Ether to FI: 3 Years to the First Million & a Net Worth Update

Guess who officially has their first million dollars? None other than Ether to FI, our periodic anonymous anesthesiologist and guest author. Congratulations are in order!

I don’t know the precise date when we had our first million, but I believe it was six or seven years after I finished residency. In other words, it took me at least twice as long to accumulate a nest egg of that size.

At the risk of sounding like an old fuddy-duddy, I’m going to say that back in my day, there were no physician personal finance blogs, and the terms “financial independence” and “FIRE” were either obscure or non-existent. People certainly weren’t writing about it, talking about it, or chasing it like they are today!

I’m delighted that today’s physicians now have a better roadmap and that doctors like E.T.F. are traveling that road and sharing their highs and lows as they pass the waypoints. Today’s post represents a high and I wish the good doctor success in reaching his next million in short order. While it’s true that the late October downturn may have brought their net worth back below $1 Million, that’s what one should expect when invested in stocks, and that would give them another opportunity to pass the milestone yet again!

 

first-million

 

Ether to FI: 3 Years to the First Million & a Net Worth Update

 

Three years and one month, to be exact.

 

How does it feel to have a $1 Million net-worth?

 

It is both exciting and anti-climactic. I was updating the net-worth spreadsheet and glanced down at the balance, and there it was—the mythical $1 million. As a little kid, I thought about all the things I would buy when I was worth a million dollars. Well, tiny E.T.F., a million dollars, is not what it used to be. A million dollars in the decade I was born, the 1980s, would be $3,158,737.86 in 2020.

When the spreadsheet ticked past our first million dollars, there were no fireworks, and we still had to go to work.  My first thought, after a small fist pump, was how long it would take reach $2 million. Then, I thought about other stages in life, especially my medical training, where I checked the box and moved on to the next task.

I completed high school and was already looking ahead to college. After college there was no celebration, just medical school to conquer next. Medical school was finished, but the job was not complete; residency loomed on the horizon. I completed residency, finally became an attending and began thinking of the money to be made and the next steps for career advancement. The Type A personality treadmill was on overdrive.

However, once I realized I reached my first million,  I caught myself, stopped, and savored the moment. We have achieved a massive milestone as a family. It will be one of many steps, but it is an important one. We have reached the mythical number and it feels good. Reality has finally converged with our theories of being financially responsible.

 

How did Mrs. E.T.F. react?

 

She breathed a huge sigh of relief and became emotional. She usually does not react to our net-worth status. Even for her, I think it represented a milestone. I can imagine her thinking, “listening to my husband and his finance crusade worked,” and there is now a tangible result.

If you have read my other posts, you know that I always brag about my wife. Our current financial position would have been impossible without her. She has read every personal finance book I have ever given her. She has been the best teammate. Her willingness to go along with a plan from a broke medical student up to his eyeballs in debt is the real reason that we are here.

 

How did we get here?

 

Over the last three years, we have shared our path – it is basic and boring without any gimmicks. We did not use any special tricks. We asked ourselves a couple of questions when we started. How much of our income are we willing to save, and can we ignore the rollercoaster that is the stock market?

I am amazed by how many new attending physicians can no longer maintain a resident’s lifestyle. During residency, the car and an apartment were acceptable. After a salary increase, the same person deems that these items no longer fit their new and improved status. Lifestyle inflation after a long training period is deserved, but I think people take it overboard.

As a physician anesthesiologist, if you spend twice your resident income after you become an attending, you have made a 100% improvement in your lifestyle. The difference between your new income and doubling your resident income leaves a lot of room for savings. Rapid net-worth growth becomes automatic.

 

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The best advice I ever received on building wealth was to pick my “one thing.” My “one thing” is travel. I do not have the biggest house or the nicest car, but I like to explore the world (when there is not a global pandemic). I spend lavishly on travel, but not much else.

