How an Engineer Hit $1M With Stocks and Real Estate
Welcome to Kiplinger’s My First $1 Million series, in which we hear from people who have made $1 million.
They’re sharing how they did it and what they’re doing with it. This time, we hear from a soon-to-be retired 58-year-old vice president at an engineering consulting firm in Durham, North Carolina. He’s married and reports his current salary at $185,000.
See our earlier profiles, including a writer in New England, a literacy interventionist in Colorado, a semiretired entrepreneur in Nashville and an events industry CEO in Northern New Jersey. (See all of the profiles here.)
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Each profile features one person or couple, who will always be completely anonymous to readers, answering questions to help our readers learn from their experience.
These features are intended to provide a window into how different people build their savings — they’re not intended to provide financial advice.
To learn what these millionaires have taught us, check out the articles 5 Key Insights We Learned From 50 Millionaires and 5 Things 50 Millionaires Wish They’d Known Before They Retired.
And to hear more about My First $1 Million, you can check out this podcast with bestselling author and tax attorney Toby Mathis:
The Basics
How did you make your first $1 million?
Started with investing in getting a degree with which I could make a decent salary. After reading a book from the library on mutual funds, I began using them to save.
At 25, my first real estate investment was a duplex. I realized my wife and I could live in one side, and the rent from the other side paid 80% of our expenses.
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I was hooked and used savings to keep buying single-family homes to rent.
After 9/11, I began heavily investing directly in the stock market through individual stocks.
The Fun Stuff
Did you do anything to celebrate?
We celebrated with a nice dinner out, but used a coupon to get the dinner for half off.
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It is good to have goals. Mine was to get to a million by age 40. We made it by age 39.
What is the best part of making $1 million?
A feeling of accomplishment in reaping the results of hard work, the confidence in knowing you have a reasonable grasp of the investing world, the freedom of knowing your kids and the government will not have to support you in your old age and the ability to give to those in need and make significant investments in charitable organizations.
Did your life change?
Overall, financial freedom has been a blessing, but money has not changed who we are.
Does anyone know you’re a millionaire?
Only my wife and I (know we’re millionaires). Our kids are now all out of college (debt-free) and are starting to realize we are.
Any plans to retire early?
Planning to retire soon.
(Image credit: Getty Images)
Looking Back
Anything you would do differently?
I would have had less fear. Coming from a family who thought any investment riskier than putting all your money in a mattress was too risky, I was afraid of real estate and the stock market.
If you avoid excessive leverage in real estate, and all leverage in the stock market, success over long periods is inevitable.
If you start in your 20s, as we did, you have a long time to invest.
What advice would you give to your younger self?
Start even earlier on Roths and maximizing my 401(k) contributions. Time is the real magic ingredient.
Also, don’t listen to the smart money people who say today that the best years of the stock market are behind us and that unfortunate young people today can expect only mediocre returns over the next 20 years.
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Warren Buffett, whom I greatly admire, said that very thing over 20 years ago when I first started buying stocks. He was very wrong then, and so are the people, including Buffett, who say that now.
Also, I would share the lesson that there are no experts in investing who know which stocks are going to take off or tank, including yourself. There are only those who get lucky for a while and con others — and sometimes themselves — that they have special powers.
As John “Jack” Bogle said, Nobody knows nothing. Realizing this is a key step in becoming a wise investor.
Did you read any books that helped you on your journey?
Did you work with a financial adviser?
No. My experience in knowing people in the financial advice business is they are focused on their returns, not yours. My financial education mostly came from reading Money magazine — which was acquired several years ago by Kiplinger — religiously for the past 30 years and practice through actual investing.
Keeping fees to a minimum is a big key to success.
Today, when a financial adviser tries to pitch me to become their client, I can ask them a couple of investment or tax questions that show whether their education is subpar.
Did anyone help you early on?
The key kickstart was a cassette tape series about success that my mom gave me while I was a college student to listen to, by the late Pat Robertson.
That was the first time I heard basic financial principles such as the power of compounding.
(Image credit: Getty Images)
Looking Ahead
Plans for your next $1 million?
That’s well in the rearview mirror now. The first million is truly the hardest to make.
Any advice for others trying to make their first $1 million?
Live below your means, put your savings in a low-cost index fund and don’t touch it.
Take advantage of Roth accounts as early as possible and get the full company match on your 401(k).
For a young person, (I would advise them) to start with generosity. My religious background encouraged me to budget a significant amount to give to charity and those in need.
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This seems contradictory, but doing so when you are young with a small amount of money makes it easier to do so with a bigger amount later.
It also frees you from the stress that comes with money and gives you a purpose that matters.
Do you have an estate plan?
Yes. We have set up trusts to avoid probate and to help our adult children not receive a windfall all at once that could have negative consequences.
What do you wish you’d known …
Before you retired? Almost there, so can’t answer yet. However, it seems from my research that planning is key. Probably, at least for a seasoned investor, the planning for the mental, emotional and physical side is more important than the financial side.
(Image credit: Getty Images)
When you first started saving? Not sure I would change a thing. The joy of discovery along the way is part of the process.
When you first started investing? Again, not sure I would change a thing. I made mistakes and learned from them. By starting early with a small amount of money, the cost of those mistakes was small compared to the value of the lessons.
If you have made $1 million or more and would like to be anonymously featured in a future My First $1 Million profile, please fill out and submit this Google Form or send an email to MyFirstMillion@futurenet.com to receive the questions. We welcome all stories that add up to $1 million or more in your accounts, although we will use discretion in which stories we choose to publish, to ensure we share a diversity of experiences. We also might want to verify that you really do have $1 million. Your answers may be edited for clarity.
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