Millionaire Interview 10. I have started a series called Millionaire Interviews. There is no better way to learn how to build wealth than from those who have already done so. Along those lines, I ask millionaire bloggers or even millionaires who are not bloggers a series of 11 questions that they answer. The questions are highlighted in bold and the answers are below each question. Hopefully, the answers are enlightening and will help you on your journey to build wealth and attain the $1,000,000 mark and beyond.
The millionaires in the Millionaire Interview series became millionaires at a younger age than the Secret Dividend Millionaires. This comes down to mostly having higher incomes. Second, they are not very frugal to the point of austerity as some of the Secret Dividend Millionaires but certainly save more than they earn and save more than the average person. Lastly, most have multiple sources of income.
Before we start with Millionaire Interview 10, if you are a millionaire blogger or even a millionaire who doesn’t blog and want to be a part of this series, just send me an e-mail or message me on Twitter.
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Millionaire Interview 10 – Accidentally Retired
Millionaire interview 10 is with the anonymous author of the Accidentally Retired blog. He is married with two young children. He is a software engineer and entrepreneur and former CEO. He blogs about saving money, building an investment portfolio, and reaching financial independence. He and his wife reached the $1 million mark at the age of 30 when they sold their business. After selling the business, the proceeds were invested in the stock market and a couple of other assets. He has decided not to reveal his current net worth. Now let’s take a look at Millionaire Interview 10.
- Tell us a little bit about yourself.
I am a 36 year old, former CEO. I am married to a beautiful wife of 13 years and have two small kids who are 3 and 5.
I was a Finance and Entrepreneurship Major in college at a state school. By the time I graduated, I realized I didn’t want to work in finance, and took a job in marketing with a startup. I took a week off and traveled before heading right into the workforce.
But I always had dreams of running my own business and so I started my first side hustle just a few months later. I worked feverishly on my side hustle for two years with a couple of business partners (learning to code in the process), and we eventually ended up getting an offer to sell our business to a local company.
By this time it was 2008 and the economy was crashing. Our business (that we had sold) eventually went under and I ended up working as a software engineer for the company that we had sold to.
Still, I didn’t want to toy away at someone else’s business. I started to network and work on some side projects, and that eventually landed me work with not one, but two startups.
I quit my software engineering job and worked part-time for each of the startups. Eventually, one of the startups went under, but by then the other was flourishing. I came on full-time with that company as their VP of Technology, and negotiated a minority partnership stake in the company.
Five years later, after steady year-over-year growth, we sold the business to a public company to mitigate any future risk.
After a few years, one of my business partners who was our CEO, left to pursue other interests, and I took over as CEO. I continued to grow the business for another 3 years before we were divested to a private company.
During negotiations with the new ownership group, I could not come to an agreement and I negotiated my exit instead.
My initial plan was to take a mini-retirement and figure out what I wanted to do next, but during my mini-retirement I realized that I could likely fully retire early. And thus I was Accidentally Retired.
- What is your net worth? At what age did you become a millionaire? How many years did it take to become a millionaire? Do you have any debt?
For personal reasons, my wife and I have decided not to divulge our net worth on Accidentally Retired or other sites. But I’ll try to provide as much insight here as I can. And likely our net worth is a lot LESS than you think it might be in reality.
I gave a thorough breakdown of our asset allocations and withdrawal plan here. Our current portfolio is:
- 80% Equity
- 52% US Stocks
- 28% International Stocks
- 20% Defensive
- 10% Cash
- 10% Alternatives
We do have debt, but it is limited to 40% of our primary home’s value (probably less now with the surge in value). At some point, I would like to pay it down, even 50% would help to significantly speed up the mortgage.
But since we ended up in this early retirement situation somewhat unprepared, we are going to wait until the sequence of return risk has passed.
I became a millionaire at the age of 30, when we sold our business. In all reality, not much changed. I knew while I was working hard over the years that what I was doing would make money one way or the other. But I always tried to take a long-term view of things.
