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My net worth: 2006 vs. 2014

June 16th, 2014 at 09:27 pm

I was reading back over some of my old entries, and discovered that in 2006, my net worth was $5K.

Today, my net worth is around half a million.

That's two orders of magnitude increase in eight years. Whoa.

Granted, my salary did almost triple between then and now, which is very helpful. And I've always tried to keep expenses low, so I can save more of my income. And I've had help -- ever since my SO moved in, we share expenses and live very efficiently.

But I must also point out that I haven't actually been trying to grow my wealth. All I've been doing is maxing out my retirement accounts, and auto-investing in some index funds. It's all very passive, autopilot, set-it-and-forget-it style investing. Aside from logging into my checking account to pay off my credit cards every month, I can go months without checking my other financial accounts.

A few months back, though, I logged into mint.com, and noticed that my net worth topped half a million. I was in total shock. That was a huge milestone.

I am well-aware that in recent years, the stock market has been going gangbusters, which obviously contributed to the exponential growth of my net worth -- a pattern which will likely not hold forever.

But it also made me acutely aware that the playing field has now fundamentally changed.

Instead of generating wealth by saving income and watching those savings accumulate in a linear fashion, I now release those savings into the market, for it to do what it will. Instead of having savings be the main driver of increases in wealth, market appreciation is now the primary source of the (exponential) increases (or decreases!) in wealth. It's an entirely new paradigm, and it is a little frightening.

This is why I need to learn more than just how to play good defense -- or even offense; my salary is not going to triple again. I need to learn how to manage and balance investments, because that is the only path forward. I guess I'm in the big leagues now. Gotta step up and own it. Or at least try.

6 Responses to “My net worth: 2006 vs. 2014”

  1. Rachael777 Says:

    Impressive and motivating for the rest of us. great job. Smile

  2. Another Reader Says:

    My guess is that you are around 30. You have the power of compounding on your side now. Even with market drops, with continued investing and growth, you should be financially independent in no more than 10 years, and very wealthy in 20. If every younger person reading this blog would make the same choices, they would end up in the same place.

    Your choice of low cost, index funds is perfect for someone that is just starting out and learning about investing. Actually, they are great for anyone that wants a "set it and forget it" investing plan. A good place to learn the basics to start investing is over at the Bogleheads website:

    http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit.

    Looking forward to your next 8 year report!

  3. creditcardfree Says:

    Awesome!!

  4. snafu Says:

    You've done well with your 'Coach Potato' strategy of set it and forget it. Obviously you've managed income efficiently but knowledge has potential to boost you to 'Smart Women Finish Rich' [David Bach]. I hoe you'll follow Another Reader's suggestion and spend time with Bogglehead's.

  5. amberfocus Says:

    Hi, I really appreciate all the lovely comments, guys! E-mail notification doesn't seem to be working for some reason, but I'll try to keep up with all the comments.

    I just checked out the Bogleheads website, and it looks FANTASTIC. I'm definitely going to use it as a guide to come up with my financial plan. Thanks for pointing me in that direction, Another Reader!!

    I remember David Bach! His "Automatic Millionaire" was one of the first personal finance books I read, and I read "Smart Women Finish Rich" too! He's the one I credit for hammering home to me the power of compounding and got me started on investing. And what can I say -- 'couch potato' strategy works (especially if you're lazy and forgetful like me, ha), and it also insulates you from day-to-day market swings. It's time to kick it up a notch now, though, and really bring this sucker home. Knowledge is power!

    Thanks for stopping by, and following along with my journey!

  6. LivingAlmostLarge Says:

    Same as you!

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