$1 Million by 2017. What’s Your Goal?

July 30, 2007 by Pinyo.

Before I started this blog, I did not really have a good financial goal. Actually, my financial goal was similar to 99.9% of other Americans…I wanted to be rich. But what is rich? In “Are you wealthy? Here’s a test,” I defined wealthy as: “…when income from my assets can cover all my family living expenses and a few luxuries“. That was a good start, but now I want to put together a specific and achievable goal and plan.

Goal: Build a $1 million investment portfolio by 2017 (excluding home equity)

10 years may not sound very sexy, but I don’t know any get rich quick scheme that works. So, I have to work within my capability and 10% should be achievable. I am currently at 23% of my goal. In fact, I consider myself lucky to have accumulated this much wealth without any financial goal or plan for the past 10 years.

So how did I get to $230,000?

Well, it actually was $250,000 a few days ago before the stock market went south. Anyway, I started working in 1996 with about $20,000 debt in my name (mostly student loans and some credit card debt). I was able to save a large portion of my income each year, thanks to my Thai-Chinese culture where it is typical for the oldest son to live with his parents. This really helped me get an early start on my financial situation.

I also started to invest in the stock market soon after my first paycheck. This turned out to be another good thing for my finance. Sure, I made a few errors along the way, but it was a small price to pay for what learned. In 1998, with considerable help from my parents, I bought a house. Although I went from paying almost no living expenses to paying for everything but food, it was another good financial move in my favor.

Overall, I did well for someone with no financial goal. If I had been more serious about personal finance, I think I could have done much better.

So $1 million by 2017 is the goal, here is the plan…

My plan is simple, but will be challenging to execute. To get to $1 million, I will attempt to grow my investment by 10% a year and add about $20,000 more to the portfolio each year. Here is a rough map (updated 1/1/2008):

$1 million goal

Reaching this goal may not make me wealthy by my own definition, but I now have a road map that I can measure my progress on a regular basis. Setting a SMART goal is the key to success:

Specific - knowing exactly what I want - i.e., $1 million investment portfolio
Measurable - having the ability to track progress - i.e., I can come back to the spreadsheet above and see how well I am doing
Actionable - knowing the steps needed to achieve the goal - i.e., by saving $20,000 per year and investing that money
Realistic - being in the realm of possibility - i.e., investing for a 10% annualized return is possible
Timely - knowing when the goal will be achieved - i.e., 2017

Here are what other bloggers say about goal:

Financial Dominance: Why Defining Your Investment Goals is So Important.
The Simple Dollar: A Guide To Setting And Reaching A Net Worth Goal.

What is your goal?

32 Comments

Michele, 30. July 2007, 14:04

Sounds like a reasonable goal - good luck!
Pinyo, 30. July 2007, 15:38

Michele - welcome to Moolanomy and thank you for the assurance.
Mark Andersen, 31. July 2007, 7:15

I have more modest goals, mainly to have the debt paid off in 2 years, own a home in 3-4 years, and have 2-4 children by 2012
Pinyo, 31. July 2007, 7:52

Mark - thank you for sharing your goals. These are all good goals. Wow, 2-4 children, that’s a lot of kids.

The point is to think about what you want, make sure they are realistic, have a timeframe for each, and write them down!

The $1 million is just one goal. I also have to save for my baby college fund, have another baby (??), buy a bigger home (??), etc.
Jason, 31. July 2007, 14:27

Goals are important. Did I read that right are you at $250,000 now?
Pinyo, 31. July 2007, 15:12

Jason - I was. Last week knocked me down to $230k, but I didn’t pull any money out.
Jason, 31. July 2007, 20:28

Do you have an account on NetworthIQ? Or, perhaps, does one of your other articles tell a little more about you, and how you got to this point?
Pinyo, 31. July 2007, 21:10

No NetworthIQ account — I will have to check it out. I think this is the most revealing post so far. The biggest contributors for accumulating $230k are: (1) always pay off my credit cards (never pay late or finance charge since 1991), (2) max my 401k since 1999, (3) max my IRA since 1996, (4) learn to invest, and (5) be frugal.
Vincent Liu, 4. August 2007, 19:35

Hi Pinyo,

I’ve found your blog through blogcatalog, and it’s really nice to know that you have written out your financial goals so clearly.

