How To Save 2 Million

by Dual Income No Kids on May 30, 2009 · 0 comments

Hi All,

One of the best parts about blogging is interacting with financially successful people. Well, we recently got a note from a reader named Dennis. After saving for the better part of 20 years, Dennis and his wife were able to retire early with significant wealth built up. Here is his explanation of how they were able to do it:

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Dennis’ Story

I was 35 and my wife was 32 and we were both broke. We started saving about 30% of our income. I was a process engineer, she was an insurance supervisor. We put about 1/2 in stocks and the rest in safe bonds. We both retired early – at the age of 55 and 52 about 3 years ago. Last year our porfolio was $2M and today is still worth about $1.6M.

How did they do it?

We are by no means experts in stock or bond choices so we have made some not so good ones over the years. In 1985 I started a spreadsheet to see what would happen if we started aggressive saving a lot of our income and came up with a number of $2M. We got to our goal even though we did not save as much as our goal because our incomes increased faster than I had anticipated. When we quit our jobs 3 years ago we were each making about $75K but our income from our investments was substantial.

Stocks-(60%) Until recently we diversified 401K stock money through the company S&P 500 index and IRA money into growth and income, international, life science, and small cap funds. Then in 2007 we concentrated all of our stock money into just 5 growth stocks like – Apple, Google, Monsanto, Genenteck, and Slumberger because it is money we can afford to loose but the growth potential compounded is tremendous!!!

Bonds – (40$) In the beginning we had Ginne Mae funds and bond funds in the 401ks. We even bought US Savings bonds on a regular basis through payroll deduction. Last October because of the banking crisis we temporarily moved our bond money to Vanguard Treasury Money Markets (O% interest!) until the current crisis goes away. I haven’t figured out where to put that money yet to get better interest.

I often thought about writing a book but someone beat us- “The Millionaire Next Door” I believe it is called. Basically we cut back on spending everywhere we could and we have been out of debt since 1994 when we paid off our house early! My wife was not an early believer so it took some convincing to change our lifestyle to thrift. But about 15 years ago she started telling others to save more! If we had started saving before age 35 we could have retired even earlier!!

Thanks Dennis!

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