Multimillionaire and retired by 30 Q&A
Recently saw a post asking people what their magic number is. Wanted to share my experience with people, but I consider my situation to be extremely lucky, unique, and an outlier. Almost 32 years old, retired for about 1.5 years. Went to a decent state school, majored in finance, so nothing fancy. I started working at 18 in sales, but I didn’t start making serious dough until I was 24. I made about 280,000 that year and my income topped out at 750,000. One co-worker of mine who was much older made $2MM for context. On average, my annual comp was $400-500K. What was I selling? Debt to private equity firms for LBOs. Basically got uncapped commission for my production. But not surprisingly,Co made my bank ungodly amounts of money. As you guys probably know, private equity has been on a tear for the past several years. I was simply at the right place at the right time. Don’t get me wrong, I hustled my ass off. Haven’t traveled much and still not married, but hopefully the ship hasn’t sailed for me. Began to get burned out working 14+ hours, six days a week. From what I hear from people I'm still in touch with, things are cooling down. Too many dollars chasing too few deals. Family offices adding pressure to deal flow. Some PE firms are bracing for a recession. Retired with about $6MM, about 2/3 of it is liquid. I was able to take my commission in stock to reduce tax liability. And at the same time, the stock market has been crushing it. Lucky yet again. I like to keep things simple, so my allocation is: $2MM high-yield CDs, MMAs, and US securities, $2MM in stocks (sold some of my bank stock for other stocks and index funds), and $2MM in real estate, including my condo ($400K). Yearly cash flow (interest, dividends, and rental income) is about $400,000 minus taxes. Big chunk of that gets reinvested. No debt, live in the Midwest, and don't have any fancy hobbies/interests, except my Aston Martin, which is a money pit. But gotta live at least a little. Girlfriend knows I'm a high earner, but has no idea how much I'm worth. As far as she knows, the Aston is leased, the condo is rented, and I have shit ton of student/credit card debt. Maybe, (just maybe), I'll tell her on our 20th wedding anniversary, if it goes that far. I spend most of my time monitoring investments, maintaining the real estate I own, and working out. Also taking a cooking class. And I'm signed up for a photography class at the local college next semester. School should be more interesting now without the strings attached. And I'm always networking-- if/when I get really bored, I can probably find an independent consulting position to keep me busy. Q&A or give me advice.
I am also curious about you job. Based on what you mentioned (working at a bank, living in the Midwest, taking comp in stock) I am guessing you worked at a bank, but the banks I'm thinking of that would be located there/would have the size to be in the business, I can't see any paying hard dollars (Key, 53, PNC. All that being said, give us some additional details
you seem to have a good head on your shoulders for someone who's financially independent at an early age. couple of things I'd recommend if you were a client: umbrella coverage, periodic review of the various legal structures handling your real estate assets, and use of trusts or FLPs to protect your future self from a divorcing spouse leaving with half. while you're single now and can easily prove that you had money before any marriage, there are tricks out there that divorce attorneys use to go into pre-marital property during proceedings (if they happen). basically, just have a good attorney, and marry the right person.
outside of money, the happiest retired people I know essentially do what you do. the only thing that's missing is board seats, venture investing (at your net worth you could afford to put a few hundred grand at substantial risk, but maybe not at this point in the cycle), philanthropy, and travel. time is a scarcer resource than money. hire a property management company on standby and take a sabbatical.
Words to live by.
That's a sweet life. I am adequately jealous.
You should probably tell whomever you marry what you're really worth though - starting a marriage with a lie is a good way for it to end with one too.
That's amazing. Congrats.
How did the taxes work on your stock comp and what type of returns were you getting / how were you investing. Ending up with 6mm post tax after 6-7 years making 300-750k seems nuts. I can barely get the numbers to pencil out except with like a 20-25% IRR.
I know a couple people that have made similar money at a young age and "retired" and I do notice some downsides. Socially, you become more isolated because you lack the office environment and its harder to relate to people. Its easy to sleep in and let the days blur so having a good routine helps. There is also the aspect of having a lack of purpose, that after a while - you're only 1.5 years in - appears to wear on people and I've notice my friends becoming weirder. Seems like you're ahead of these issues but just something to be aware of. Also, there is the aspect of being too early to walk away from your prime - so maybe find a business to build vs. just simply investing. Regardless, you're crushing it so these are all "champagne problems" if at all.
So if I follow...
Current Age: 32, Retirement Age: 30.5 Serious Dough Age: 24 = Working years: 6.5
Income at 30.5: $750k Income at 24: $280k Income Avg: $500k*4.5 years = $2.25M = Total Income: $3.28M
Assume you took avg. $150k salary for 6.5 yrs = $975k (net ~$500k). Assume you saved $400k.
Leaves $2.305M in the form of stock commissions. Beginning to receive stock commissions circa 2011.
To retire with $6M, that bank stock would have to 3x from 2011-2018.
To be honest, at first I was skeptical, but I guess it is not unreasonable.
Nice work
Congratulations, you magnificent bastard. Someday I hope to join you in the FI/RE ranks, but for now I'm still headed to the office every day.
I'm surprised at the conservatism in allocation here. You don't specify a burn rate, but you say a "big chunk" of the annual cash flow doesn't get spent. I would think that some combination of rental income / fixed income payments would satisfy your spending on a "risk-free" basis, leaving you free to put the rest in index funds or into illiquid investments. Maybe that's exactly what you're doing, but the $2M in CDs / money-market / treasury bonds seems high for someone in their early 30s.
This will be complicated for you. I lucked out - I met my wife before either of us realized any of our earning potential, so we never had to consider how money would change the equation. I have a hard time envisioning a healthy relationship where all things financial are kept behind a curtain, but that doesn't mean my experience is representative.
So what does she think you do?
This is my dream. It's not actually all that different than my life now, except I have to go to staff meetings and we have a dress code.
So what made you say enough is enough and pull the plug completely when you did? I get the being burned out and wanting to do something different, but was it a specific number that you reached, or did you wake up after a bonus check cleared and go "ya know what, I'm good"?
Any regrets about leaving the workforce when you did? Or did you wish you left even earlier?
Honest question, do you think $6,000,000+ is enough for the rest of your life around 32?
Not the right question IMO - is $400K / year enough for the rest of your life? That's what his ~$6M is grossing him in ordinary income. And at least for me, that would be plenty.
Congrats; and a word of caution as well: you’ll likely want / need a prenuptial agreement prior to getting married which necessitates telling your gf your net worth well in advance of your wedding. If you wait until on or around wedding day to spring a prenup on her the judge may not take kindly to a “sign this or the wedding is off” type situation as she wouldn’t have time to acquire legal counsel.
Of course this is moot if you don’t plan on having a prenup in place or never get divorced.
Is what you did similar to what they do in the Private Fund Group at Credit Suisse/PJT where they do private equity fundraising?
Thanks. Side note I like how this guy does an AMA and doesn’t answer a single questikn
I'm starting to think this post is a troll - aside from numbers that could be real but also seem bullshit and other items outlined both making sense while also having potential to be bullshit there is zero responses to any of the questions despite being an AMA. Weird. Is this a real post?