Good Decisions Contribute to Great Assets

I’ve made good choices and I’ve made terrible choices in my life. The good choices have propelled me ahead in life, getting me closer to early retirement every day. What are those good decisions that brought delivered great assets?

Formal Education

I’ve always prioritized education. Without a doubt I can say that it’s had a positive impact in many aspects of my life, especially in my assets. I’ve tended to take risks and sign up for educational opportunities since I was in elementary school which have paid dividends. Each opportunity paved the way for the next opportunity. Elementary school: Gifted and Talented class helped lay the foundation. Middle School: went to multilingual school which immersed me in a program with other talented kids. High School: International Baccalaureate Program and Academic Decathlon both taught me how to think critically. Undergrad’s numerous business programs, clubs, etc. taught me to take risks. First job out of college: obtained three financial licenses which helped me get to my current employer. Pursued graduate school which propelled my professional career even further, as I transitioned from customer contact to staff support. Professional certifications got me promoted and a new job both which contributed to skyrocketing income. In fact, the average person with a master’s degree will make $2.67 million in their lifetime, while a high school graduate will make $1.30 million. So get yourself some education.

Contributing to and MAXing OUT My 401k

A wise family member (who happens to be the wealthiest in our family) once told me to max out my 401k. When someone wealthy gives you wealth advice, you take it! So after 6ish years in the workforce I was maxing out my 401k. Not only did contributing to my 401k lock in the delicious 8% match, but the rapid growth got me contributing more and more. It was 8%, then 9%, then I thought… could I push it to 12% all the way up to 25% at one point. My income grew and the percent came down. At one point I broke the income threshold designating me as an highly compensated employee. This puts me in the top 20% of income earns at my company. A year after I was married, I got my wife to max out in pursuit of our early retirement dreams! And guess what? Vanguard found only 10% of retirement savers max out their 401k. If they only knew a person maxing out their 401k at $18,000/yr will have $1.8 million in 30 years (this doesn’t include annual 401k increases, employer matches or even IRA contributions). So increase your contribution levels another few percentage points. Your future self will thank you.

Splitting Living Expenses

That’s my home

I purchased a house in 2013 a day before my 30th birthday for $190,000, just a hair shy of the 2013 median US home purchase price of $203,000 (as of May ’17 it’s median price is $253K). It was a 2600 square foot home with a living room ready to be turned into a jam room (I have lots of instruments 🙂 let’s jam!). But a drum set, piano, guitar amps, and keyboards only take up so much space. So my cousin and future wife joined me in my spacious abode. That additional income for bills and the mortgage helped me live like a king. Unfortunately, I didn’t directly save it, but you could say it contributed to my MAXedOUT 401k. I imagine my wife and I will explore rentals in the next few years. This will help advance our RETIRE EARLY goals and replace our w2 income. Additionally, having a partner as lovely as my wife helps me stay motivated with our finances. It’s helped me put a system in place that pays us first, then our bills, and then let’s us spend the rest.

Opening trades: Proctor and Gamble, Merck and Titanium Metals

My first ever investment account was with Sharebuilder (now CapitalOne Investing). It was a brokerage built for young investors just starting out. The application process was easy and they let you buy fractional shares (i.e., I could buy $500 worth of stock instead of having the exact dollar amount). So in 2003 I opened an account with $300 in PG, $150 in MRK, and $150 in TIE. These three stocks gave me an understanding of how slow and steady will always beat boom and bust. From here I would explore others stocks and eventually get into options, including more complex strategies like iron condors and jade lizards.

What are some of your best money decisions? What advice would you give others? I’ll share my hard lessons soon.

-Max Out!