How We Reached A Million Before 40

hong kongI always enjoy getting emails from my readers asking questions.  Some of you asked about real estate investing, while others have asked about investing strategies.  One reader questioned how we were able to grow our Net Worth significantly in 2013 despite not being much older than them.   Was it from a large inheritance or because we had large salaries?

From an inheritance stand point that doesn’t exist because I grew up poor in government housing (food stamps aren’t transferable)  and worked at Walmart for a summer during college. Upon graduation I had bad money habits but was able to turn it around in time.  I bought my first property in 2001 for the tax write off while living in the Bay Area and never sold any of my properties.  We were able to leverage our real estate holdings to purchase our current house.  In order to obtain financing all properties we held had at least 25% equity.  We then purchased another investment property with a partner

I was also investing in the stock market as I was investing 25-30% of my income across retirement and taxable accounts.

I met my wife in 2009, within three months of dating we started discussing finances.  She contributed 10% to her 401K, and $100 per paycheck to her Roth IRA.  She didn’t like mortgage debt so she was adding an additional $500 per month towards her condo.   I had her increase her 401K to 15% and increase her Roth to $200 per paycheck. To pay for it she only paid the minimum on her mortgage. With the volatility of the market my wife lost several thousand dollars based on my advice. (Worst advisor ever).   Despite terrible investing advice within a year she contributed the maximum into all her retirement accounts.

Full disclosure: My wife was very lucky she didn’t have student loan debt and her parents helped with a $100,000 down payment on her condo. I graduated with some debt that was paid off in a few years.

Although painful the bear market was a great way to build wealth. 2009 was a very scary time, I was working 70+ hours because the business dictated it. One of the top managers actually told us that we should be grateful to have a job when there were so many job losses. At that point I wanted to be financially independent. On my worst day I lost $14,000, at the market bottom I had lost over 60 percent of my portfolio. Coupled with my real estate losses I would basically be working for free for the next three years. We didn’t panic, continued to contribute the maximum despite naysayers telling us we were foolish to keep losing money.

My pet peeve is when bloggers who has never experienced a bear market declare that it was obvious to invest in 2009. Since most have only known bull markets some of them want a 50% haircut. If you only have $15,000 invested and saving $5000 a year yeah, you thing a 50% haircut is nothing, but once you break into the six figures it’s extremely painful. Remember this statement, “Bulls and Bears make money, pigs get slaughtered”.

In March of 2009 I had around $125K in all of my accounts, down more than $100K the year before.  My wife had around $35K in her 401K and Roth, so our combined accounts were around $160K.  I get a profit sharing into my 401K and my wife receive a match, in 2009 we saved around $42K.  In 2010-13 contributing the maximum with profit sharing and matches averaged around $52K a year.  We also added $18,000 into our taxable accounts in that time period.

At the end of 2013 our investment portfolio grew to 708K, we collected $19,300 in dividends.  I could never imagine in 2009 that 5 years later my investment gains (without contributions) would be greater than my 2009 portfolio value.  That is the power of compounding. 70% of my investments are in index funds, I allocate more towards small and mid caps which have had a nice run.

Building Net Worth takes commitment and stick with your plan.
When we budget we prioritize our investments first. Even when we bought our house and our living expenses went up we still maximized our retirement contributions. On the income side we combined for $191K last year which is a great household income for the US,in Hawaii that is only upper middle class due to the high cost of living. Using this salary calculator living in Hawaii at 191K is equivalent to $123K in North Carolina, which is the salary of a teacher and cop.  Honolulu is ranked the third least affordable home market in the world, add in $4+ gas and $8 gallons of milk and you get the idea. Prioritize investing as something always comes up, keep investing regardless of the markets and stick with your plan.


  1. I really enjoyed reading this and it sounds like being consistent with your investing strategy as well as being patient during the bear market helped you reach your goal. $1 million is definitely a goal of mine, so hopefully I can join you in the club one day ;)
    DC @ Young Adult Money recently posted…4 Tips for Becoming a Full Time BloggerMy Profile

  2. Love this, as you’ve shown the importance of staying the course through rough markets! As an investor, I haven’t experienced a bear market yet – but I think I’m mentally prepared for it. Posts like these help show me how crucial it is to contribute the max and then DON’T TOUCH IT :) I think being a historian (by education) helps me in this regard, too.. my first tendency when trying to figure anything out is to figure out the historical trend, if whatever it is has existed long enough for a meaningful trend to emerge. With the stock market, the historical lesson is whatever goes down, goes back up (and usually higher than before). It may take time, but it does happen.
    Kali @ CommonSenseMillennial recently posted…A Frugal Battle RoyaleMy Profile

