My wife has a newer, reliable car. She buys new clothes from time to time, but i take pleasure in other thinking im poor when they see me in my car. Some folks even walk around me 😅 I know what i have, and it gain pleasure in the security it brings and spending time with my family.
Oh yes, I completely understand. I have a newer vehicle, but I also have a 1993 GMC pickup that I enjoy driving around. There are weeks where that is the only vehicle I drive. I'm quite comfortable not worrying about what others might think. The true comfort comes from knowing you're financially stable, independent, and free to spend your time as you wish. Thank you for the comment and for sharing-it's much appreciated!
This report from the Federal Reserve quoted family net worth. Thus, if people were married, it would reflect their combined net worth, including assests & liabilities.
That is certainly true! I have witnessed far too many people, including loved ones, who had many plans in life, only for things to be cut short due to a serious health issue.
I'm happy to hear you found the information interesting! At least it provides some real data for everyone. There are so many misconceptions about income and net worth in this country. Thanks for the comment.
Yes, I agree. The retirement numbers in this country are not good. Unfortunately, most people don't start investing early enough when it can be a very small sacrifice, and Social Security is not enough to live on.
The data in the Survey of Consumer Finances put out by the Federal Reserve is mostly about family incomes and family net worth, and that is what is often quoted in articles and news reports. However, if you want a more realistic view of individual incomes, I have a recent video looking at these numbers. If you are interested, here it is: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-H3Y8EhjwqyM.html
My wife and I have been fortunate. We started out behind the curve, by the time we were 40 maybe we were about caught up to the median but behind in retirement savings. Now, a little over 20 years later we're doing pretty good in the percentile rankings and with about 13X our annual income saved for retirement. If I have any life lessons worth sharing it's to start investing and building wealth early. We didn't have that opportunity and playing catch up is hard. We've lived way below our means for ~20 years and it's paid off. But it would have been a lot easier if we'd started earlier.
Thank you for the comment and for sharing your journey. Congratulations on being in a good financial spot now. Hopefully, the life lessons you've shared can be helpful to others. You're absolutely right. Starting early makes it quite easy and requires very little sacrifice. However, starting later in life requires much more sacrifice. Thanks again for the comment.
I think a lot of people start late because their incomes take a while to get where they can save more and grow their wealth, especially if they have kids
Very true - Thank you for the comment. No doubt that as income increases, there is normally more opportunity for people to save and invest. However, many times people can get started, even with small amounts, and build the habit of saving and investing at a younger age. Without that habit and mindset, many people often fall victim to lifestyle inflation and, as their income increases, focus on improving their life and spending more money on a variety of things. Thus, they still end up living paycheck to paycheck. Naturally, every circumstance is unique, but often people could have started earlier if they had made it a priority. However, some are truly struggling just to get by even though they are not buying any unnecessary things. Anyway, thank again for the comment and sharing those thoughts.
@@MikesFinancialEdge I agree with that. I learned saving habits in my youth, then life got away from me for a little bit, but I'm grateful that I'm back to saving again and I'm also thankful for these reminder videos that help me set things in perspective that net worth and wealth are not seen, but are very important for setting ourselves free internally and within our most important relationships. Having material things is short-term and fleeting fulfillment.
Does it mean if you are meeting or exceed the networth number at earlier age you can retire? For example, if I have 1 million at age 50 and only earn 80k a year. I could essentially retire now and never run out of money if I continue to spend only 6k a month.
It sounds like you're in good financial shape and should feel comfortable with the security it provides. A withdrawal of $6,000 per month or $72,000 per year would equate to a 7.2% withdrawal rate in the first year. Typically, this withdrawal rate is then adjusted for inflation going forward. However, this wouldn't be considered a "safe" withdrawal rate for retiring at a younger age. Keep in mind that retiring at 50, for example, could mean our portfolio needs to last for upwards of 40 years or more. Additionally, Social Security is based on your best 35 years of income, and if you have no earned income after 50, some years will be counted as zero, reducing your Social Security benefits regardless of when you start receiving them. There are many factors to consider here, such as the sequence of returns, safe withdrawal rates, future inflation, taxes, investment fees, and more. While I have a few videos coming out first, I plan to cover these topics directly later this summer, and I believe you'll find them highly interesting. Make sure to subscribe so you don't miss them, as they will provide a comprehensive understanding of the factors we need to consider and various safe withdrawal strategies. Thank you for your comment.