For a while I have been pondering whether if would be considered obscene to write about their wealth, which I’m glad that you did.

It is inspiring to read about your goals, which I have written a bit about mine as well: http://blog.vinceliu.com/2007/.....life.html. It’ll be nice if I can get some feedback!

Another thing, is if I may link you up to my blog if like? I do enjoy the the topics and the way you write approach financial management, straightforward and down to earth.

Cheers,
Vincent
Pinyo, 4. August 2007, 22:50

Vincent - welcome to Moolanomy. Thank you for such a thoughtful comment. I was and still am struggling with the decision to share my net worth. However, if I was able to inspire one person to secure a better financial future, I think I made the right choice.

I took a look at your site and it seems like you got a good head start being under 30 and all.
Vincent Liu, 5. August 2007, 11:34

Pinyo,

Thanks for the feedback, really appreciated you giving me a review. Likewise, I’m also struggling with my own decision to be open about my wealth, but I agree that you have made the right choice, for there is no shame in showcasing the fruits of your hard work and financial prudence.

Will keep reading your blog, and thanks for being an inspiration!
Pinyo, 5. August 2007, 12:26

Thank you for your words of encouragement.
macewan, 17. August 2007, 19:32

I’m currently socking away 30% of my net.
Pinyo, 17. August 2007, 19:48

Macewan - welcome to Moolanomy. 30% is very hard to do. I think that’s awesome.
GoalGuru.com, 29. August 2007, 15:33

What you are doing is awesome and you are inspiring a lot of people. There are many ways to reach the same destination and you are doing it in a way that you are passionate about.

You are also showing people the enormous value in long term perspective. Way to go!

Live Your Dreams,

Jill
Founder and CEO, GoalGuru.com
Pinyo, 30. August 2007, 5:40

Jill - welcome to Moolanomy and thank you for the words of encouragement.
Eric, 30. August 2007, 20:27

I really admire you for telling us about what appears to me to be a very ambitious but achievable goal. I haven’t read through your entire site yet, but I’m curious and interested to see if you are changing things in your life, and what those things are, in order to help you save 20,000 a year. I’m making some of those changes in my life now and it’s been an interesting and eye-opening experience.
Pinyo, 31. August 2007, 4:51

Eric - thank you! It is ambitious, but if the stock market historical growth rate of 12.5% is still achievable, I should be safe with my 10% target.

My saving method is to pay myself first. Historically, I have been able to fully contribute to my 401k and IRA, although it is increasing harder to do so. Anyway, I believe I can manage $20,000 a year which is still a lot of money.

I think once you have a goal and put together a plan, you can achieve make your dream comes true also. Good luck. I look forward to read about your goal too.
Jake, 3. September 2007, 16:50

Great way to lay out your goal. When you write it down like this it increases the chances that you will make your goal by many times!

So happy million!
Pinyo, 3. September 2007, 20:06

Jake, thank you for the reassurance. That’s one purpose of this blog; to keep me on track. I hope this will all work out.
Jeff, 26. September 2007, 6:17

You have hit the nail on the head:

1> Have a written plan (share with others)
2> Long Term Perspective
3> Stay focused
4> Pay yourself first

Well done on the article and good luck.
Yves, 27. September 2007, 14:07

Thank you for writing this blog. I look forward to reading more about your suggestions and successes!
Pinyo, 27. September 2007, 18:02

@Jeff and Yves - Welcome to Moolanomy and thank you both.
Money Blue Book, 30. October 2007, 20:58

Inspiring most definitely - Save as much as possible and invest in the market and let compound interest do its magic. Time is definitely our friend!
-Raymond
Ruth, 1. November 2007, 9:07

It’s great to read your chart. I have a similar one. My goal is to have $400,000 by age 42 so that I can “retire” (which might mean work part-time on and off).

I’m 35. $400,000=$16,000 a year at 4% withdrawal rate, and currently my spending is a little less than that. So far I am at $160,000, not including my house, and I invest ~$30k a year, which is about 1/2 my salary. I can do this because I pay myself first and more important have followed the principle of not changing my lifestyle as my income increased–although I have, but not as much as most people.

