100%. I didn't come from money. I did see my parents go from living with my grandmother when I was a toddler to buying a half a double to buying a modest single-family home before I went off to college. I also happened to have a roommate in undergrad whose dad put $10k in a brokerage account and told him to learn how to invest.
When I graduated, I bought a book about investing and with my first decent money-making job at 22 years old, starting socking away about 50% of my pay into mutual funds and was maxing out my Roth contributions. I didn't have a 401k or matching when I started.
In 3 years, I took a little out and bought my first house, then a 2nd, then a 3rd, then a 4th, all in the next few years (I bought a book about making money in rental properties after the first house). I lived in 3 of those places for a couple of years and then would rent it out after I left. By my early 30s, I owned 4 properties and had a pretty nice little start on a retirement fund. We sacrificed some things that my peers were doing like frequent vacations, expensive new cars, and my time with self-managing the rental properties.
At some point, ETFs came along and so my savings started going there instead of mutual funds. I've done individual stocks as well but that's been hit or miss. I have one about to go completely under and a few down significantly while others have over doubled and over tripled since buying in the last few years. The individual stocks are mostly for fun, and the bulk of the portfolio is in real estate and ETFs, plus those early mutual funds.
Fast forward to my early 40s and the wife and I decided to retire early, comfortably, with multiple income streams. We still don't spend in excess but have loosened up considerably on that front. I suspect we continue to as several rental properties will be entirely paid off over the next few years in my early 50s. Those already nicely cash flow positive income streams will get a significant increase.
We're working to get to 8 figure net worth which we were well on the way before 2022. That was a bad year for nearly everyone and it's the first year in our adult lives that our net worth decreased. Actually, the inflation-adjusted (so relative to inflation or what you can actually buy with it) annualized (so the 1-year average) returns have been pretty bad the last 3 years. They are DOW 1.87%, NASDAQ -0.04%, and S&P 4.51%. I know it's been a much harder 3 years on most people though with cumulative inflation now about 20%. Many families are raiding their 401ks, running up massive credit card bills, going without including meals, or even a roof over their heads (foreclosures are up 8% this year and PA is 3rd highest in the nation with a 46% increase!). Some of this is what seems like permanently high inflation but also mortgage rates surged from 2.77% to 6.88% currently (was over 7 a few months ago). Average rents have increased by 6.49% annually over the last 3 years (well over double what it had been) and real wages (measured against inflation) were down 3.1% in this timeframe. It's just breaking a lot of families.
Anyway, I still remain positive in the long term and am convinced we'll be above 8 figure net worth before long. The 4 years prior to the last 3 were significantly better. We can get back to that eventually (it's not going to be immediate). Those 4 years the inflation-adjusted annual returns were DOW 12.03%, NASDAQ 32.53% (the highest 4 year in history), and S&P 14.78%. The best part is that this period was coupled with average annual inflation of only 1.875% and real wage growth of 8.7%. So we just need to get back to an economy that was very strong not that long ago.
My point while dropping a number of market conditions that I track for investments and broader economic health is that anyone can do what we did. Again, I didn't come from money. I'm not rich, at least in my mind, but we've done well for ourselves and our family. The formula is relatively easy to follow. Financial planners advise you to start putting away at minimum 10-13% of your pay starting in your early 20s and that should be enough to replace 80% of your income in retirement if you retire at 65. If you start later, you need to sock away a higher % (13-20% if you wait a decade to start investing). Someone who invests $5000 a year from age 25 to 35 and just lets it sit until age 65 will have almost 30% more saved at retirement age (assuming an 8% annual return) than someone who saves $5000 a year from age 35 to 65. The key is to start early, so impress this upon young people. You don't have to do the real estate if it sounds daunting or too much. Just start investing and the earlier the better.