Once we sold our business, we took all of the money we made and immediately invested it in the stock market. Ironically, our investments were much too conservative for our age, but it was invested, nonetheless.
- How did you become a millionaire?
What made me a millionaire was investing in building a long-term sustainable business. I had no doubt that the business would eventually be sold and we’d make money. But even if it failed, I knew that I would rather go down trying and learning new skills every day than staying stagnant in a 9 – 5 job.
When I started my career I was making $35,000. From there I quickly grew it up into the $60 – $70K range as an entry level software engineer. When I partnered with my business partners, I stayed in that range, even though by then I knew I could easily get more on the open market.
We made sure to build a profitable business first, and pay ourselves later. But as we grew our business, we slowly increased our salary levels until we were in the low six figures by the time we sold.
Income was not the driver of my success. It was owning a piece of the business that I was building. And it wasn’t just a few stock options, but by negotiating to become a minority partner with a real vested interest, I helped put myself and the company in a much better position.
After we sold our business, staying on for another 5 years was a big factor in continuing to improve our net worth. I maxed out my 401(k) and aggressively negotiated salary increases when it made sense, and also didn’t take any raises when we needed to give our employees bigger raises.
I just can’t stress enough that when you run your own business, you have to focus on the long-term. If you don’t believe me, go read Amazon’s shareholder letters from Jeff Bezos.
Long-term thinking really wins over time when running a business AND when investing.
- What is your investing philosophy, and do you use a particular strategy?
My initial investment strategy was to do nothing and hire a financial advisor. My first child had just been born, and I was still running a multi-million dollar business. So I got a recommendation for a “top notch” advisor from my Uncle and I spoke with the guy a few times before deciding to go with him.
Was this the worst thing to ever happen? No. At least we were invested, but certainly we would be in a much better position had I gotten myself more up to speed on investing in the first place.
In the last year, since becoming Accidentally Retired, I’ve really taken my finances very seriously — it’s my job now. I’ve gone through several iterations of my investment philosophy, but I found that simple investing is the best investing.
After reading The Little Book of Common Sense Investing, by John Bogle, I am thoroughly convinced that I am a Boglehead and I will do none other than invest in low-cost index funds.
I also have taken a much more aggressive stance with 80/20 allocations compared to what our financial advisor had us doing – he had taken a more defensive approach and had us at 55/45.
With hindsight, I would have skipped the advisor, invested in only index funds, and I would have taken a more aggressive 90/10 allocation given my age and time horizons.
- What was your best investment? What was your worst investment?
My best investment was in myself. Trusting that owning equity in a growing business would pay off one day. As I said before, this was all long-term thinking. I could have made much more money working as a software engineer, VP of Technology, and eventually CEO on the open market.
Yet in the long-run, I made much more money by making a conscious decision to make less money in the short-term.
My worst investment was hiring our financial advisor. Even so, I still wouldn’t change that decision. I had to learn that lesson. I fired my financial advisor last November, and haven’t looked back since.
- How much time per day or week do you spend reading financial news and going over your investments?
It ended up being fairly complicated to move away from my financial advisor for a few reasons, so for the past 6 months I have been very active. Active in taking long-term capital gains, short-term losses, and working with my accountant, etc.
I have now made all of the moves I can for 2021 and so all I can do is sit back, watch and reinvest my dividends.
My goal is to get my portfolio entirely into index funds. Ideally a portfolio with only a few index funds like VTI and VXUS will suit the simplicity I’d like to attain.
One thing I have been doing for at least the last five years is doing periodic quarterly reviews of our finances. I have my own self-built spreadsheet that I used to review our net worth, earnings, taxes, expenses, etc. In the past year and some change, I have also used Personal Capital to help tie everything together and get a quick and easy view of everything.
I have also been using an accountant for the last five years. This was largely because my taxes became complicated after selling our business. Now that I am navigating early retirement, I will likely continue to work with him for another year or two.
- What habits helped you become a millionaire?
