Millionaire Interview 391

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

If you’d like to be considered for an interview, drop me a note and we can chat about specifics.

This interview took place in November.

My questions are in bold italics and their responses follow in black.

Let’s get started…

OVERVIEW

How old are you (and spouse if applicable, plus how long you’ve been married)?

I am 66 years old, and my partner is 59.

We have been together seven years, and going strong.

Do you have kids/family (if so, how old are they)?

I have three daughters.

The oldest is 33 and currently in her second year of law school.

The next daughter is 30 and recently married.

My youngest is soon to be 25 and currently working on her master’s degree.

What area of the country do you live in (and urban or rural)?

I am originally from Ohio (Go Bucks!).

A career change led to a move to Eastern Pennsylvania in 1997, and again to central New Jersey in 1999.

After two years in NJ, I seized an opportunity to return to a field-based management position, and moved to Colorado where I currently live in a Denver suburb.

What is your current net worth?

My current net worth is $5.1 million.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

Two thirds of my assets are a variety of stocks, bonds, treasuries which are managed by my investment advisor, not affiliated with a brokerage house.

At one time, the rest of my assets were invested in a number of rental properties located in the greater Denver area. Over the last couple of years, they have been consuming too much of my time, despite having a property manager. Earlier this year, I sold two of the properties, and I intend to sell two more, leaving me with three properties that have been consistent performers. I will likely keep them for the long term.

Over the past couple of years, I’ve invested in a couple multifamily syndications, and have also expanded into some alternative investment vehicles – ATM fund, oil and gas fund, and a debt income fund. I like these investments as they have minimal correlation with the stock market.

EARN

What is your job?

I graduated from college with a degree in pharmacy, and soon thereafter, went on to get a master’s degree – a specialty MBA with primary focus in pharmacy.

Early in my career, I worked in traditional practice settings – managing an independent retail pharmacy, management in a large, urban medical center pharmacy.

Realizing that I did not wish to return to either environment. I worked briefly for Prudential when they were in the healthcare business. That lasted a short time when Prudential decided to scrap their interest in healthcare.

At this point, I was still young, and wanting to do something entirely different. I eventually had an opportunity to join an elite (medical) group with a global pharma company, and, quickly realized I had found a role that perfectly suited my professional interests. I started in the mid-Atlantic, and soon moved into an operations role at the global headquarters. When the company acquired a smaller firm, I seized the opportunity to return to the field in a management (director) role.

Soon after moving to Colorado, I learned that the company was to be acquired by a very large pharma company. I decided I would do whatever I needed to do to remain in Colorado, and thankfully, the company offered me a position very similar to what I was doing at the former company, and gave me a generous bump in pay. I was promoted to Senior Director in 2013, and remained at that level until my retirement in 2020.

What is your annual income?

For the last five of my employment, my gross income was approximately $500K, +/- $50K.

The variability in the pay was due primarily to incentive payments and stock options that varied based upon my individual performance as well as the company performance.

Post retirement, I have been fortunate to receive deferred long-term benefits, the last of which will be paid in 2024. These benefits have enabled me to defer draws from my various investments.

Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?

My first job after graduation (1980) was in a small hospital, where my annual salary as $20K. My schedule was eight days on, and six off, which enabled me to work part-time in a local independent pharmacy, which added approximately $5K to my income that year.

I started grad school full-time in the fall of 1981, and after my first quarter, I returned to my home town to run an independent pharmacy, where I was making $30K when I left in 1987.

From there, I transitioned to a large urban medical center, where I worked for the next five year, making $50K when I left in 1992.

From there, I had a couple short stints in consulting, specialty pharmacy, and then working for Prudential, making $55K.

When Prudential pulled out of healthcare in 1996, I went to work for Kroger pharmacies as a floater, just to pay the bills until I landed a full-time position.

It was the first of 1997 when I started as a regional medical liaison, making $87K.

After two years in the field, I transitioned to a corporate operations role for the same group, making $115K, and two years later, moved into a regional director role, making $120+.

When the company was acquired in 2003, I took a similar position with the new company, making $135K plus performance awards.

Over the next 17 years, my base salary grew to $260K, with bonuses + options which typically added another 50-100% of my base. Throughout my time in pharma, I was also fortunate to have a good 401-K match, as well as a pension which was $1.2 million when I retired.

What tips do you have for others who want to grow their career-related income?

Don’t ever settle for average (pay, performance, job type).

Have a plan, work your plan.

Keep scanning the horizon for opportunities you truly feel passionate about, and when you find them, figure out a way to secure one.

Work your network consistently.

Companies often experience highs and lows over time, and during the lows, will typically execute layoffs. During those lean times, you don’t want to find yourself in the bottom half of your group/team.

What’s your work-life balance look like?

Now that I’m retired, it’s pretty great! It will be even better after I sell a couple of my rental properties – the ones that have given me the most headaches.

Other than that, our focus is enjoying our lives while we are still able, including lots of travel.

While home, I try to play tennis as much as possible – I’m on a men’s 3.5 team, and I’ve recently started playing pickle ball.

Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?

No more career, so I’m leaning on my various investments to provide for income in retirement.

In addition to traditional investment vehicles, in 2023, I have used proceeds from the sale of two properties to invest in an ATM fund, an Oil & Gas fund, a multifamily syndication, and a debt income fund. The first three will provide tax credits to help offset the capital gains from the property sales.

I plan to sell two more properties, and will be looking for opportunities to redeploy the proceeds.

SAVE

What is your annual spending?

Since retirement, the annual spend rate has not changed that much.

Given the amount of travel we are doing each year, our annual spending is in the range of $170-$180K.

We are fortunate that we bought our current house when rates were still low. Nonetheless, it is still fairly expensive to live in the Denver area – we are contemplating the possibility of moving to NC, though no firm plans as of yet. A similar home in NC would cost around 60% of what our current house is worth.

What are the main categories (expenses) this spending breaks into?

I tend to break things down into fairly large buckets – reoccurring living expenses (including home, auto), healthcare, travel.

Do you have a budget? If so, how do you implement it?

We don’t manage/track a detailed budget, though I have put together a monthly spreadsheet that I use to estimate & track our spending which tracks pretty consistently month-to-month.

What percentage of your gross income do you save and how has that changed over time?

Since retiring, I’ve been getting tax refunds due largely to the paper losses from the rental properties.

In 2021 and 2021, I qualified as a real estate professional which helped mitigate my tax exposure considerably.

As I transition some of my real estate holdings to other investments, in time, I will end up paying some taxes in the years to come.

What’s your best tip for saving (accumulating) money?

Always plan on living on less than the amount of income from all sources.

I started a spreadsheet around ten years ago, tracking my investments and income, and it has been a huge help to help me project my income, assets, in future years – I think of it as my financial GPS.

Though I have not explicitly done it for myself, others may find it helpful to have savings as an expense, just like they track a house or car payment.

As for cars, I recommend buying cars that have taken the up-front depreciation hit (2-3 years), and then plan on driving it for a long time.

What’s your best tip for spending less money?

Go out less, don’t frequent Starbucks, etc.

When I was younger and married, I came to realize that it’s often not the big-ticket items (house, car, etc.) that blow your budget, it’s the smaller expenditures (eating out, Starbucks) that get you because by themselves, they don’t feel like a budget buster, but when you look back, you realize it’s the volume of these “smaller” expenditures that will often break your budget.

What is your favorite thing to spend money on/your secret splurge?

Experiences.

We love to travel, and was unable to do as much as I wanted while I was working. Now that I’m retired, I am able to go for weeks at a time.

We’re trying to figure out how we could make it work to be away for 2-3 months at a time.

INVEST

What is your investment philosophy/plan?

Diversification.

Now that I am retired, I am more risk adverse than I was when I was younger. The money I have invested in Wall Street vehicles is quite diversified, and well managed by my advisor.

Otherwise, I like having a significant amount of my portfolio in real estate and other investment vehicles, especially those that provide tax benefits.

What has been your best investment?

By far, my best investment was my education, which set me up for the kind of opportunities that ultimately made for a successful career.

Everything else cascaded from there (job advancement, income, benefits).

What has been your worst investment?

A couple of things come to mind.

One, buying too much house when we moved to Colorado.

After that, I’d say the duplex I bought a few years ago – it turned out to be a money pit. I won’t bore the readers with all the gory details, let’s just say if there was such a thing as a do-over, I’d likely invest that money in something more passive like a syndication.

What’s been your overall return?