Mike, I don't own any property assets, I only saved some 70k cash sitting in the bank earning some 3.1% interest.. and I have invested 20k in stock market, so my total assets is about 100K, and I don't have any debt or credit card debt, I feel like my personal finance is not progressing much, I'm 36 now.. do you have any better advice on how I can speed up the process
You should feel great about having around 100K and absolutely no debt at your age. Having 70K in the bank sounds like it may be more of an emergency fund than you need. However, I don't have enough information, such as your monthly expenses and obligations, to determine whether that's an appropriate-sized emergency fund or if you are saving up for a major purchase like a house. There are places where you could earn more than 3.1% on your savings. Many high-yield savings accounts offer rates of 5 to 5.5%, and there are numerous short-term CDs (1-6 months) paying around 5%. If you don't need that much in an emergency fund, you could consider investing more of your money. Hopefully, the 20K invested is through a discount broker, and you are using low-cost ETFs. Anyway, it sounds like you have been really responsible and are off to a great start. I bet there are many people out there that wished they were in your financial position.
36 is still so young. You have lots of time. I didn't start investing until I was 35 and I retired at 58. At least you're paying attention to your finances which is more than most ever do. I think the reason you feel like you aren't progressing is because you are mostly saving vs investing. What is the purpose of the $70k in savings? A normal emergency fund is between 3 and 6 months of your living expenses. Invested funds are where the magic of compound interest happens. And the second reason is it takes time. Just like a snowball starts off slowly down the hill, it picks up speed and rolls faster and faster the longer its on the hill. Be patient, don't give up. Depending on the markets it takes between 7 to 10 years for your investments to double in value. The math works the same at all levels. It might not seem exciting when your $1000 increases to $2000 but think about when your $500K turns into $1M. I encourage you to play around with some online investment calculators to see what the $20k will turn into. You're off to a fine start, now you just have to educate yourself, come up with a plan and stick to it. The first thing I would do is automate your investing.
@@lindacannon7392 I think we started investing at same age, I only started investing in US stocks last year at 35, my 20k investment is 95% in Tesla stock that I have been buying during its dip and recent correction, and now my plan is to put $500 each month into the s&p500, and at the same time I'm saving those cash for my future house and marriage, so I just don't want to risk all that in the stock market... That's my current position :)
Yes, it's not about competition, and it's best not to worry about keeping up with anyone else. Life is about choices, and what makes one person happy may be very different for someone else. However, it's a good idea to think about the future and take steps to ensure a more comfortable retirement. But, many people are curious about what is considered average or normal in terms of finances. Since there are many misconceptions out there, the intent of this video was to answer some of those questions. Anyway, thanks for checking out the video and the comment.
After listening, if those numbers are true I make well below the median but my net worth is above the median. I'm coming up on 64 , lost my paid for house in divorce almost16 years ago, four children raised , I'm as frugal AF I drive a 1995 rusty G20 van I have a small old house but it's paid for. I still think my finances are kinda sad . But some of those numbers are pitiful.
Unfortunately, most articles and many media outlets simply report what they call the 'average,' typically quoting the mean. It's likely that many in the media don't even understand the distinction between mean and median. This approach often gives people an inflated impression of Americans' net worth. Using the median instead provides a clearer picture of where the middle actually stands, which tends to be much lower than people realize. I agree that these figures don't bode well for those seeking a comfortable retirement. Thank you for leaving a comment. I hope your situation continues to improve going forward! I appreciate you sharing and I hope some of the long videos on the channel can be of help.