The biggest habit that helped me to become a millionaire is probably my ability to keep at things even keel even when the going gets tough. My general thought is that all you need to do to be successful and productive is to 1) show up every day, 2) be reliable and consistent, and 3) be continuously open to learning new things.
If you do those three things over a long period of time, you’ll eventually gain career success.
My wife and I are not frugal, but we also aren’t big spenders either. We run a cash flow positive household, always have. We haven’t always done things quite as aggressively as we could have. Perhaps we could have begun investing earlier or padded our IRAs and 401 (k)s earlier on, but we always tried to save a good 20% – 40%.
Once we sold the business, we saved every penny that didn’t go to taxes. Nothing changed, yet our savings rate boomed to 70%.
We do like to indulge in eating at good restaurants, pay for experiences, and most of all travel. I’d say we try to live a well-balanced life. You only live once, right?
- What are your three favorite books related to investing, personal finance, retirement, and financial freedom?
If I had to recommend only three books to someone to get their financial house in order, it would be these:
- The Little Book of Common Sense Investing, by John Bogle
- The Millionaire Next Door, by William D. Danko
- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
- Why do you blog about your investing and journey to millionaire status and financial freedom?
My blog is called Accidentally Retired. I think ultimately the reason why I love to blog is because it helps me to organize my thoughts.
If I want to hone in my thoughts about investing, early retirement, or life…writing helps me to clarify and explore more than any other process.
When I first left my CEO gig, the day I left, I made a list of things I thought I might want to do next. I actually forgot about this list, but I discovered it recently. Blogging was top on my list.
I mainly write for myself, but I hope that I can inspire and motivate others despite my selfish reasons.
- Besides investing what else do you like to do?
I have a lot of hobbies, but the ones that I am indulging in the most right now are golfing, reading, hiking, and from time-to-time astronomy.
I also play fantasy football during NFL season, even though that becomes more like an obsession.
Besides that, AR has become a really fun and fulfilling hobby.
- Anything else you would like to add?
My way was a fast and furious way to do it, but a 9 – 5 get rich slowly method works just as well. Stay disciplined, save and invest more than you spend, and you’ll be on your way.
I also believe that it doesn’t matter how much money you have if you aren’t happy. This is why I have tracked my happiness for the past 2.5 years.
When you track something, you tend to become more aware of what moves the needle. We all track our finances right? As a result of our tracking, our net worth improves.
If you track your happiness, it works in a similar manner. It can and will improve too. So don’t just focus on your finances, make sure you focus on your happiness as well!
Final Thoughts on Millionaire Interview 10
I hope you enjoyed reading about the anonymous author who blogs at Accidentally Retired in Millionaire Interview 10. Check out his blog when you get a chance. His blog has some interesting reads on early retirement, financial independence. and enjoying life in general. Those are goals of the FIRE movement. His story shows that by working hard, focusing, and being optimistic of the future that it is possible for an entrepreneur to become a millionaire at very early age and start another career. The author of Accidentally Retired has shown that it is possible to reach $1 million by age 30 and go further from there.
In an earlier article I identified the three principles of dividend millionaires: spend less than you earn, invest your savings, and reinvest the dividends. Your odds of becoming a millionaire are about 3.6% in the U.S. Achieving FIRE is a process. But I would argue that through careful planning, high saving rates, and investing you can improve your odds. The author of Accidentally Retired has showed us it is possible at a fairly young age of 30 in Millionaire Interview 10. Recall, in the U.S., the average net worth is about $728k in 2016 dollars for those between 35 and 44 years old. I have written previously on net worth targets by age.
As a final note, I have another series called Secret Dividend Millionaires. This one is about ordinary people who became millionaires by investing in dividend paying stocks for the most part. Most of these people were only discovered after they died and left their money to charities and other non-profit organizations. Often, they became millionaires through very frugal if not austere living, investing their savings in stocks that paid dividends, and reinvesting the dividends.
You can read Millionaire Interview 9 – Million Dollar Journey Journey as well.
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.