How to Save $1 Million Before You’re 30
To save $1 million before you’re 30 years old is one of the most difficult financial goals to achieve. Many have difficulty trying to accomplish this goal by 60 or 65. So to accumulate this before you’re 30 is monumental. Especially when you consider you’re likely starting from $0 and have 8-10 years to accomplish this feat. It takes a unique mix of dedication, sacrifice and financial literacy.
This last week I’ve been working to bring you the story of a 26 year old has currently banked $400k and is on track to accomplish this goal of stacking $1 million before his 30th birthday. He can then choose to retire or keep working, pursue his passions, or do whatever he wants. Being ‘work optional’ is a very enviable LinkedIn status to have.
Tell us a bit about yourself and introduction to my readers
Hey guys! I’m a 26-year old Asian American who’s working in the finance industry. I grew up in a middle-class family and I had high hopes of getting into the high class lifestyle. The idea of being conservative and frugal with my money habits came from my mother, who always taught me to respect money.
Below is a glimpse of South Korea where I grew up.
The earliest memory I have of money is when I sold gum to my classmates when I was in kindergarten. Looking back on it, I more than likely sold the gum at a loss because I was selling them for less than what my parents bought them for. However, I didn’t mind because my parents had bought me the gum so it was money in my pocket.
Since then, I’ve learned a thing or two about gross profit and net profit; I’ve come a long way!
I had hopes then of becoming a billionaire one day, but I realistically know that I won’t get there. Does not hurt to try though!
What got you interested and into investing at such an early age?
Feeling like you don’t have power over your own life sucks. When I was living on a $20 – $25k annual income I felt so powerless. I felt like my employer had total control over me. If they told me to jump, I just had to jump.
It motivated me to save and invest as much as I could so that I can stand on my own two feet without relying on someone else to survive. These days, I am happy to know that I have some sort of power when it comes to negotiating.
That’s why I’m interested in being rich. Not because I want to have a lot of money but because I don’t want anyone in the entire world to have control over me.
What better way to do that than to save and invest my money? Through my investments I could make work optional and retire on my terms.
What was key for banking 250k by age 25?
In short, learning and being interested in financial literacy at an early age. I remember reading personal finance blogs when I was in college and loved devouring every single word. These were millionaires who already achieved financial independence.
I couldn’t believe that they gave this advice for free. On top of that, it was also correct advice that was actually working and they were a living example that this advice worked.
After I learned how to get rich, then the only thing left to do was to actually get rich. All I had to do was save and invest the majority of my money. I continued to live like I was poor. My first apartment out of college was a very run-down place that cost $750 a month. The toilet would not flush well but I still practiced delayed gratification and lived in that apartment for over two years.
My starting salary out of college was $52,500, of which the majority went to my 401(k) and HSA. After maxing these out, I lived on approximately $20 – $25,000 per year. After six months of working, my salary increased to $56,000 plus a $29,500 bonus.
However, the bonus would only come after a year and a quarter of working so I lived on $20 – $25,000 for two more years before finally enjoying the higher salary. The rest of the money went into my retirement accounts where all I did was put it into the S&P 500 index.
I am now 26 years old and have a net worth that seems to teeter along the $400k line.
Explain your strategy of 1 Million by age 30
I remember telling one of my friends that I’m going to be a millionaire by 30. His immediate response was, “But you’ll never even make a million dollars at work.” I’m glad I didn’t listen to his faulty reasoning.
My strategy to get to a million: right now, I have a salary of $107,000, plus a $10,000 bonus potential, plus a $11,000 401(k) matching so I am paid very well. I save approximately $80k of cash per year, including my 401(k) contributions and matching. After running the numbers, it turns out if I just keep saving and investing, I am on track to be a millionaire by 29 years old. This also assumes no raises and zero side hustle money.
Once I have the million, I can make work optional and possibly retire. Not sure what I’ll do, but the freedom and option to work will be worth every sacrifice and penny saved.
What has been the biggest challenge?
The biggest challenges come with the early years. After working 2 jobs every semester in college, working internships and jobs every summer, and doing a double degree, I had high expectations around how my life would turn out.
Therefore, it was demoralizing that after all that hard work, and trying to be as productive and attractive as I could be for a company to hire me, that I would then live so close to the poverty line on a self imposed $20 – $25,000 annual salary.