I'm about to turn 24 with about $115k between a high yield savings account and stocks investments. Also I'm debt free. It might sound like a lot, but keep in mind I do NOT wanna slave my life away and have to work beyond 35-40, meaning I realistically only have 15ish years to save for retirement. Also the only reason I've even been able to save this much is because I've been working since I was 18 and I still live with my parents due to the stupid high rent prices. My gross income is only about 40k and I'm able to save 28k of that per year. I eventually wanna buy a home but most decent houses in my area cost 400k+, which means it could take me at least another decade at this rate to buy one in full. The problem is by then, the housing prices are gonna appreciate even further, forcing me to delay my retirement plan and potentially work well into my 40s/50s. Boy our generation really is screwed aren't we🤦♂️
Thanks for the comment and sharing. Congratulations! You are well on your way to reaching your goals. I know it may not be ideal and may not be what you would prefer right now, but being able to live with your parents and save like crazy is such a great opportunity for a while. Houses won't keep appreciating as fast as they have in the last few years, and potentially, you could see them come down a bit in certain areas of the country, depending on the economy. If interested, I do have some videos you might find helpful, and I think they could be very beneficial to you as you work towards your goals. I'm not sure if you have subscribed to the channel yet, so I'll add a few that you might like. By the way, how have you invested your savings? How to prepare to buy a house: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-MWKV04UVNeA.html Rent vs Buy: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-dMtkuQjmlOc.html How to become a Millionaire on an average salary: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-jLePdbCMr0k.html
Yes, I think when most of the information put out uses the mean average, it can tend to make people feel worse. At least if someone wants to do a comparison, the median gives a better picture. Thanks for the comment!
The values used were from the Federal Reserve Survey, and I used the median values for all categories. It did take into account the conditional median value of homes, which showed a 24% increase. Naturally, these are national averages, and certain areas saw higher increases. Also, keep in mind that as home prices increased, many people took out additional home equity loans to access extra cash. Thus, for some, the increase in home values didn't add to their net worth as much as one might expect.
Every time someone says they have like a 800k$ house, I almost die laughing (not rly but..) It sounds more like the bank has 80% of your house and you only have like 20% and you are dying in order to pay the mortgage.
I certainly understand. 😉 Net worth is created by what people don't spend on vacations, nice vehicles, and so on. So it's the stuff you don't see in someone's life. Plus, as you mentioned, far too many people are what's called "house poor" because they bought too much house for their income, and the payments are keeping them from saving and investing properly to create the net worth needed for a comfortable retirement. Actually, the majority of people in this country go into retirement still in debt. Thanks for checking out the video and leaving a comment.
As a single guy I find the house thing hard. Very few 1br's and condos have a lota fees. Meaning your paying for a lota exta room or condo fees as a single person. I prefer renting for less and investing the difference.
I certainly understand! Buying a home isn’t really the "investment" many people think it is, and many would be better off renting, which allows them to save and invest more. Condo fees, HOA fees, PMI, real estate taxes, insurance, and other expenses are often not considered in the decision. It sounds like you’re trying to make wise choices. You might find this video interesting-it’s a detailed look at the rent vs. buy decision. ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-dMtkuQjmlOc.html
Condo fees typically are not more than you would put in sinking funds for your home anyway. Taxes. Roof. Yard care. Exterior repairs. It's even where I live. But you're right, the world isn't favoured for single people. Everything costs more for us
Yes, we single people really don’t get many of the benefits that others enjoy. For example, we face higher income tax brackets for the same income levels. As for fees, things like HOA fees vary widely across the country-some are reasonable, while others can be pretty steep. Anyway, thank you for watching the video and for your comment!
Well, for some people, a home can be a liability. 🙂 Especially for those who are buying too much home for their income level or if they purchased a home at an inflated price. Other times, it can be a good investment. There are always several factors to consider. Thanks for checking out the video and the comment!
I don't believe in using income to predict what you need, you should use spending. I only spend about 1/3 of my income. And I can cut that down easily.
Certainly, if we are looking for ways to invest more for our future, we should first look for areas where we can cut back on unnecessary spending. I do agree with that. It gets easier once someone is making enough to take care of their basic needs in life. However, many struggle to differentiate between needs and wants. Anyway, if you are able to live on one-third of your income, that's fantastic. It sounds like you should have the opportunity to really set yourself up for a comfortable future. Thanks for checking out the video and leaving a comment.
