Financial advice I got from my grandfather to retire in my 30s

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  • When I was a teenager, I was surprised to learn that my frugal grandfather was a millionaire.
  • My grandfather told me that if I wanted to be rich, I had to live below my means, invest my savings in stocks and bonds, and patiently build my wealth.
  • After taking this advice, I am now on the verge of retiring in my 60s with millions or quitting my full-time career at 35.
  • Use Bloom to analyze your 401 (k) today and see how you can grow your retirement savings »

When I was a teenager, I had the surprise of my life.

My grandfather, who I suspected didn’t have much, was actually a millionaire.

This sentence does not quite reflect the shock that went through me when I heard the news.

My grandfather did not graduate from college. He was earning a modest salary as a blue collar worker. And he’s spent his whole life raising five children as the sole supplier.

His lifestyle didn’t allude to money either. In fact, his constant pinching only reinforced my theory. This guy was still driving a 15 year old drummer and was caught dead before he paid someone to change his oil. He drank the cheapest beer, and he was known to cross town on foot (not by car) if that meant finding it in a store with a cheaper price. And did I mention he raised FIVE kids?

But all the while he was carrying a silent secret. His modest way of life actually financed a portfolio of stocks and bonds.

By the time he retired at age 60, that portfolio was worth $ 1.2 million. It’s a lot of money today, and it was even more when I heard the news twenty years ago.

So you can imagine the impact this had on me. Immediately I wanted to know the secret. How the hell did this guy manage to go from average Joe to a comfortable millionaire? And how could an ambitious teenager take action to replicate his success?

Fast forward 15 years, and I have now used the advice he gave me to save almost half a million dollars by my 30th birthday. This head start means that I will probably be able to retire not at the typical grandfather’s age of 60, but more likely at the infantile age of 35.

My grandfather’s advice

My grandfather finally told me his secret: wealth doesn’t mean making a lot of money. It doesn’t mean spending a lot of money either. Instead, wealth is investing in income producing assets.

For Grandpa, his favorite assets were stocks. By only winning average stock returns Over the course of his 35-year professional career, he only needed to invest about $ 8,000 per year to bring his portfolio from zero to $ 1.2 million.

So that’s what he did.

Because he didn’t have the luxury of a high salary, it meant carefully watching his money. All this search for offers and spending wasn’t just a personality quirk; it was part of a bigger plan to get rich.

Putting grandfather’s advice into practice

As a teenager, I began to aggressively save money. If the old grandfather could do it with five children and a modest income, maybe I could too?

I started investing my meager savings like Grandpa did, just to earn average stock returns. It turns out that with the increasing availability of passively managed index funds these days, getting those average returns has never been easier.

Over the years, the results surprised me more and more.

Helped by compound interest, my pocket change in high school and college had grown to around $ 20,000 by the time I walked across the stage to collect my college diploma – a perk my grandfather didn’t never had.

By age 25, using the strategy of living under my means and saving a large chunk of my $ 50,000 salary, my portfolio had grown to $ 100,000.

Five years and a few happy increases in pay later, I’m now 30 with over $ 400,000, at most recent net worth update on my blog.

But here’s the shocking part – Grandpa and I totally underestimated the power of his advice.

Starting earlier gave me a big boost

By starting just a little earlier than him and saving a little more, the power of

compound interest
exceeded even my wildest expectations.

Running a basic compound interest calculator shows that I’m not just able to match Grandpa’s $ 1.2 million portfolio at age 60. If I continue, my portfolio should reach an absolutely ridiculous amount of $ 6.8 million at age 60. (These figures are adjusted for inflation.)

Even if I stop investing tomorrow and decide to never save a dime more for the rest of my life, the money I have already set aside should be around $ 3 million by age 60.

For this reason, my current plan is to quit my full-time career at the age of 35.

From there, I plan to make money through less stressful part-time jobs to fund a modest lifestyle. While letting my wallet silently compose itself, just like Grandpa did.

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