It Took Me Four Years To Hit $500K But Only Six Months To Hit $1 Million

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It took me four years to hit $500,000 but only six months to hit one million

I started my journey to early retirement with only $10,000 to my name. I was freshly married and off to the big city to my first professional job. My wife had six months to finish up graduate school then her student loans would hit.

Our collective net worth was negative $50,000. Debt consisted entirely of student loans. As the work week slogged on our mindset about the “American Dream” changed drastically.

Detailed in a prior newsletter, my wife and I sat down together six weeks into our careers and made a plan to get financially independent. Freedom 30 it was called. To become financially free by the time we were 30, which was five short years away.

The plan was to work our asses off for five years and drop as much money as we could into the stock market. We were both educated with high paying jobs so if we lived like the average American, we could save 50-75% of our income every year. By the end of year five we should have enough assets saved up where we could quit our jobs and do whatever we wanted with our time.

I remember when I first started tracking our net worth. I had an excel sheet with a detailed budget and another sheet that forecasted our net worth, assuming a certain percent of our income saved and the rate of return we would get on our investments.

I would look out into future years on my net worth forecast and see how quickly money compounds. It kind of seemed impossible to tell you the truth. By year five, assuming my forecasts were directionally correct, I would be making more money from the assets I had in the stock market than my current job.

The journey was slow. It took two years to hit a net worth of $100,000. Two long years of hard work and intense saving. But at the end of that year I thought to myself, “this is beginning to work.” I was ecstatic.

“This is kind of working huh,” I said to my wife. We had enough money saved up where we could live without any income for more than a year. It felt good. We saved over 70% of our incomes and had both gotten nice raises.

Every bonus we had at the end of the year went directly into the market. And at the start of the year we would do it all over again.

By year three our net worth had doubled. It took two years to hit $100,000 in net worth but only one year to hit $200,000 in net worth. Compound interest was starting to work.

At the end of year four we were at a cool $500,000. Our savings rate was off the chart given that the world was shut down and there was nothing to do, and our investments killed it. I bought a bunch of stocks at the market low in March of 2020 that more than doubled. It was one of the greatest investing years I have had in my career. Six months into the new year, and our net worth had doubled again.

It took us four years to hit a net worth of $500,000, but only six months to hit a net worth of one million. As Albert Einstein famously said, “Compound interest is the 8th wonder of the world.  He who understands it, earns it; he who doesn’t, pays it.”

Sure, the market returns during 2020 and the first half of 2021 have been absolutely insane for anyone actively invested in the market. In any normal market scenario, it probably would have taken a bit longer to go from $500,000 in net worth to one million. But that isn’t the point. The more money you save and throw at the market, the more opportunities you will have.

If I wasn’t actively saving and investing money every month, I would have not been prepared when the COVID-19 crash happened. But since I created a plan four years before the COVID-19 crash happened, I had a large pile of money set aside waiting for place to invest. And this pile of money compounded extremely fast and will continue to compound for many years to come.

If there is anything to take out of this newsletter, just remember these two things.

  1. Money compounds extremely fast and the more you accumulate the faster it will compound. It took me almost five years to become a millionaire. But it will probably only take me 1-2 years to double that.

  2. If you can figure out a way to save 50-75% of your income for five years your life will dramatically change. By the end of year five it is highly likely your assets will start producing more income than the time you put into your 9-5. It can be a long journey but it works and it is very rewarding.


  • Unrelenting Coal Demand: Coal prices across Asia are surging to record highs due to a hot summer, pent-up demand from an industrial revival and higher natural gas costs. Price of physical coal cargoes have soared more than 50%. “Coal is going up, and yet people don’t want to invest in coal,” O’Connor said. “There is a dislocation between coal prices and equities.”

    My Take: The movement in coal is extremely interesting. This article specially talks about thermal coal, but you are seeing the same pricing happening in the met coal market. Underlying pricing are rising and the majority of these coal companies have stated they expect to have record numbers, potentially for multiple years. I am less bullish on thermal coal for the long-term as I think the terminal value of most thermal mines is zero (at best). But incredibly bullish on met counterparts as you need met coal to make steel and demand will stay strong. Subscribers can see my top met coal idea here.

  • Gold rises above $1,800 to a three-week high: Gold traded over $1,800/oz on Tuesday morning. The weakening dollar helped propel this price movement. Margaret Yang, a strategist at DailyFX stated “It’s mainly a weakening U.S. dollar that is boosting gold prices. Gold was sold down heavily after the June FOMC meeting and now that expectations have been priced in, buyers are back to the market.”

    My Take: I continue to hold physical gold as a long-term asset. Long-term I am targeting 3-5% of my portfolio in physical assets such as gold and silver. Eventually I think interest rates rise, inflation increases and the dollar goes to zero. Holding gold is my way of shorting the entire system. When economic hell comes, my physical gold will provide that margin of safety. I also own a small junior gold miner that pays a monthly dividend. They recently increased their dividend which now has a 6% yield. Please see my initial research report here for all subscribers.

  • Conditions are ripe for repeat of 1970s stagflation and 2008 debt crisis: We are thus left with the worst of both the stagflationary 1970s and the 2007-10 period. Debt ratios are much higher than in the 1970s, and a mix of loose economic policies and negative supply shocks threatens to fuel inflation rather than deflation, setting the stage for the mother of stagflationary debt crises over the next few years. Making matters worse, central banks have effectively lost their independence because they have been given little choice but to monetize massive fiscal deficits to forestall a debt crisis. 

    My Take: I have been critical for sometime of the reckless monetary and fiscal policies set across global markets. There is too much cheap debt in the system. If and when the cycle ever turns, inflation will increase, interest rates will rise, discount rates will rise and asset prices will get crushed. I was telling some friends the other day that the commercial real estate (“CRE”) investors who are buying assets with a 4-5% cap rate could get crushed if rates ever rise. Most CRE guys term their debt out for 10 years then refinance at the end of the period with more equity in the property and for the last ten plus years, at a lower rate as rates have persistently moved down. Should this cycle ever turn, valuations on CRE will get crushed, and real estate investors will be forced to refinance at a higher rate, impacting real net operating income and free cash flows.

  • Oil prices won't go to $100/barrel, targets $80-$85 instead: John Kilduff, an energy trader with Again Capital, told reports that he doesn’t think crude oil will go to $100/bbl but expects to see it trade at the $80-85/bbl level. “Things will get worse before they get better,” Kilduff stated.

    My Take: I have been pounding the table that oil could go to $100/bbl on Twitter. I think demand will outstrip supply this year and with the potential for inflation, oil could continue to fly. However, I am not specially investing in oil directly. I have a small position in a producer and a few energy service names instead. My main point here is that producers are making a significant amount of money at current prices, and every incremental price increase in oil will flow directly to the bottom line. If oil goes to $85/bbl, producers will kill it. If it goes to $100/bbl, they could go to the moon.

  • Russia’s National Fund Ditches The U.S. Dollar: The Russian Finance Ministry reported yesterday that they sold of the U.S. Dollar to zero in the National Wealth Fund. The fund also reported that they increased the British Pound to 5% and the Euro and Yuan to 39.7% and 30.4%, respectively.

    My Take: In June the Russian Wealth Fund announced that they would reduce the U.S. Dollar to zero and instead invest in the euro, Chinese yuan and gold assets. What Russia is signaling is that they don’t need the U.S. anymore. The Russian Central Bank also announced they will be investing into the development of a digital economy. Over the next several years if the United States’ competitors continue to diversify out of the U.S. Dollar, the fiat currency could become worthless as additional countries follow suit. I will continue to accumulate real assets such as gold and potentially raw rural land to hedge an economic catastrophe.