Email from a reader: Your retirement account grew by $120,000 in 2015? Bull!

Published October 28, 2015   Posted in How to Save

I received an email a couple weeks ago from a reader who expressed disbelief that my “retirement account” (read: investments) grew by a whopping $120k this year – and the year isn’t even over, yet. I love this email.  It gives me the opportunity to point out how powerful a high savings rate can be to your net worth.

The exact email:

It is not believable that your retirement account grew by $120,000 so far in 2015.

If you take a look at our net worth numbers over on the right hand side of the page, it’s true.  We started the year at $514,495.43.  At the end of last month, we were at a pleasant $641,177.31, which represents a growth of $126.681.88.

Note: At the beginning of the year, we inadvertently missed one of our financial accounts that had around $10k in it that we found in may, so technically, our beginning balance was probably around $524k, bringing our growth down to $116,000.

Either way, not too bad.  Adding around $120k to our portfolio in 10 month’s time would set nearly anyone up for early retirement in short order, and believe it or not, it’s just not that tough to do.

To address the disbeliever’s email, how could anyone increase their “retirement account” by that much? Am I just full of shit instead?  Well, I certainly don’t think so…though possible!

Savings vaultIt works through the magic of saving, my friends. Our net worth did not grow $120k based solely on stock market growth alone.  Our net worth grew due to a combination of market growth and an aggressive savings rate.  Truthfully, it was more the saving than the growth.

Look back through our published budgets.  We save around 70% of our income every month. Both my wife and I work and bring home two salaries.  We have no kids.  We don’t take expensive vacations.  We don’t eat out a lot, and when we do, we order water to drink!

We sold our Honda Ridgeline a few months ago.  I ride a motorcycle that gets 50 MPG.  I also completely eliminated my commute by finding a job that allows me to work 100% from home.

We buy new clothes maybe once a year, if that.  We don’t have expensive television service or unlimited cell phone plans – in fact, I use the most basic Android phone there is (the Android Core Prime).  We keep the house warm in the summer and cool in the winter, which keeps our bills low.

We close windows to retain the heat and A/C inside the house.  We turn off lights when we’re not using them.  I mean, pretty basic stuff.

We also have no debt other than our mortgage, and that will be going away next year.

To top it off, we eat better now than we ever have before.  We spend a few hundred a month buying some of the freshest vegetables around and make healthy, nutrient-packed dinners every night.  We can (and do!) eat until we’re completely full and never gain a pound.  Our calories are high quality and thoroughly tasty.  We buy in bulk to save cash, freeze foods when necessary and keep the fridge stocked with just the foods that we plan to eat in the next couple days.

My wife and I are happier and healthier than ever, and it hasn’t taken a huge wad of cash to make all that happen. In fact, it doesn’t take all that much at all.

How can anyone increase their investment savings by $120,000 in 10 month’s time and still live in the lap of luxury?  Believe it or not, it is not hard.  It happens by living sensibly and being mindful about the things that truly bring happiness into your life – and then saving the rest.  Two incomes help, but it’s the saving itself that accounts the most for our ability to grow our net worth.

And this year is not done yet.  I hope to flirt with the $140k mark by year’s end.

Exploding your net worth is possible through a combination of controlling expenses and saving as much as possible. Neither my wife or I feel like we are depriving ourselves of anything. The fact is we have everything that we could possibly imagine.  In truth, we have more than we need, including our home.

And we are just two 30-somethings living in the desert southwest with a goal of early retirement. If we can pull this off, anyone can.  Your growth rate might be different, but it doesn’t matter.  This isn’t a race.

Remember, we don’t have a money goal for retirement.  Instead, my wife and I are fully prepared to design our lifestyle around our financial picture at that point in time by streamlining our expenses to meet our investment portfolio’s limits.

We have a date goal – as you can see on the upper right of every page of this blog. December of 2016 is the date that we will begin our journey into our next life. I will be 35. My wife will be 32. And we will both be happier than ever.

Does anyone call B.S. on your position in life?

We track our net worth using Personal Capital


45 responses to “Email from a reader: Your retirement account grew by $120,000 in 2015? Bull!”

  1. Maggie says:

    The power of SAVING?!?! Use real terms here, Steve. Ain’t nobody that can SAVE money! 🙂 You have made some excellent strides and are great motivation for the rest of us. We’ve upped our saving rate considerably this year and love to see the progress multiply! Thanks for proving that basic math and frugality can make a big difference.

    • Steve says:

      Thanks Maggie – yup, the power of saving. It can make a huge, huge difference in your net worth, even if you don’t realize any gains in investments. Saving is really the least that we can do to get ahead. 🙂

  2. jestjack says:

    I too look at these numbers with a “jaundice eye”…..and why wouldn’t I? Based on these numbers your net worth has gained 25%….in 10 months…..Many seasoned investors would be hard pressed to duplicate this feat. Especially in a slow economy with low inflation. Perhaps share a bit about how much was appreciation and how much was additional funding. In this “neck of the woods” the “boogey man” is taxes….the more you make…the more you pay. Taxes would wreak havoc on $12K per month…that’s about $3K a week….which equals crazy tax rates….Your thoughts?

    • Joseph Beckenbach says:

      Tax paid depend wholly on what is in question and how it’s held, which determines *when*. First define “make” and then we can nail down where “the more you make the more you pay” isn’t getting applied right. If it’s “employment income”, then yes, more taxes paid immediately. If it’s simply “increased net worth” from holding something that goes up in value that you keep holding (stocks, bonds, houses, businesses, …), yes, you will pay more in taxes at that new higher value — but only when you sell.

      You local business-folks have zero tax owed on the growth of the value of their businesses, simply because they’ve not sold them yet. I don’t care that my house has appreciated in value enough to cause $10k in capital gains taxes — because I’m not selling it! No sale, no gains, no extra tax realized. I don’t care (regarding taxes at least 🙂 ) that my portfolio has seen a similar rise to Steve’s (and I don’t claim to be a seasoned investor yet). The improvements are in tax-deferred accounts or in investments which rise in value without producing taxable cash — nothing sold, no gains *realized*, no extra tax to pay now.

      Yes, eventually tax will be paid when it comes time to pay it. That I have more in my net worth now, does not mean I must pay more tax *now*. Seen too many people make that mistake, and it costs much heartache and lost chances to make life better for themselves and their families.

      • jestjack says:

        The point being that a 25% increase for not even 10 months of the year 2015 is the exception rather than the rule. A large windfall from an inheritance or a RE sale could explain such a large gain but to just say it’s from thrift …. not feeling it….

        • Steve says:

          Hi Jestjack – no windfall of any kind, unfortunately. When you’re saving close to $100k a year from two incomes, investments tend to increase fairly rapidly.

        • Mr. SSC says:

          I agree with you in that it’s not all from thrift and frugality. However, by not having high car notes, multiple car notes, spending $3k/month eating lunch/dinner out, a boat, a truck to pull the boat, and other things that don’t cost money, it gives Steve, and myself extra income to put towards savings.

          The more we spend, the less we have to save and invest. The less we spend, the more we can invest.

          When we were analyzing our FI timeline in the event my wife was laid off, we found that it would only knock back our date by 2 years. The main reason is that once you get a huge nest egg going, it has the compounding snowball effect and grows and grows. At this point, our investments are making as much for us by its growth, rather than by us continuing to dump large amounts of cash into it. By having both things happening, it is possible to grow that much in 10 months. It can be the rule, because that’s what happens with compounding and aggressive saving, it does get that awesome.

          You yourself could see this in your own investment accounts – it just takes saving, more saving, and waiting.

  3. Marc says:

    What kind of motorcycle do you have? My daily rider was a Ducati 916 a couple of years back until the voltage rectifier and the rest of the electricals fried up 🙁

    • Steve says:

      Hey Marc. I’m on a Honda VTX1300c now – a cruiser. I used to ride a Yamaha R1 sport bike (actually, two of them at different points in time). Insurance was ridiculous for that bike, but man was it ever fun! I’ve always liked the Ducati 1098, but I could never bring myself to actually spend the money for a Ducati, even used.

      I hadn’t seen the 916 before, but that’s a sweet looking bike as well.

      …I love sport bikes. 🙂

  4. Stockbeard says:

    I’m about 15% up in total wealth this year myself, thanks to high savings rate, a side gig, increase in salary due to an international relocation, and some significant luck with some of my investments over the past few months, which have counterbalanced the bad august market.

    Single income, two kids.
    It is doable, people, if you take action. The easiest and first step is to aggressively save, as Steve mentioned.

  5. For me it’s not that hard to imagine! Right off the bat about $40k is coming in pre-tax in the form of maxing out your 401ks plus some match. Then S&P 500 is up about 4% which would account for another $20k or more (on $500k beginning balance). So now what’s left is $60k, which is definitely doable with your two incomes and savings rates! Boom!

    Like I always say – haters gonna hate, savers going to retire.

  6. You know we never share numbers, but I’m going to throw one out there just to back you up, because this stuff is *so possible* with diligence and focus. This year, market fluctuations included, we’re up $149K since January 1. That is almost entirely savings and investments we’ve made, since the market has returned us very little, though there are some small 401(k) gains in there. This is simple math: save a lot and your net worth will go up a lot!

  7. Great post. That’s an impressive savings rate to be sure. We’ve cut a lot, but our auto budget is still a bit high and I can’t work from home.

    2 salaries is still definitely key to hitting 6 figures in a year though.


  8. In the short term a high savings rate is way more powerful than compounding. Couple that with a high income and stacking the Benjamin’s can happen very rapidly.

    Too many people glaze over the importance of your savings rate.

    I recently did a study that I will publish soon that actually compares someone with a 50% savings rate earning 0% vs someone that saves 15% earning a 8% compounded return.

    At the end of 20 years the 50% saver has $750K and the 15% saver has $515K.

    Assumes a $100K income for both. Actually all variables besides savings rate and rate of return are held constant.

    Anyways, keep up the good work!!!

  9. Christine says:

    I’m not anywhere near your $$ amount in savings, but when I told me bosses last week that I have already saved over $20,000 this year (avg yearly salary of $43,000) they were floored and offended. They acted like I was lying! The power of saving is incredible.

    PS: Love that you ride a motorcycle! Great way to save on gas!

    • Steve says:

      Thanks Christine! Yup, I love riding – and you’re right, the gas savings is awesome.

      It’s wonderful that you’re able to save so much money. The fact that anyone would get offended by someone else’s savings rate, in my opinion, says a lot about that person. That offense is probably more jealousy than anything.

      Thanks for dropping by! 🙂

  10. Chris Muller says:

    Hey Steve – as soon as I read the title I knew you would have a field day with this one. I love non-believers! You make some excellent points on how you’re increasing your net worth. Here’s the problem – one of the things that separates you guys from the pack is the fact you’re willing to make sacrifices. You’re willing to say no to things that most people think are societal norms. Your phone for example… to you it’s just a phone. Realistically it’s probably more than any of us actually need. You’ve recognized that. To people who don’t increase their net worth by 120k per year though, it may seem like a sub-par phone. Those folks want to lease a new iPhone for $35 a month, then pay an upgrade fee the following year to get the even newer one. And think…for what? It’s funny…if nobody is around to show our cool stuff to, would we still buy it? What I’m suggesting is that people create and follow these societal norms (like buying an iPhone) to show other people what they have. In a vacuum, none of this would matter. So what’s cool is you’re living that way, but you’re not. You’re not pressured by these stupid societal norms. That’s why you’ll be retired next year and the person who wrote the email won’t. Anyway, I’ve sufficiently rambled off on a tangent, so I’ll end it here. Excellent post buddy!

    • Steve says:

      That’s an excellent point, Chris – it is an interesting question about whether we would still buy some of the expensive things that we buy if nobody else was around to see us interact with them. That is something we never really think about, but it’s a very real phenomenon at play. Well said, sir.

      Thanks for your comment, as always!