I used to have 3 roommates, now I have one; I used to not have a car, now I share one with my roommate and bicycle to work; I used to live without health insurance, now I have it through my job. I don’t know if my plan will work, especially due to health care costs, but then I don’t want to sit around after age 42, I just want to have more flexibility to work part time and in the nonprofit sector, etc. I don’t have any dependents, which helps, but if I did I don’t think it would be very different–my parents brought me up in a frugal way and it just seemed natural to me to wear hand-me-downs and drink powdered milk and work my way through college.

Now I enjoy being creative and frugal because I know it’s helping me toward my goal. I’ve never felt deprived; but then I also happen to enjoy things that are free anyway, like nature and reading and drawing. I feel very normal, but when I look around it seems that I’m not. Maybe if people had goals they believed in they would have an easier time making choices that are healthier for them. Or maybe having free time is just more important to me than it is to other people.

Thanks for having a place where I can write this. One of the hardest things about being a saver is that you can’t talk about it–it’s more okay to tell someone you got laid last weekend than that you’ve broken the $150k mark 3 months early. Why is that?
Pinyo, 1. November 2007, 9:22

@Raymond - yes, compounding is great.

@Ruth - welcome to Moolanomy. I really enjoyed reading your comment, so if you ever feel the urge to write about your finances and frugality, I would welcome you as a guest writer.

Living off $16,000 per year and saving $30,000 is an incredible feat, and your plan is so well thought out that I am sure it can be done. I would certainly love to hear about how you manage to do these things in more detail.

By the way, I would prefer living frugally and retire at 42, than having to work the rest of my life for all the goodies.
Tommy, 3. November 2007, 23:50

Wonderful goal! Mine are a bit more modest. However, I may up the ante after your inspiration. Good luck.
Ruth, 4. November 2007, 16:35

Thanks–and I’m flattered! I would be happy to be a guest writer sometime if I can find a way to be honest without revealing too much about myself. One problem with my plan is that if my employer found out that I’m itchin’ to leave it would cause a lot of bad feelings. You’d think people would be happy for you . . . and they would be, on the one hand. On the other hand, they’d be sad/hurt. It’s also harder to argue for raises if they know you’re trying to retire early . . . although again it’s your money so it shouldn’t matter. But it does.

BTW, when I lived on the West Coast in my early 20s I lived on $425 a month, and I was quite happy. So now living on $16k feels luxurious! But it depends on what you’re used to, how you feel about yourself, and even who your friends are. I hope all these PF blogs help “freaks” like me know that we’re not alone, and we’re not crazy!

Lastly, anyone looking for more inspiration: Thoreau, “The Good Life” by the Nearings, “Your Money or Your Life,” and “A Reasonable Life” all have been very helpful to me.
Pinyo, 6. November 2007, 7:20

@Tommy - welcome to Moolanomy. Great to hear. I am sure you can do it, as long as you have a SMART plan.

@Ruth - You’re welcome. Yeah, leaving a job is always a sweet sorrow, but if you can do it, why not.

Trust me, you are not a freak — I think PF bloggers cover the whole gamut — rich/poor, spendy/frugal, in debt/financially free, etc.

I read Your Money or Your Life. I will have to take a look at others. My reading list is quite long.
Double Journey, 25. November 2007, 12:00

Good Luck to you in your journey. I have similar goals. I am a few years younger and have a little bit more saved, but hope to get to a million in relatively short order. I plan to get there like you, saving diligently and investing wisely. For a little fun however, I took some money aside and am going to “try and get rich quick”. I’m talking about it on my blog. We will see how that goes.
David Carter, 14. March 2008, 8:37

I don’t mean to be rude or anything, but 10% is pretty optimistic. I think you should up your contributions each year as well. Maybe by say 3%, the going rate of inflation, otherwise I think it might be hard to hit 1Mill in 2017. I hope ur a good investor! gl
Pinyo, 14. March 2008, 9:16

@Double Journey - Thank you. Good luck to you as well.

@David - Not at all. The 10% was based on historical performance of S&P500. It might be a little optimistic considering the weakness that started since year 2000. If I miss my target at the end of 2008, I will most likely revise my plan to reach the $1 million mark.

Good idea about adjusting contribution up each year.