  3. Great stuff, Charles — it’s a treat to get this sort of detailed info. We missed out on a large part of the rally, but at least purchased our home in 2010 and caught the last bit of the party. I feel like our path to a million will take a bit longer, but who knows?
    Done by Forty recently posted…Did Americans Really Overpay by $1B at Tax Time?My Profile

  4. I wasn’t even introduced to the world of investing until 2009, talk about good timing. I bought my first funds in 2010 and first shares of stock in 2012. Someday I hope to be able to by real estate too.
    Stefanie @ The Broke and Beautiful Life recently posted…Find Your BeachMy Profile

  5. Wow is it really that expensive? That’s crazy!
    Martin recently posted…How Will You Make More Money to Enjoy Life This Year?My Profile

  6. That’s awesome, Charles! It sounds like you made some pretty good moves that have continued to benefit you. Good job =)
    Holly@ClubThrifty recently posted…Reward yourself for good spending habitsMy Profile

  7. Great to read about your path. We are being consistent with investing and trying hard not to let emotions get involved.

    I’m glad you mentioned how scary it was during the market plunge in 2009. I remember thinking I should be buying cheap stocks right now, but it was such a frightening time I hesitated and didn’t end up investing much after all.
    Kay @ Green Money Stream recently posted…The Consumer Financial Protection Bureau – What Can it Offer You?My Profile

  8. I was still in college during 2009 and hadn’t started investing yet. I do specifically remember my parents were extremely stressed out. I remember one night my uncle called up dad asking him if he was going to cash out his retirement before things got worse. My dad didn’t.. but my uncle did.
    Liz recently posted…How to Make Your Job More EnjoyableMy Profile

  9. Awesome read Charles. Very informative, but also very informational. I loved the statement that “Bulls and Bears make money, pigs get slaughtered.” I hadn’t heard that before, but I doubt I’ll ever forget it. My wife and I aren’t near where you and yours are, but with diligent saving, investing, and living below our means, I aim to be one day.
    Ryan @ Impersonal Finance recently posted…what will be your legacy?My Profile

  10. Great story. I plan to continue to build up my net income by not taking on any debt and saving where I can.
    Poor Student recently posted…Budgeting an Irregular College IncomeMy Profile

  11. I enjoyed reading your story. Thanks for sharing.

    It is true, a lot of people new to investing think they’re genii :) I see all the, invest in this, pick dividends, stay away from that etc and they’ve never experienced a significant down turn. I’ve felt the benefits of a balanced portfolio, and I’m sticking to it, even though it may not be sexy.
    Elroy recently posted…SE Asia Trip I – ThailandMy Profile

  12. What a great story, Charles. It really is amazing how quickly things can turn around and add up for the better if you do it right. Our net worth is between 90k and 140k right now, depending on how you value our house right now, but once we get the debt paid off, that number will jump substantially. As you guys have proven, a few short years of working really hard on your financial health can make a big difference!
    Laurie @thefrugalfarmer recently posted…25 Ways to Save Money in 2014My Profile

  13. I always love hearing stories about how fellow bloggers have attained their success. It is truly informative and inspirational. I know all too well about bear markets as I decided to start investing (well buying tech stocks) one month before the internet bubble burst. But that didn’t deter me from investing…be greedy when others are fearful was a quote I remember reading from Buffett. Also, you said it was not from inheritance, but didn’t say whether it was because of high salaries. High salaries definitely are a major plus, but even many with high salaries don’t have a high net worth because they inflate their life style.
    Andrew@LivingRichCheaply recently posted…House Hunting UpdateMy Profile

  14. Thanks so much for sharing your story and some tips, Charles. It’s particularly inspiring since it can be expensive living in SD, as well. Sounds like you and your wife make a great financial duo!
    anna recently posted…Wedding/ Honeymoon – Bridal Shower and Getting Into the DetailsMy Profile

  15. Great message. Pay yourself first and make sure you are continually adding new funds to your investments, no matter what the market is doing. It’s called stay the course. Thanks for being so candid with your savings.
    Bryce @ Save and Conquer recently posted…Tax Refund TheftMy Profile

  16. Great strategy to keep investing as a priority no matter the circumstances. Good luck saving 52K+ in 2014.
    EL @ Moneywatch101 recently posted…The Dichotomy of Money BehaviorsMy Profile

  17. Back in my 20s, becoming a millionaire was never really a goal of mine. Now that I read about it more and more from other bloggers, it seems more attainable through consistent saving, investing and aggressive money management. I won’t get there by 40, that’s for sure, but I’m hoping before 50 or try for Freedom 55.

