How We Made Our First Million Accidentally

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11 Responses

  1. Bravo! Congrats Tom. Keep it up, it appears your success is directly correlated to your ability to save with discipline. I am impressed.

    • tom says:

      Thanks – a lot of saving – yes. But also some luck (my super was basically in fixed interest just before the GFC and then automatically removed and put in shares as they bottomed in AU) and good fortune (grandparents land). Now my goal (one of them) is to get the savings to work for me. Dividend, rental income etc.

  2. jefmiles says:

    Congrats man! Must say you tell a great story here, I was captivated by the title & curious and the way you told the story it had / has all the makings of an E-Book 🙂

    Looking forward to following how you go with it all!

  3. Well Chosen title… It got me interested. The story did not disappoint me.
    Well done on managing your finances this way.

  4. I love how you provided your net worth at age 23.

    I am young and at the beginning of this wealth accumulation process, so when I hear about how successful people were managing at around my age, I feel inspired and motivated to keep at it!

    • tom says:

      Thanks Elle – I know that whenever I start something it can feel overwhelming to see what others have achieved. But when people actually look at the start it can really make the first few steps easier. The net worth back then is rough however, I just know that I had about $40k in savings and didn’t have any real other assets. I also know how much I lost in the GFC 🙁
      For me it has been interesting to watch my savings at a young age account for almost all of my increase. Whereas when you build up assets the balance tips to asset growth/income producing more of your gains.
      Simply being interested in finance and trying to make good decisions puts you ahead of so many other people. I always try to make sure people who are further along than I am are used for inspiration rather than resentment. There will always be people further ahead and behind where you are.

  5. Great story, congrats on the first million! Great achievement to have a fully paid for home in Australia! We have quite a lot in common so look forward to following your story to the 2nd million!

  6. Len says:

    Very interesting post, Tom. Thank you for sharing. Just wondering, have you worked out how much your net worth needs to be before you can consider yourself financially free? I’m in a similar situation to you, a young couple although we do have a young child as well. Based on our annual expenses we worked out that we need roughly $1,250,000 in net worth to buy have to work for a living. Just curious if you’re thinking along similar lines or whether you guys have a different goal in mind?

    • tom says:

      Good question Len. We don’t have a set goal in mind, however we are including the house in net worth. That means that a good chunk of our net worth is not income producing. All the calculations we have done are based on income producing assets rather than net worth. The hard part has always been factoring in inflation over the next 50+ years. $1m now can provide income that we could easily live off, but in 30 years it won’t. So we have always attempted to maintain the principal against inflation, and therefore live off the income over inflation. For most of the calculations (done a while ago now) we have set inflation at 2-3% and interest at 5-7%. Factoring in tax can also erode those numbers too. I think excel gave a number closer to $3m with a worst case of $8m, when those factors are taken into account.

      Given those numbers are unlikely, we have sort of changed from “live off income” to part time and/or work we love to boost the income and keep growing the capital (eg starting our own business). So far we haven’t run any of those numbers however, mostly because I do enjoy most of my job, and the numbers still feel too far off. Our first realistic step is to reach a point where our essential bills are covered by our passive income. By essential I mean food, electricity, rates, insurance, but not holidays, meals out, new car (when required). Currently I think we are almost half way there.

      You have made me want to do some more calculations now – there goes my weekend 🙂

  7. Len says:

    Hmm we are also thinking along similar lines. To slowly transition to working for ourselves or from home.

    It’s interesting what you say about inflation. I might have to revisit our calculations as well. Our expenses are around $50k/year. Is my number of $1.25mil way off the mark?

    • tom says:

      I’m not sure. I will have to do some more maths. Your $50k is roughly what we are thinking as well. I tend to run scenarios (best case, average case, realistic, optimistic, and worst plausible case). I think I will try and do a blog post once I get around to doing it. Hopefully I will have some more down time over Christmas.

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