Jump to content
House Price Crash Forum
Sign in to follow this  
crashmonitor

By 50 Years And 8 Months You Have Earned Your First Million

Recommended Posts

Well I'm 50 years and 10 months so I should have made it by now. I guess it assumes you inflate previous earning for inflation. I once tried to reckon up what the multilplier would be on my aggregate lifetime earnings over 35 years to adjust for inflation and I came out with an adjustment of 50%...some back in 1980 needs inflating by more than three fold, but recently not much change.

Also not sure if this includes investment income and notional gains on property, which is probably more than my earned income over 35 years. Indeed if you wanted to balance your income to your equity on the balance sheet these would need to be brought in .

http://www.expressandstar.com/business/uk-money/2015/05/27/men-earn-a-million-by-age-of-50/

Edited by crashmonitor

Share this post


Link to post
Share on other sites

....and spent your first one and a half million.

Well that's a good point, you either spend it on what you think are assets like expensive cars or big flashy houses that are actually liabilities or you invest it in stuff that produces an income and stop working and mess about on housepricecrash.

Share this post


Link to post
Share on other sites

Is this after tax?

Gross...subtract £212,300 tax and national insurance. Just not sure about the inflation adjustment, presume it's in today's money.

Share this post


Link to post
Share on other sites

Is this an average? I can't see it personally. Average wage being £26k currently means 40 years of work, taking into account its worth for those 40 years.

I'd say my father hasn't earned that all his life to be honest. He was in the military all his life and when he retired in the 80's, was only on £14k as an RSM, he then went into a factory role at £10k. The previous 30 years of his life was very poorly paid. In fact, it's only recent history the armed forces started paying anything like fair wages.

Share this post


Link to post
Share on other sites

what a pointless statistic.

I breathed the equivalent of all the air in the British Isles in my lifetime.

Share this post


Link to post
Share on other sites

what a pointless statistic.

I breathed the equivalent of all the air in the British Isles in my lifetime.

I actually like statistics and especially those relating to income and expenditure. I have kept books going back 30 years of income and expenses and attempted to fill in the gaps for my first five years. I do actually possess a lifetime income and expenditure account that balances to a balance sheet. (It might sound a bit obsessive but actually it takes no time at all and is just a cumulative total I continue to add forward, and I don't bother sub analysing drawing, just the raw totals shown below, (may be ten minutes to balance income and drawings to equity at the end of each month))

That is wages + investment income + profit on houses - drawings = closing equity (value of pensions, current house at cost, other investments)

Had I not taken an accountant's interest in Me plc I would not now be financially independent.

Not everybody's cup of tea, but I love numbers.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

We were told something like this at school back in the 80s. It was quite eye opening at the time. The trouble is, as Winkie suggests - you need to spend a certain amount to stay alive. Some is, of course, stolen by inflation. Quite a lot is no doubt frittered away on long forgotten things too. Millionaires aren't what they used to be. If you bought in London more than a decade and a half ago, there's a good chance that you are a good way there just in terms of the asset you own. Ditto if you own a decent but boring business for a similar period of time.

Buying as many true assets as you can will increase the chance of capturing as much of the million as you can. But it's a hell of a commitment eg 10% annual return (after inflation) is considered very good indeed - even assuming you have any money left after living expenses. If you truly start with nothing (ie no inheritance/wealthy parents), it's quite a mountain to climb.

Edited by StainlessSteelCat

Share this post


Link to post
Share on other sites

We were told something like this at school back in the 80s. It was quite eye opening at the time. The trouble is, as Winkie suggests - you need to spend a certain amount to stay alive. Some is, of course, stolen by inflation. Quite a lot is no doubt frittered away on long forgotten things too. Millionaires aren't what they used to be. If you bought in London more than a decade and a half ago, there's a good chance that you are a good way there just in terms of the asset you own. Ditto if you own a decent but boring business for a similar period of time.

Buying as many true assets as you can will increase the chance of capturing as much of the million as you can. But it's a hell of a commitment eg 10% annual return (after inflation) is considered very good indeed - even assuming you have any money left after living expenses. If you truly start with nothing (ie no inheritance/wealthy parents), it's quite a mountain to climb.

A lot of it comes down to luck and timing. The house price boom of 1999-2003 enriched the current generation of boomers (me included). But a plain vanilla investment in the stock market would have done just as well these last 35 years and cancelled out the need for a fifty something to work now.

Meanwhile most reinvested the gain in house prices into even more expensive houses, thus defeating any chance of financial independence and meant they were on the treadmill forever, because in reality a house is a liability not an asset.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

A lot of it comes down to luck and timing. The house price boom of 1999-2003 enriched the current generation of boomers (me included). But a plain vanilla investment in the stock market would have done just as well these last 35 years and cancelled out the need for a fifty something to work now.

Meanwhile most reinvested the gain in house prices into even more expensive houses, thus defeating any chance of financial independence and meant they were on the treadmill forever, because in reality a house is a liability not an asset.

Isn't a house a liability and an asset? You need to spend money on maintenance but it should also give you somewhere to live.

Share this post


Link to post
Share on other sites

Isn't a house a liability and an asset? You need to spend money on maintenance but it should also give you somewhere to live.

My view is that a house is an asset only when it rises in value, otherwise I have found mortgage free or renting amounts to about the same on the drawings front, and I have done both recently. In the north, where prices are only back at 2007 levels, that's eight years of liability....the money could have been invested as opposed to standing still.

But it is both to some extent yes.

The truth is if we could all make do with the cheapest house we could live with and invested the resulting savings into income producing assets we would all wind up a lot richer. However, sometimes that nice house is just too tempting.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

And what about indirect tax?

A few years ago I worked out about 70% of my salary went on Tax, NI, VAT, Car Tax, TV License and all the various duties.

Share this post


Link to post
Share on other sites

A lot of it comes down to luck and timing. The house price boom of 1999-2003 enriched the current generation of boomers (me included). But a plain vanilla investment in the stock market would have done just as well these last 35 years and cancelled out the need for a fifty something to work now.

Meanwhile most reinvested the gain in house prices into even more expensive houses, thus defeating any chance of financial independence and meant they were on the treadmill forever, because in reality a house is a liability not an asset.

Interesting - thanks for your reply.

I agree with you on the housing front. It was partly lack of imagination (and lack of interest in investing together with hassle from missus) which made me buy outright at 40 - having saved for around a decade. But there was a voice in the back of my mind - approx £100K is a hell of a lot of money to spend on a house (basically 20 years worth of rent - nevermind insurance and maintenance) and a huge opportunity cost. It is certainly a liability now - as the housing market here is at best flat and it still needs maintenance. Still glad I did it though as there is a lot of piece of mind knowing you can't be kicked out/can fix stuff yourself rather than being dependent on a landlord.

Next step is financial independence although I may not be far from it given our frugal lifestyle.

Share this post


Link to post
Share on other sites

even if you saved every penny in those 50.8 years you would still be not well off in real terms , a million is just not much money nowadays

Share this post


Link to post
Share on other sites
But there was a voice in the back of my mind - approx £100K is a hell of a lot of money to spend on a house

Hmm I spent 400k on a house, it would cost about 1200 / m to rent which is about 28 years.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   89 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.