick some butt on your behalf.

Well in August 2009 the deadline for my $100,000 by Age 30 goal came and while I fell just short I had put myself in a great shape financially going forward. I immediately did the smart thing and laid out the next goal $1,000,000 by age 43 and even put a nice little tracker on my blog with the (post coming) and then proceeded to never sit down and write the post


Even before I started this blog at age 26 I had created excel spreadsheets forecasting my savings into the future and estimated returns and always seemed to come up with age 42 or 43 as to when I would cross the 1 million dollar mark. In my heart I always wanted to hit it by 40, but I never seemed to get the math to work with my then 21 year old brain which if you know a 21 year old probably wasn’t all that sharp.

Ironically when I created my little tracker for when I would hit $1M I relied on the calculations I had done even before I got my first job instead of doing the simple math and probably realizing with a little hard work $1M by 40 was probably attainable. So I probably set the bar too low and then I compounded that mistake by not putting together any meaningful plan as to how to achieve it and just figured by just using the status quo of me randomly living frugal and saving money by chance I would hit that mark.

Well today I’m going to actually look do the math and see where that status quo puts me and see what it will take for me to hit $1M by age 40.

Scenario 1 – Do nothing and let the market do the work for me.
I very recently had my retirement nest egg cross the the $600,000 mark and I have 3 years until my 40th birthday. In my last annual report I decided to include another $60,000 of private stock I own. If I were to never put another penny into the market I would need to have annualized returns of 14.86% over the next three years for my accounts to hit $1,000,000.

Odds of Success: 10%
Commentary: This would be a rather poor approach as it relies 100% on things out of my control and would rely on very unrealistic and uncharacteristic returns by the market as a whole or me to do something even more stupid and take on a idiotic amount of risk that would likely result in me putting together a new $100,000 by Age 45 post than it would welcoming me into the double comma club.

Scenario 2 – Average market returns – plus ho hum contributions.
If I expected annual returns of 10% I would need to contribute $38,000 to my retirement each of the next 3 years in order to hit the $1 million dollar mark.

Odds of Success: 40%
Commentary: The first problem with this plan is that it requires 10% annualized returns – which while that is historically an average return, the market is anything but a constant and almost never returns anything near 10% for a single year and is often much higher or lower than that.

Scenario 3 – Continue contributing as planned and hope for strong market returns
I currently have budgeted that I will contribute about 50k a year to our retirement accounts. I feel like this is very doable going forward as my 401k and employer matching account for about $29,000 per year. If I max out mine and my wife’s Roth IRAs that is another $11k and then I need to put $10k into a taxable account that will help the transition into early retirement by giving me an account with less strings attached to the money. If I were to do this I would need to achieve about 8.73% annualized returns from my investments.

Odds of Success: 60%
Commentary: I feel like this is probably the most well balanced plan. It is also ironically the path forward that I was already taking, but it gives me a little assurance that the math kind of works out.

The big question mark is what the market will do the next three years – which as anyone with any sense will tell you is that they have absolutely no idea. The market could be down all three years or it could be up significantly. Historical market average is around 10%, but almost never during a 1 year period will the average return be anywhere close to that and it doesn’t get a whole lot better in a short period of time like three years.

Ultimately this is the reason my $100,000 by 30 goal was all about contributions as it was entirely in my control, but that ship has sailed and going forward the whims of the market will be what is controlling my ship versus what I am doing.

The other item to factor in is my ability to put way $50k per year into my retirement accounts. The last two years I averaged $45k and while I’m already close to $60k this year that included a $25,000 boost from my cash savings that was a one time thing.

It certainly is possible for me to save that much money but we currently built some extravagant mansion out in the country with a $300,000 mortgage, have 5 kids, and a million home improvement projects lined up for the house so it may come down to a choice of spending like drunken sailors or hitting the $1M mark or finding ways to bring in additional income.

One wildcard with this scenario is that my wife does not currently have an income producing job as she is raising our five kids could theoretically land a teaching job in the next year or two or come up with other ways to make money which would definitely help on the income part and increase our odds.

It appears I am definitely on the right path and I have a couple of plausible scenarios to get me to my goal. I obviously will be targeting Scenario #3 which has the highest odds of success, but it is also apparent to me that this goal is very much out of my hands at this point. It reinforces that the real power to have drastic affect on your future wealth is achieved at a young age many years in the past. This sets the foundation and you are able to just plow through the choppy market waters and keep moving forward.

Once enough time has passed and your nest egg has grown to sufficient size you are a captain on a large ship with a tiny rudder and you are able to make less of an impact than you could 5 or 10 years ago. The only caveat to that statement is that your rudder right now is much larger than it will be 5 to 10 years down the road so while your saving habits certainly have less affect overall than they did in the past they certainly have much more than they will down the road. Which is fine because hopefully at that point I am just on the ship enjoying the view.

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Interim Retirement Nestegg Report – I broke $500,000

Interim Retirement Nestegg Report – I broke $500,000

Well it took a little longer than last time, but compound interest is still working its magic with my retirement nestegg. Today I officially broke through the $500,000 mark for the first time. This milestone came 14 months after the $400k milestone which was actually slower than it took to go from $300k to $400k, but this market is not exactly the magical market that existed in 2013.

The more I update those tables below the more I question why I used a stupid metric like the DOW as an indicator, I think the only reason I chose it was because of the nice symmetry for when I first broke through $100k and the DOW also being at exactly 10,000 – anyway you get the idea that my nestegg is growing faster than the ridiculously dumb and outdated DOW index 🙂

I also broke through another milestone this month – my wife and I had our 5th kid! While this certainly won’t help me financially I think it carries some weight to the fact that you can’t use kids as an excuse as to why you are not achieving your financial goals/dreams. 5 kids and 1 income have worked out just fine for me to reach $500k in retirement assets at age 35 – and I am hardly hardcore when it comes to being frugal – though I’m also not a moron generally when it comes to spending money either. So it’s been a nice balance I’ve been able to work out.

Taxable Account – $17,678.94
Traditional Rollover IRA – $37,561.08
My Roth IRA – $133,790.44
Wife Roth IRA – $77,432.67
Traditional 401k – $236,145.41

Total Retirement Nestegg – $502,617.54

$100,000 NestEgg Milestones

Date DOW Jones Value MFJ Nestegg
Oct 2008 10,000 $ 69,300
Oct 2009 10,000 (+0%) $100,000 (+44%)
Feb 2012 13,000 (+30%) $200,000 (+100%)
Jul 2013 15,423 (+19%) $300,000 (+50%)
Feb 2014 16,395.88 (+6.3%) $400,000 (+33%)
April 2015 18,084.48 (+10.30%) $500,000 (+25%)