So after 2 years of it, I was getting sick of the FIRE lifestyle and I almost gave up.
That was the biggest challenge. It felt like I was living paycheck to paycheck. Sure, I was making progress but that progress felt so slow relative to what I was giving up.
Summarize your best investment ever
My best investment ever was in the S&P 500. I day traded when I was in college and still do at times. Sometimes I made money, sometimes I lost money. However, there have been zero investments that I made that beat the S&P 500 contribution, dollar and percentage wise.
Below is a percentage breakdown of where I put my money. All of the tax advantaged accounts plus brokerage accounts are in equities. I know some will say this is risky, but I’m young and bonds are not good investments today.
Walk us through your asset allocation a little more
90% of my investing accounts are in the S&P 500 index while 10% of my investing accounts are my “play portfolio” where I try to beat the S&P 500 with bets such as individual stocks and day trading. As of today, the 10% is all sitting as cash. Has it ever beaten the S&P 500? Nope, but it is still fun to try. Even if it does beat the S&P 500 in one given year, it will take a long time to make up for the lost time.
What is your secret advantage or skill that separates you from your peers?
Ability to practice delayed gratification. We all know the famous marshmallow study that highlighted how patience beat out everyone else in terms of winning at life. It wasn’t intelligence, it wasn’t genetics, it was delayed gratification. While my friends were spending as much money as they could after graduating, I saved as much money as I could.
It doesn’t take any innate skill. All it is is behavioral characteristics that are going to push you forward and beyond your wildest dreams.
What would be your best piece of investment advice for someone just starting off?
The first 2 to 5 years will not be impactful if you just do the boring way of investing in index funds. The best investment advice is to have zero to low expectations when it comes to the stock market and making money.
The first 100k is the hardest but it’s also when things start to get cool. A 1% increase in the S&P 500 in a single day will start to feel meaningful to you as you see the balance increase by $1000.
All I did was invest it into the S&P 500 index.
Give us a link to your most viewed blog article and why you think it has done so well:
My best viewed blog article is highlighting the story of an unknown billionaire. It’s done so well because it’s highlighting the story of a not well known billionaire who is a community college graduate making it big in real life.
Everyone is enamored with those stories and so am I. One day, I hope to get there as well, right alongside him.
Any closing thoughts or parting wisdom?
One final thing that I will say about FIRE (Financial Independence, Retire Early) is that you didn’t come this far to only come this far. When you are almost about to quit like I was, remember to keep going for six more months. If after those six months you still want to quit, then take your foot off the gas a little.
Then after another six months if you want to quit, take your foot off the gas by another 80%. If after another six months you want to quit, then quit. I would rather have you not quit at all, but the FIRE lifestyle truly isn’t for everyone.
I will say that from personal experience, I would be very sad if I had quit. I’m so glad I didn’t.
Where can people find you and contact you?
You can find my blog on Filled With Money and you can find me on Twitter @FilledWithMoney. You can tweet to me and I will respond! All of my accounts and blog posts are written by me and it will stay that way.
Bonus Material
I want to take a moment and highlight just how monumental this achievement is. I’ve had a few private conversations with Filled With Money and learned a few more details of his strategy. With his permission granted, I want to share some extra details of what is required to accumulate this amount of wealth before you turn 30.
Started at 17
Filled with Money isn’t kidding when he expressed his intense desire for financial freedom and independence. He started working and saving as much as he could at age 17. By 21, he had a good nest egg of 30k. This was also the age he started working full time and investing with full force into the S&P 500.
Monthly contributions to save $1 million
So if our goal is to save $1 million by 30 and we start at 21 with 30k in the bank, how much do we need to save each month? Well first, this is difficult to answer because it is impossible to know where the markets will go over the next 10 years.
However, if you will allow me to look backwards and assume you had started 9 years ago and only invested in the S&P 500, what would you need to save each month? The answer is a gut wrenching $3200 a month. Yes, even with the incredible bull run of the past 10 years, this is the amount of capital you needed to put away each month. Now remember, this is the average each month and would include all sources of contributions such as employer match and annual bonuses.
While I Have You
- Like and Share this article on your favorite social media platform. Buttons for this are at the top of this page.
- Follow me on twitter @mywealthmoney
- Like my page on Facebook – mywealthmoneyfb
- Subscribe to my weekly updates so you’re always on top of my latest posts!
- Read some of my other blog posts:
