Tag: investing

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4 Things I Did To Hit Over $100,000 In My Brokerage Account At 27

It feels amazing to see my Vanguard brokerage account hit over $100k at such a young age. I have worked hard in both the earning and expense side in my investing journey. It feels great to see the progress and growth to hit over $100k in such a short amount of time. Here are four things that were critical for me to hit this major milestone!
 
The first and most important thing I have done is ensuring my money is also making money for me. This is my first of three core principles that are fundamental to my values.
 
If you are keeping your money in a savings account earning less than .03%, your money isn’t working as hard for you as you are working for it. If you are keeping your money in cash stashed under your bed, again, your money isn’t working hard enough for you. Keep your money invested in assets so it can work as hard for you as you work for it.
 
The earlier you begin, the better off you will be in the long run. The main driver here is compound interest and how powerful it is.
 
A key to having a lot of money to invest is by saving. The largest expense for 99.9% of American’s is housing. If you house hack, there are a few things you are doing. First, you are eliminating your largest expense. This allows you to automatically save that money, if you are smart. Next, if you buy a home, you are building equity in the home by having your tenants pay your mortgage for you. Finally, there are tax advantages to owning real estate. I won’t bore you with all the details on the advantages here, but you can read this article to understand a little more on the tax advantages of investing in real estate. 
 
Item #4: I Focused On Both Sides Of The Equation
Too often, I hear people talking about cutting the small expenses. What they sometimes forget is the fact that there are two sides of the equation. The first side is expenses and the second is expenses. I have put a heavy focus on both increasing my overall income as well as decreasing my living expenses. This focus on both sides of the equation has been a critical part of being able to get to $100,000 in my Vanguard brokerage account.
 
Sometimes it is good to take a step back and celebrate how far you have come. I am often very hard on myself that I am not doing enough and need to do more. I am often slow to celebrate the amazing progress I have made in trying to do big things with my life.
 
To fully grasp this accomplishment, if I were to not touch this account for 30 years, let’s see what it could look like. If we were to use a 7% interest rate compounded yearly, in 30 years, my $101,000 would look like this.
 
What My Vanguard Account Will Look Like In 30 years
 
That’s right, if I were to not touch this account (no adding money and no removing money), it would be worth $774,000 in 30 years. Now, I don’t plan to stop here. I am going to continue automating my investments every week. At least, until I hit a number where I feel financially independent.
 
So for a very short period of time, it is time to celebrate! $100,000 let’s get it! Time to get to $200,000 and on!
Key Takeaways:
  • Ensure your money is always working as hard for you as you work for it. 
  • Invest early to realize the power of compound interest
  • House hack to eliminate your largest expense
  • Focus on both increasing your income and decreasing your overall expenses. It isn’t enough to focus on only one or the other. 

Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:

1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking

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How I Invest Almost 100% Of My Paycheck – February 9th Update

Time for an update on how I invest almost 100% of my paycheck every two weeks. I find it more and more fun to continue watching progress towards my financial independence. A big component of this is investing almost 100% of my paycheck. When you can automate many of your investments, you allow yourself to sit back and watch cool things happen.
 
Where My February 6th Paycheck Went?
Here is the breakdown of where my paycheck went for investments:
  • $1,000 to my HSA
  • $1,200 to VTSAX in my Vanguard account
  • $3,269 to my 401k
I am continuing to hold strong at the beginning of the year with very small paychecks coming through. It is funny when you go from a paycheck being a little over $4k at the end of the year to $1,200 at the beginning. The main driver behind this is the heavy investments in my tax advantaged 401k and HSA accounts.
 
For these specific accounts, I never see the money hit my bank account. And for me, this is a great thing. For many, when you see money in your bank account you will think to spend it. For me, seeing money in my bank account makes me cringe. I cringe mainly because if money is sitting in my bank account, then it isn’t making money for me! This is my first core principle: Your money should make money for you. 
 
Why I Contribute To MY 401k
I highly recommend for everyone to take advantage of some key accounts if you access to them. A 401k is one of the accounts I try to take full advantage of. To read more on what the advantages of a 401k are, click the link above. 
 
There are two main reasons I invest in my 401k. First, it is a tax advantaged account that allows me to save $6,825. My last bit of salary is in the 35% tax bracket, which is why the amount of tax savings is so high for me. It is really a no brainer for me to max out this account each year.
 
Second, my employer offers a 6% match on my 401k contributions! That is right. Free money. Who can say no to free money?! I know I definitely can’t. This year, I will receive a match of $10,200 from my employer. I could not be more grateful for the match opportunity my employer provides.
 
Three more paychecks to go before my 401k will be maxed out! I am excited to start seeing larger paychecks coming into my account soon.
 
Key Takeaways:
  • Automating your investments allows you to not see the money hit your bank account. It is fun to sit back and watch your investment accounts grow!
  • Living paycheck to paycheck is an incredibly powerful. No matter how much you make.
  • Don’t miss out on your employer’s 401k match if they offer it! If you say no to the match, you are throwing away free money!

 

 
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How I Invested Almost 100% Of My Paycheck In Retirement Accounts

Second paycheck of the new year in the books and I invested almost 100% of my paycheck into retirement accounts! This continues along with the strategy of front loading my investments at the beginning of the year. Being able to invest almost 100% of my paycheck into retirement accounts will allow me to max out my retirement accounts by the end of February. Let’s take a look at where my money went.
 
Breakdown of Second Paycheck
The total amount for my second paycheck of the year was $6,538. Of that, here is the breakdown
  • 401k: $3,269
  • VTSAX: $1,200
  • HSA: $1,000
  • Taxes: $717
  • Living Money: $352
What My Strategy Is
I have worked hard to document my strategy for this year. To read the full article of how and why I am planning to front load the year, you can click the link above. 
 
The goal remains to max out my retirement accounts by the end of next month. This will then dramatically increase my paycheck for the rest of the year and allow me to invest more aggressively.
 
Don’t Forget To Automate
One of the keys to my strategy is automation. What do I mean by automation? Here are two ways I automate my investments each month.
 
First, I set up automatic deposits for my 401k and HSA contributions. For me, I set this up through benefits with my employer. We have a landing page I can go to and can update the percentage of my check to contribute to each of these accounts. I do this for one reason and one reason only. When automating this way, I no longer see that money in my bank account. This money will go directly to my retirement accounts and I don’t have to do anything on my end.
 
Second, I set up automatic investments every week in my Vanguard account. This money is transferred on pay day as well so I end up temporarily seeing the money in my account. Again, the goal is to automate things so I have less things on my end that I need to do.
 
Executing this strategy allows me to live paycheck to paycheck in an effective manner. The less money I see in my bank account, the less money I will end up spending.
Key Takeaways: 
  • Front loading your retirement accounts is one of many strategies you can utilize for saving
  • Don’t forget to automate your investment strategy. The less you see in your bank account, the easier it will be. 
  • The cool thing about front loading is what my paychecks will look like after my retirement accounts are maxed out!

Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:

1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking