The First $100K of Investments

I’ve heard from several people that the first $100,000 of investments are the worst and after the last three years I can believe it.  It’s been  a very long road to get here.  Back in Dec of 2006 my investment net worth were a mere $32,100.  By the end of 2007 I was at $50,700 and then 2008 knocked me back down to $49, 100.  So the majority of my growth was in the last year.  So what happened exactly in 2009?

Well I’ve been looking at the numbers to sort that out since in my mind I didn’t do very much different than the previous years.  Yet this is the factors that leap to my mind when I looked at the numbers in detail:

  1. Do Not Underestimate a Bottom in the Market.  During the market drop in 2008 and into 2009 I never stopped investing.  Was it scary? Hell yes!  But I keep buying stocks that looked attractive and kept putting money.  The pay off was a huge surge in growth.  For example my TFSA did a 54% return while my wife’s TFSA managed a 30% return.
  2. A Good Pension Plan.  I took a new job at the end of 2008 with a damn good defined contribution pension plan.  I contribute 5% and they put in 6%.  Yet I can also tap two other programs to boost my employer’s contribution from 6% up to a total of 11%.  So grand total that’s equal to 17% of my salary going into my pension plan.  So when you add that to a bit of growth its easy to see how it went from nearly $0 to over $15,000 in a year.
  3. Have a Plan.  In 2009 I wanted to add $25,000 to our various accounts (I’ve yet to confirm if I made that goal).  That goal helped me to stay focused on adding to our investments regardless of everything else in my life.  I kept at it and made sure to keep investing even when I had doubts (which trust me I had them).
  4. Luck helps.  I won’t lie to you my TFSA result was more about dumb luck than skill.  I picked three stocks for that account which I bought mainly for their distributions (on average a 10% yield) and they just happen to do very well over 2009.  Also me getting the second job at the School Board obviously helps with boosting my cash available for investing for the last two months of 2009.

So overall I would say the three things that got me to my first $100,000 was having goals, being stubborn enough to follow the plan and a bit of luck.  So I’m sorry to say I don’t have any investing secrets to share or a plan to make you rich fast.  It all comes down to deciding your goals and keep working for them even when things get hard.

7 thoughts on “The First $100K of Investments”

  1. I have to agree with your assessment. Luck definitely helps. And timing does make a difference, no matter what anyone tells you. We committed all our cash when we saw that a stock we follow had fallen to an unreasonably low level a year ago. It rebounded, then we bought another, which also rebounded. That’s made all the difference. It was mostly luck and timing, but also the willingness to act.

    The other thing you mentioned that’s really important is your goal of adding cash. That’s probably why the first $100,000 is apparently so difficult: early on, investment returns play less of a role compared to deposits. You can see my thoughts on this:

  2. It took me nearly 10 years of working, saving, and investing to get to the $100k mark (retirement and non-retirement combined) in 1995.

    In those 10 years (1985-1995), I was buying some big-ticket items such as cars twice and my co-op apartment. I also refinanced the mortgage on the apartment but had not begun paying off large chunks of principal. The refi in 1992 did accelerate my savings, though.

    The stock market had its big crash in 1987 but I was just getting started so I had very little in stocks at the time. In 1995, the market was just beginning to take off.

    My company was still non-profit so there was no ESOP (Employee Stock Ownership Program), the thing which would end up being my ticket to retirement last year.

    After 1995, it took me only about 2 years to add each $100k to get to $500k in 2003, and about one year for the next $100 to get to $900k in 2006. I had the booming ESOP, a booming market most years, and some peak wage earnings until 2001 (when I switched to P/T) to offset paying off the mortgage in 1997-98.

    But the last 3 years have had me treading water, like you have. Paying the taxes on the cashed-out ESOP set me back when I retired in 2008. I would have hit the $1M mark otherwise. I should be able to hit $1M in 2010.

    I agree that trying to build a portfolio the last 3 years has been tough. I am glad you reached the $100k mark.

  3. Robert,

    Good point. I think a lot of people are too worried about investment choices at the start when it really doesn’t matter that much until later on. I know I made some awful ones over the years.


    Actually your story is similar to mine. My first $32,000 took 6 years to get to, so in total it took me 9 years to reach $100,000. I was also buying the car, house, paying back student loans and getting married during that time.

    Now I’m predicting if I wasn’t paying off the mortgage I could reach $200,000 in 2 years. Yet once the mortgage is gone I should be able to do it in 1.5 years.

    It’s amazing to see that compounding start to take affect along with getting to the point in your life when you have more income to save.


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