Why 2 million?

I could try to give a long insightful breakdown of why I think $2 million is the amount I need to be financially free, but I won't. I'll give you a quick breakdown instead.

If I assume a conservative rate of return of 5%, $2 million in cash & assets (excluding my home) should provide about $100,000 in passive income per year.

What about inflation you ask? Well I think this goal assumes inflation will be pretty tame for the next 20 yrs - and that $100,000 will still provide for an upper middle class lifestyle (albeit maybe not as great as it would today). If inflation becomes significant and I don't take advantage of it accordingly, I admit I may need to restate this goal.

I think this is a very simple goal. I certainly hope I will be able to get a better rate of return than 5% and I hope my net worth will continue to grow past $2 million, but I feel this is the perfect high level goal that will enable me to lead an upper middle class life without meaningful financial worries and free to pursue my life's passions and opportunities.

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Comments (9)

DATE: 11:57 AM
Just a suggestion: wife and kids are really asset drain liabilities. Stay single to rerach your goal! Just my 2 cents.

DATE: 8:21 PM
Nice site but I'd say $2M is not going to go far these days. Especially when you have to put $1M into a house (at least where I live).Also factor in that most investment planners will only let you take out (at most) say 5% if you make 10% per year, so figure 2.5% if you assume 5%. This is in order to have your portfolio continue to grow.I think about $10M ought to do it.And I (kind) of speak from what I know, having netted approx $1M from IPO stock and it's nowhere near enough not to work (but then I spend a lot more $ than you)

It's great to have found your blog. We actually have a lot in common, however, I am 5 years older than you and my goal was actually $1,000,000 by 40 when I started working at the age of 25. To make a long story short, I've always been frugal and goal oriented and just a few years after starting my company job I was worth about $300k, but then 2001 came and wiped me completely so I started from zero again. However, I went into business on my own and now, 6 years later after all those worthless stock options and sleepless nights. I am worth $1.4 million and I am on way my to $2 million before the end of the year.

I run a successful internet business that nets me close to 65k-70k a month and coupled with my investment returns, I basically make 7 figures a year. I work from home, don't have employees (only sub-contractors), have zero stress, and have a great lifestyle. And to me, the key to TRULY becoming master of your own domain is going into business for yourself. As long as you are working for someone else, your fate will be in the hands of others.

And since my million mark was reached last year, I am hoping to be a decamillionaire by 40 and if I live long enough, I will reach $1 billion assuming I earn a 10% return and I live to 85. I will then be an example of an "joe billionaire", because I am just a regular guy who came from nothing (I did just about all the menial jobs you can think of when I was in college) but took a chance and it paid off.

Wow! That's an inspiration!

To anonymous, I say: If you get to the $100k income and are technically "financially free", then you have the time to develop the next 5 or 10 million.

Rick - sounds like a path that many others should consider. I'm new to building an Internet business. But what you describe does seem to be quite attainable. If you are working in your passion, your stress goes WAY down, and your energy WAY up.

But Rick - why 85? I have a plan to live to 100. With your reduced stress, and your increased income - surely you can spend a bit more time on your health and CONTRIBUTE further to the world.

You have to be giving something to the world to make the income you are making.

Tim you junk! Usana is not an internet business, it's doomed to fail! Stop lurking in other people's blogs.

Impressive start! How old are you?

I recently achieved the coveted $2 million goal (age 49) but don't feel any sense of financial freedom. And once frugal, always frugal. I have no plans to retire because I enjoy working. Also, the fact that I have two 10 year olds and will be facing college tuitions in 8 short years gives me some incentive to keep working.

In 1998 I was taking about $50k from my struggling business ... I had no other 'investments' to speak of at that time.

Unfortunately, for me, I 'costed' my future life (I wanted to retire in 5 - 10 years) at $250k per year (why? Long story ... but it involves a LOT of time, travel and trying new ideas).

That told me that I needed $5million ... ouch! But, it did spur me into massive action:

1. I completely overhauled my business strategy (taking it to 3 countries),
2. I started investing in real-estate and built up a multi-million dollar portfolio
3. I started learning the rules of the stock market.

As my name suggests, I overachieved, but, it starts exactly the way that 2million suggests:

By knowing YOUR end-game, THEN taking EXACTLY the required amount of risk and action to get there ... a lot for some ... a little for others. What about you?

This is a different way to think about your retirement investments:


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About 2millionblog.com

A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,278,865


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