    Thanks for sharing, Charles! :)
    MakintheBacon recently posted…Who Doesn’t Have A Bank Account +$100 AMAZON VOUCHER GIVEAWAY!!My Profile

  18. Awesome post, Charles – it’s refreshing to hear how you attained this achievement by sticking to a plan it good times and bad! I’m in my mid-20′s now and charting a similar path. I’m looking to purchase my first home within the next year or so and have flexibility to choose almost any location because of my current job.

    To pick your brain regarding growing net worth the quickest:
    Would you recommend seeking out a location with a high income to cost-of-living ratio? Or, do you think it’s more important to find a location where real estate values are rising the most?

    • Justin,
      If you have a high cost of living and have the COLA adjustment (Ex: SF) I would move there. You should then buy property only where there are a lot of not in my backyard activists who prevent any building which restricts supply. Avoid buying where it’s expensive because the desirable city over is highly priced, and they can still build.
      Prime example is the inland cities near LA (Banning, etc.) that went up in value due to La being so expensive, but fell hard after the bust. You can still build out in those areas thus you have no downside protection.
      I’m going to have a future post on why living in an expensive city will actually improve your finances.
      Charles recently posted…How We Reached A Million Before 40My Profile

  19. Thanks, I really appreciate the input. You’re spot on – I would really need to keep supply vs. demand in mind with this decision. I guess it’s pretty easy for me to overlook the economics and just go for what’s new/trendy. Looking forward to that future post!

  20. Hats off to you, this is really awesome. Very humbling that you were able to accomplish this at a such a young age. I definitely wish I was more disciplined through my 20s.
    Mark @ recently posted…What Everybody Ought to Know About the So Called “No Closing Cost” MortgageMy Profile

  21. What a ride! It is really cool that your wife was on board from early on. I recommend automatic investing in index funds to most people, so you average your costs and you don’t think about it. Any time I do some more active trading, I want to bang my head against the wall for exiting too early and not holding enough to a position. They say when other cry you should buy but it is hard to go against what everyone does and investing during a crisis, while a great way to make money, also has some risk.
    Pauline recently posted…New side hustle: How I made $1,500 renting my house to travelersMy Profile

  22. It takes a ton of courage to keep investing when your portfolio is experiencing such drastic losses. Back in 2009, I was still an intern, kind of fresh out of school, so hadn’t yet started investing. Though I will never forget the fear I saw in all my older co-workers’ eyes. Some panicked and cashed out of their accounts near the bottom, thinking it was better to salvage whatever was left than to keep riding this rollercoaster down.

    I agree, it’s easy to say “shoulda kept investing” in hindsight… but to actually experience catastrophic losses… and still keep doing it… I commend you on having the discipline, conviction to keep on investing.
    FI Fighter recently posted…Why I Invest In Turnkey PropertiesMy Profile

  23. I bled in 2009….absolutely bled…. I had made significant use of margin. I think my losses over the period must have been 100k, accentuated by leverage. I hung on for dear life as much as i could. scary times. things have since recovered, but most have forgotten that period. i’m scared off too much debt these days. the minor moves down recently….doesnt even rate on the scale as anywhere near as scary as those times.
    Integrator recently posted…What’s your investment philosophy?My Profile


  1. […] A while back, I posted an infographic entitled Broke? It Might Not Be Your Fault, which lists statistics and facts showing how it is hard to move up to the next economic rung. One of the main things I love about America is that we have much more opportunities compared to many other places. However, a growing amount of people are pessimistic about achieving the American Dream. I am a big fan of the Horatio Alger stories, the “rags to riches” type stories where those living in impoverished conditions rise from humble beginnings to live a richer life through hard work, determination, courage, and honesty. Recently, Laurie from the Frugal Farmer posted Can You ‘Bootstrap’ Your Way Out of Poverty?, where she cites to a Yahoo Finance article which answers the question in a negative. However, Laurie goes on to recount an inspiring story of how her mother was able to overcome many obstacles to “bootstrap” her way out of poverty. Charles from Getting a Rich Life posted a story about living in government housing and growing up poor, but is now a millionaire before the age of 40. […]

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