It makes me happy, and we are still able to achieve our financial goals. Reigning in lifestyle inflation and choosing a “one thing” is how we got here. Low-cost index funds are great, but the gap between what you make and what you spend makes all the difference.

Mrs. ETF often teases me that once I find something I like, I usually stick to it and have little desire to try anything else.  My quip back is that I have discovered the secret recipe for a long and happy marriage. This character trait has been helpful in terms of investing.

We developed a plan, chose our index funds, and continued to invest. The only time I review investments is once every few months when I write these articles. I do not watch the news and do not track the trajectory of the stock market.

There is an advantage to this approach when you are investing for the long term. We just put money in the market and let it ride. Ignoring the stock market is another key to how we got here.

 

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Net-worth Update

 

When I compare our original spreadsheet to our most recent spreadsheet, there are definitely more lines. However, the general theme is the same – keep it simple and limit costs.

 

ETF_Net_Worth_November_2020

 

There are a couple of new additions to this net-worth update. We recently began investing in real estate and made our first contributions to a brokerage account. These two areas will receive more attention as we move forward as we would like to have investments that fund daily living before the age of 60.

After exploring active real estate investing, it became clear that being a limited partner in syndications is the best approach for us right now. I would still like to manage property in the future, but now is not the time.

We invested $50k in a real estate equity fund this year and plan to increase our contributions next year into another fund or a syndicated property. The cash flow generated through this style of investing is very appealing to us.  In ten years, quarterly payments from a group of funds could be enough to fund our cost of living without touching any of our stock market investments.

In addition to real estate, we will begin to contribute to brokerage accounts. The brokerage account will be our bucket to tap if we stop working before retirement age. Within the brokerage account, we plan to use a two-fund portfolio of VTSAX and VTIAX. We would like to eventually have our brokerage account to make up between 25-50% of our mutual fund investments; there is some major catching up to do.

Our net worth has crested over the $1 million target.

Reaching $2 million in two years is the next goal. Stay tuned and keep us on track.

 

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Have you reached your first million yet? If yes, do you recall when it happened? How did you celebrate?

27 thoughts on “Ether to FI: 3 Years to the First Million & a Net Worth Update”

  1. Mind sharing which RE syndication fund and platform you use? I’ve heard RE syndications and crowdfunded sites can lock up your money for years until a property sells. But you mentioned quarterly returns. Thanks.

    Reply
    • We are currently investing through a specific company, we are not using one of the common syndication platforms discussed. Our money is “locked” up for ten years with a possible two additional years depending on the state of the market when they attempt to sell the properties. They historically have exited in three to five years after closing the fund to new investments. We will get quarterly distributions from the fund based on the performance of the underlying assets. There is a preferred annual return of 8% that will be distributed to limited partners but is not guaranteed. Anything over 8% but less than 12% is split 70% for limited partners and 30% for the fund sponsors. Over 12% but less than 15% the split is 60:40. After 15%, the split is 50:50. This is of committed capital. If the sponsors refinance early before the sale, we could receive a big portion of our committed capital, long before the sale of properties and closure of the fund. A good book on investing in syndicated properties or funds is the Hands Off Investor by Brian Burke. It helped me gain some clarity on how investing in this style of funds works.

      Reply
  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Excellent progress.

    You seem to have each of your accounts at similar asset allocations.
    Have you thought of simplifying and looking at them in aggregate
    to reduce the funds you own?

    Best-

    Reply
    • In my dream scenario, I would invest solely in Vanguard. The issue is we have to use the funds we have available at work. Currently, our investments are basically a four fund portfolio. We don’t have a total stock market index fund at work, so we substitute with an S&P 500 Index Fund. We don’t have a total international stock market index fund, so we split our international allocation into a developed market fund and an emerging markets fund. In truth, even if a total international stock market fund was available, I would still have our current tilt with an emerging market fund being overrepresented based on its market cap. The last thing we would invest in is small-cap value, similar to our IRA investments, but because it is not available, we invest in a small-cap blend fund. In retirement, we will simplify to a 3 fund portfolio, once all of our investments are with one provider. It will likely be VTSAX, VTIAX and VBTLX. Thanks for commenting.