  11. MrsSSC says:

    I got to agree with ONL – we are up about $140k since January 1, not including all that we’ve saved in college funds for our kids. There is no reason it can’t be done! Granted making in the 6 figures help – but all we aim to do is hit a 50% savings rate. We worked our butts off for years in school and took great jobs, so I’m not going to apologize ever for making a good salary. I love what Fervent Finance said – “Haters gonna hate” – Mr SSC even has a shirt that says that 🙂 We all make our life choices – and I love that you all are yelling off the mountains how great your choices have turned out for you!

    • Steve says:

      I’m loving these comments of how others are kicking a lot of ass in the savings department. While a high income enables those 6-figure savings rates, a high income isn’t necessary to save. And like you, I’ve never really considered apologizing for making a great salary. 🙂

  12. I don’t doubt your numbers at all. Our net worth has exploded the last few years and that’s with 3 kids. We each make just under six figures, so above average but nothing crazy.

    I’m always astounded with people who make good money yet still have no savings. Seriously, it’s not that hard. And most “sacrifices” are nothing more than cutting out wastefulness and not trying to impress others. Great post!

    • Steve says:

      I’m with you on that one, DTG – I’m just as astounded by those with high incomes, but low savings. Every time I hear about these situations I think of the Millionaire Next Door book…one of my favorites that separates the real rich from the fake rich.

  13. Mr. 1500 says:

    I call BS, but on this:

    “To top it off, we eat better now than we ever have before. We spend a few hundred a month buying some of the freshest vegetables around and make healthy, nutrient-packed dinners every night.”

    What diet isn’t complete without the orange, crunchy, chemical things that look kind of like turds? Of course, I’m continuing our Cheetos conversation. They are healthy, taste just as good on ice cream as they do as turkey stuffing, and have been scientifically proven to increase your IQ by 14 points.

    In all seriousness, unless you’re pulling down CEO money, this is a pretty great accomplishment considering the S&P 500 is only up 1.5% for the year.

    Nice work and cheers Cheetos to you my friend!

    • Steve says:

      Ha! As far as I’m concerned, Cheetos contain cheese. Cheese has calcium. Therefore, Cheetos are healthy. Boom, see that logic! 🙂

      Thanks for your comment, and I appreciate you giving the blog a read!

  14. Leigh says:

    You guys are doing great at a $120k increase so far this year, especially with no help from the stock markets! I’m up about $60k so far this year and I should add another $10k or so to my net worth before the year is out. And you know what? Most of that is from my savings rate. In fact, that’s pretty much dollar for dollar how much I will have saved this year because my investments have been basically flat this year!

    • Steve says:

      Awesome, Leigh – nothing wrong with a $60k increase! Like I always say, early retirement isn’t a race, and you will probably find that you’ll be able to retire earlier than you anticipate as that magical date draws closer. 🙂

      Thanks for reading!

  15. weenie says:

    I believe your numbers because I’ve achieved a >25% net worth increase myself so far this year – although my numbers are a lot smaller than yours (I’m on an average UK salary), I know it can be done via a combination of saving, cutting down on expenses and a bit of luck with the stock market! Keep up the great work!

  16. Simple Saving says:

    This was a slam dunk post to show how most consumer driven people just don’t get it. I am self employed and work part time from home and the wife works part time as well. We get teased all the time about our 17 year old pick up truck and our less than cool cell phones. when my wife submitted to her HR department that she wanted to save 50% of her salary into her 401k (she only makes 34k) they immediately contacted her and said she made a mistake and that they would “correct it” to the 5% that she probably meant. Ha!

    • Steve says:

      Ha! Love it, Simple Saving. Saving 50% is definitely something that most HR departments probably don’t see very often. Funny thing is…if you multiply the typical savings percentage by 10 through your employer, you can probably also DIVIDE the ordinary number of years that you’d have to work before retirement by 10. 😉

  17. At your net worth, a 10% increase due to dividends and growth along with saving 5K a month and you are there. Seems a fair growth number. Awesome job…..Steve

Leave a Reply