The minute my first kid was born, my whole world changed. Not just from the fact that I became a new Father and had to learn how to be a great example when I wasn’t provided one growing up, but from my mindset about what my goals truly were. I literally took a step-back and re-evaluated everything.
Specifically what was it that I was trying to accomplish? How would I accomplish it? And how much money would it take to get there?
Every time I look into my kids eyes, I think about all the opportunities I want their kids, my grand-kids, to have one day. Thats when I decided I set my goals to low. I needed to set them higher. The problem is I don’t have a blueprint, so as I’ve talked about before, I started with the end goal and worked back from there.
First question I asked, is what does generational wealth look like for me and my family. More specifically, what dollar amount would it take to get there. For me that was $20 million dollars. Now you may ask why $20 million? Well its simple, $5 Million in four areas:
- Family Business – Real Estate, Small Business Investing, etc
- Family Trust – To provide funds to future generations for education and advancement
- Scholarship program to benefit those who are historically underestimated
- Retirement Funds to live on
That led to my next question, how do I get there knowing what I know today? So let’s start with the facts: I am a (relatively) young, healthy, attending surgeon, who has a chance to earn a great living over the next 30 years. With that in mind, how much do I need to earn or better yet invest per month?
To answer this question, I needed to understand what interest rate compounds my monthly investment to arrive at least $20 million at the end of 30 years. While past performance is not an indicator of future results, its a damn good benchmark to use for estimating. For the last 30 years the stock market has returned on average 10.7%. Assuming that average, with a variance of 3%, I arrived at an estimate of needing to contribute $9-10K per month ($108K – $120K per year) for 30 years to achieve my goal.
Now how the hell do I do that? First step is to figure out what salary would allow me to invest at that rate. Without getting too in the weeds with the estimate, lets assume that I am investing 20-40% of my yearly salary. That allocation would require earning $300K- $600K per year. Is that doable as a general surgeon? Well the answer is yes.
A 2019 Medscape survey on General Surgeon compensation showed the average salary for a general surgeon in the United States is around $362K per year. So as long as I keep my expenses low and earn the average or even better above the average, I can meet my goal.
Now that I know that my goal is realistic, what will I invest in to ensure my money is relatively safe & growing? Well, remember, I hate taxes. So keeping tax optimization in mind, the first step for me is maximizing any tax-advantaged accounts that I have before moving on to other assets. After that is done my goal is too look for other assets that provide equity, cash flow, and/or secured by real assets. As such here are the asset categories I am planning on investing in:
Now this is my plan on how I am going to get to my goal. And yes, to some it may seem aggressive. Or some may say its too risky. But honestly I am comfortable with the risk in this plan. Additionally a plan is just a theory! If the plan needs to change or I need to change my allocations because the plan isn’t working, then thats what I will do.
The process that I used to visualize my goal and create a potential plan, can be used by anyone. Obviously the income expectation will change and the end financial goal will be different. However the process is the exact same. Try it one day and let me know how your plan works out.
As always if you have questions or concerns regarding creating an emergency fund, investing, real estate, insurance, or planning for the future, don’t be afraid to speak with qualified financial advisor. Smart Asset has a great tool to find an advisor in your area or feel free to email me (contact@surgifi.com) to help you on your path to financial independence.
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