      Reply
      • Right but can’t you just have all your international spread in one or two accounts, all your total stock markets spread in one or two accounts, emerging in one or two etc. instead of having all four in most of them? There’s no advantage or tax implications to swapping in these tax deferred accounts. Seems like that would be a lot easier to look at and manage.

        Ps congrats, we are two years and 3 months out of training with a NW of 850k. Ended training with -150k. Hope to get to that 1MM soon.

        Reply
        • That was our original plan for my retirement accounts. We ran into issues with automatic rebalancing. This way makes that process easier. You are crushing the net-worth gains.

  4. Congratulations! That really is an incredible pace to get to 7 figures. I was in my mid 40s when I hit it.

    The great thing is that the 2nd, 3rd, and 4th million come at an increasingly faster pace as a lot of your net worth is now capital working for you.

    Reply
    • Mrs. ETF is a nurse practitioner. Our income fluctuates. She went part-time a few years ago, and she is cutting further back. That will probably be explored in a future post. I make an Anesthesiologist salary, so it is on the higher end of the physician income scale. It is not as high as a specialist surgeon, but it is a good income. Our income has definitely helped in the process, but I think our savings rate is the most important thing. Our income and our lifestyle do not correlate very well.

      Reply
      • Out of that million, how much would you estimate is brute savings rather than returns/appreciation?

        Congrats on the major milestone.

        Reply
        • I would estimate 80-85%. Three years is not a substantial amount of time for compounding, but there was some in there. Thanks for commenting.

  5. Congrats on hitting the first million — and the pace is incredible if you’re aiming to double to two million in two years! We moved from buy and hold index investing to tactical asset allocation given the high market volatility — so far we’ve been happy but we’re also at more of a wealth preservation stage with our portfolio. We’re using our businesses as our wealth accumulation, but we look at our portfolio as a legacy so we have different objectives there.

    Reply
    • Our strategy will remain as buy and hold with an increase in real estate contributions. I have been talking to Mrs. ETF about started a business, hopefully, that is on the horizon in the future.

      Reply
  6. Curious what the plan is to take $1,000,000 and turn into $2,000,000 in 2 years. Can you expand on expected annual contributions, and expected returns for 24 months? I think it is an excellent goal, but I’m curious how attainable it is. I realize income/savings is a huge part of it, but I’m looking for insight on that equation.

    Reply
    • The rationale is that we were able to turn 80k into $1 million in three years basically through brute force savings. Now we might actually be able to count on the stock market return to assist in our net-worth growth. We are also creating passive income through real estate investing. We have a high savings rate, so I expect it should take us less time than it did to attain the first $1 million. I have not sat down to calculate the precise expected returns from the stock market.

      $2 million in 2 years is a stretch goal, but I think it is in the realm of possibility. I am a big fan of stating big goals, and then going after it. Thanks for taking the time to comment.

      Reply
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  8. ETF,

    Enjoying the vicarious journey to wealth, thanks for the updates.

    The anticlimactic response to hitting your milestone is a sign you are doing something right – investing is supposed to be boring.

    Look forward to great things ahead for you (fewer nights/weekends/call?),

    CD

    Reply
    • I cannot wait to stop working nights and weekends. That is my first definition of wealth.

      You have been there from the start of this vicarious journey. Thanks for commenting.

      Reply
  9. Congrats on reaching 7 figures! That is impressive for someone who’s 3 years out of residency. The first million is the hardest, it gets easier after this! I gave up all my late nights and weekend calls when we hit 3 millions, so you are getting closer!

    Reply
  10. Congrats! What spreadsheet do you use to get all that information? Do you manually input all the data or does it pull information somehow? Trying to create something similar for my assets.

    Reply

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