Hi Mike! Long-time viewer here. I was hooked after watching your video: "The Surprising Advantages of DCAing." It made such intuitive sense to me...I've been DCAing ever since into the S&P. All great info in this video! Cheers and can't wait until the next one. 👍
Thank you for your comment. It's great to hear from you and to know that you've enjoyed some of the videos. Congratulations on implementing Dollar-Cost Averaging (DCA) and making it a habit!
Some may breathe a sigh of relief, while others may feel they're falling behind. However, everyone can always strive to improve and make their future better. Thanks for checking out the video!
Mike, I have a friend that makes 30,000 dollars a year. I advise him to think about investing and getting in early given that he is only 20 years old. However, he says that the government will collapse by the time he retires and there is no point in saving the money now. I really don’t know how to respond to that. Do you have any advise?
Wow, so synical at such a young age. This is not a financial or investing issue, this is a life attitude. Its quite sad actually. I would begin by asking him why he feels that way. I think he may be getting his news and info from bad sources. Could the zombie apocoypse happen? I'll take the 99.9999% chance it won't. I love you want to help your friend but not sure this is something you can help him with. I wish you all the luck.
That's unfortunate because he truly has time on his side, making it a very little sacrifice. At age 20, if he only saved five dollars a day ($150/month) and it grew at a rate that the S&P 500 has averaged over long periods of time, it could grow into over 1.5 million dollars by the time he turns 65. $5/day is a small insurance policy in case the government doesn't collapse. He could also have his portfolio diversified more than I'd probably recommend for someone that young. For example, a percentage in gold, a percentage in international ETFs, and a percentage in U.S. ETFs. Maybe even a small percentage in Crypto (like no more than 5%). Consider if someone works an 8-hour day, saving 6.25% of the salary, at least, is like saying, 'I'll devote 30 minutes of each 8-hour day to invest for their future,' just in case things don't go the way they think. I know it's tough convincing some people to think about the future when they believe the future is unknown, but there are always catastrophic events happening. Consider just a few of the things during the past 30 years: The Gulf War, LA riots, World Trade Center bombing, Oklahoma City bombing, September 11 attacks, Afghanistan war, occupation of Iraq, Recession and Global Financial Crises of 2007-2009, multiple debt-ceiling crises, Occupy Wall Street, Greek government debt crises, global pandemics, current wars breaking out in various places currently, and so on, just to name a few. Yet, if you ask older people, the number one thing they say they wished they would have done is to start investing sooner. Could you imagine how people must have felt during the Great Depression of the 1930s? They probably believed the future looked dim for the government, too. Anyway, if you are able to reach him and get him started, I bet he will be thinking you years from now!
Most people of them, I believe.😉 Studies and information always point to the young thinking they will retire early. Yet, at the same time, they are not saving and investing enough. It's very easy to prioritize the present self over the future self.
The report from the Federal Reserve, which is released every three years, only covers up to the 90th percentile of net worth. Measuring the point where the top 1% falls becomes a little more challenging to do accurately. According to a recent wealth report published by Knight Frank, it takes $5.81 million to be in the top 1% in the U.S. It's also important to be careful with wording. For instance, in a recent Schwab report on modern wealth survey, they stated that people in the top 1% had a net worth of $10.8 million. However, this figure represents the average (mean) net worth of individuals in the top 1%, not the threshold required to enter the top 1%. There's a little more information for you. Thanks for checking out the video.
Congratulations on achieving such a nice net worth! If you're interested, here's a link to the Knight Frank report I mentioned. You can download it for free. www.knightfrank.com/wealthreport Also, I am not sure of it's accuracy, but here's a percentile net worth calculator that's interesting. dqydj.com/net-worth-percentile-calculator/
Thank you for the comment. I am glad you found the information presented in a non-hyped way. My goal was to simply present the facts and offer some healthy perspectives for making comparisons in life. Thanks for checking out the video.
