aything less than 4% interest rate after tax deduct i borrow. will very likely do this for life! anyways i keep a spreadsheet that contains my net worth every year and future goals on a yearly basis all the way up to year 100. i use waht i feel to be conservative numbers. i actually had to update it, cuz i never used 20m as my inflation growing goal. my number was 7m! essentially the 1% net worth. used a 2% inflation for that. Anyways around 60 i’ll hit the 20m in today’s money. the numbers are actually simple: i contribute about 28k/year (401k, hsa, roth) I assume a 15% increase as the return on my net worth and i’ll hit 42m at 60 in essence.
which is conservative cuz i made 25%/year since 2011. howd i do it? i did it using tax deferral 401k, ira, hsa since 2011 around 30% from tax savings on the first year then the appreciation from it per year or 10%/year(this is fully maxed) , leverage/real estate in 2012 25%/year, requries low rates and low prices which is rare nowadays im thinking of stepping onto commercial real estate when the next recession hits rates and prices. or side business in 2016 around 20%/year theres work and its annoying and idea isnt exactly scalable and is dependent on your partners or workers. (funny thing is,i thought this biz was like a 40% cagr, but there are so many unforeseen costs, shit breaking, people quitting, and there is delay in the pay, your costs are front loaded on a job, and you dont get paid until a month after,theres also seasonality, when it rains it really pours, and when there is nothing, you best better have enough cash to survive the lean winter months nad fixed costs.)
my current obssession right now is that i am currently trying to learn how to do 15%+ returns on markets, like this is shit that i can do with excess wealth without any work that is scalable as fuck. i created a list of cos taht i consider great. i started doig htis wen i got my charter 17 mos ago essentially when i had free time. most are overvalued so i really need a downturn to make them cheap also to see how these fuckers perform. its a work in progress. i follow about 50 cos. why 50? here are some stats from past 10 yrs: around 620 10b+ market cap companies 10 yrs ago. about 275 did 10% or more per year. about 125 did 15% per year. 50 did 20% per year, the spy did around 9%/year for comparison. I am targeting 20% and above! anyways i think the majority of my gains will fall here as it prolly requires the least amount of work and is scalable
teh idea is to make sure these companies are best in breed and once i buy it, i never have to put too much effort into it or worry. like for example suppose you buy this shithole company trading at a cheap price . it goes up to your target price, this shit dont grow, so your like, time to sell! you feel good except now you got a problem cuz you got mo money and mo problems. and now you have to work again to find another shithole company and waste time learning about something in secular decline that wont be relevant. now if you have a great co you’ll be like aw shit, great co is going down, wtf is up. you check it, seems financials are going up higher. so you’ll be like WHA CHEAP BUY MORE! now say great co goes up, you’re like aw shit, dont have to do anything because everything is getting better, the dcf just got higher so now i’ll let it run. now whats bad about great co is that they are ver likely overvalued, and you run the risk that they are slowing down. so the key is have a value appraoch and make sure you keep tabs on them.
