Sitting here at 35 years old (but for not too much longer), I noticed something special about these numbers.
My dividend growth stock portfolio is essentially worth $10,000 for every year I’ve been alive.
Now, I pay almost no attention to my net worth, preferring to keep my eye on passive income measured against my basic expenses in life (I don’t spend my net worth down at the net worth store, nor do I plan on selling stocks/assets in order to fund my lifestyle).
But aiming to have $10k for every year you’ve been alive is kind of a fun goal to have.
While one’s relative wealth will be more or less impressive based on age, when looking at this very basic metric, having $200,000 at 20 years old or $500,000 at 50 years old are both very good positions to be in. Of course, the former would be far more preferable due to the power of compounding, but $500k sitting around at 50 puts you in the top echelon of global wealth, and it buys you a lot of freedom and options in life.
Speaking of compounding, the reason I’m even writing about this today is to highlight just how powerful it is.
Having Less than $0 At 25
As I’ve shared before, I started my journey to financial independence behind the eight ball.
I found myself worth less than $0 at 27 years old – meaning I was worse than broke.
Weighing student loan debt against what little cash I had (my only asset at that time) found me with a net worth that was close to -$20,000.
Becoming aware that I was worth less than a baby in my mid-20s was the wake-up call I needed to get in gear.
Dedicating myself to entrepreneurship, frugality, and dividend growth investing allowed me to quickly make up ground and dig myself out of the hole I created for myself.
Eclipsing $65,000 At 30
Within just a couple years of starting my journey toward financial independence in earnest, I was able to build my portfolio into a solid collection of high-quality businesses.
The portfolio had a market value over $65,000 in May 2012, which is when I turned 30 years old.
So I wasn’t even close to $300,000 at 30.
But that’s why we keep striving. That’s why we keep saving, investing, and letting compounding do its thing.
Compounding sneaks up on you a little bit. It warms up and starts chugging along slowly but surely.
But when it makes its presence felt, it hits you like a freight train. And it just doesn’t stop.
Sitting On $350,000 At 35
I now find myself 35 years old and controlling a vast assemblage of some of the finest businesses in the world.
These companies are all raking in massive profits. Better yet, they’re very good at not only directly sharing that profit with their shareholders via dividends, but they routinely and regularly grow those dividend payments (as their profit grows).
It’s the five-figure and growing dividend income these businesses send my way every year that underpins my financial freedom, as it’s this passive income that I rely on to cover my basic expenses in life. Everything else is more or less gravy.
The portfolio, as noted at the outset of the article, has a market value of approximately $350,000 now.
That’s $10,000 for every year I’ve been alive.
However, I certainly didn’t have $10,000 at 1. Or $100,000 at 10. Nor did I have $200,000 at 20.
No, I had $0 at 25.
But that’s the nature of things if you put intelligent habits on your side. If you let the power of compounding take hold, giving it the fuel it needs by saving and appropriately saving your capital, it will allow you to zoom ahead in life and make your wildest dreams come true. I’m the proof in the pudding.
And $950,000+ At Age 55
A fun little exercise is to take your current portfolio and compound it out at a fairly modest rate over a long stretch of time, assuming you won’t even add another dollar.
This illustrates the power of compounding in a highly effective manner.
If my investments were to compound at just 5% annually (a very meager rate in comparison to the long-term rate of growth of the American stock market) over the next 20 years, and if I assume I never add another dollar (which is not going to happen), I’ll still end up with ~$950,000.
That would mean I’ll have at least $950,000 at 55. And it’s highly likely I’ll end up with way, way more.
So that’s not $550k at 55. That’s almost twice that. And that’s with putting in zero effort from here on out.
That’s the rolling and acceleration of the snowball that is compounding. It picks up speed and turns into an avalanche, whether you like it or not.
Look out below!
Maybe you have $10,000 for every year you’ve been alive. Maybe you have more. Or perhaps you have less.
The overarching point here, however, is that you put compounding on your side, whether you have $10k or $300k at age 30.
That’s because you can quickly eclipse having $10,000 for every year you’ve been alive, even if you start relatively late in life – and that’s with little money to start with, as I’ve proven.
What do you think? Do you have $10k for every year you’ve been alive? Do you think it’s a neat goal to shoot for? Are you allowing compounding to snowball your wealth and passive income for you?
Thanks for reading.
Image courtesy of: Sira Anamwong at FreeDigitalPhotos.net.
P.S. If you’d like to have $10,000, or more, for every year you’ve been alive, take a look at some amazing resources that helped me accumulate $350,000 by age 35.