Like many others, my returns have varied over the last few years, though from 2019 to 2022, I realized a 55% increase in the value of my portfolio.

I do not expect to see that kind of change over the next four years, though who knows?

How often do you monitor/review your portfolio?

As I mentioned before, I have, and continue to update a spreadsheet, tracking my investments by quarter.

Between quarters, I’ll often do an interim calculation at the end of a month, just to see how things are tracking.

NET WORTH

How did you accumulate your net worth?

There are a number of factors that ultimately evolved to get me to my current net worth.

One, I was fortunate to work for a company where I had both a pension as well as a 401-K that provided a generous company match. I contributed enough to the 401-K to ensure I would maximize the company match. I also received stock options, and either held onto the stock, or sold it to invest in other funds, ETFs, etc.

Additionally, each year I received performance bonuses that in good years, equaled my base salary. I never spent that money – I always invested it, and thus was able to turbocharge my saving/investing.

Aside from the first house we bought when we moved to Colorado, I have lived rather frugally, not wanting for a big house, nor expensive cars – always living below my means.

When I divorced in 2007, I had to really skinny down my spending so that I could pay support. Once I fulfilled my support obligation, I was able to increase my spending, though not by a lot. I took the difference, and invested that as well. Despite the fact that I had paid a lot in support, I was able to get back on track fairly quickly.

What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?

I would rank order them as earn, save, invest.

I would say that earn and save are essentially tied for first, as they are so closely related.

I was able to invest as much as I did because I was fortunate enough to receive a generous pay and benefits.

When it comes to investing, I’m always learning, and actively looking for opportunities to optimize my investments.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

A lot had to deal with work.

Before I began working in pharma, I was working for Prudential, and was recently married, with two children to take care of. When Prudential pulled out of healthcare, I was left scrambling in order to make ends meet.

After coming on board with pharma, the first challenge was weathering the acquisition by a much larger company.

A number of years after the acquisition, there were a couple of occasions where the company went through a downsizing, and I was concerned that I could be left holding the short end of the stick.

I continued to work hard, and felt that as long as I was in the top half of my team, I had a good chance of surviving. That perspective and hard work turned out to be in my favor.

What are you currently doing to maintain/grow your net worth?

Just like my journey, after retirement, I have been careful to avoid spending beyond my means.

I’ve been fortunate to find a very good advisor who handles my various financial investments.

Additionally, I have found a few good sponsors for alternative investments that do not correlate with the stock market, thus keeping me pretty well diversified.

Do you have a target net worth you are trying to attain?

I don’t have a target per se, though I do believe that given the collective performance of my various investments, and if I live long enough, I don’t see why I could not hit the $10 million mark, though I won’t lose any sleep if it does not happen.

Wherever I end up, there will be a nice inheritance for my survivors.

How old were you when you made your first million and have you had any significant behavior shifts since then?

I was 53 when I hit the $1 million landmark.

Since that time, I’ve more or less stayed the course with the behaviors that enable me to hit that landmark.

Since then, I have invested in many things outside of the stock market, and that has contributed significantly to help me get to where I am today.

What personal habits and/or traits have you developed that have made you successful at growing your net worth?

Consistently living below my means.

Saving/investing a significant portion of my income – probably around 30% while I was working.

I also stay engaged with all of my financial partners, and learn as much as I can from them, and ultimately make solid decisions.

What money mistakes have you made along the way that others can learn from?

I spoke to this in an earlier question/answer – my first Colorado house (I’d buy smaller), and have paid more attention to my gut when I purchased the duplex a few of years ago.

What advice do you have for ESI Money readers on how to become wealthy?

Have a plan, and work your plan – consistently.

It’s not too much different than exercising – you’ll see your greatest gains if you have a plan that you stick with. I had an experience like that when I turned 50 – I joined a small gym that held me accountable for what I ate, and doing intense workouts regularly, three times a week. After only six weeks, I got in the best shape of my life, so I believe others can apply similar principles to their own financial fitness.

FUTURE

What are your plans for the future regarding lifestyle?

Yes – done.

Perhaps I could have retired a little earlier, though I probably would not have had the comfort that I felt retiring at 63.

I also wanted to make sure all of my children got through school with no debt – that meant I could not retire in my 50s.

What are your retirement plans?

Financially – stay on track.

Continue doing the same kind of things that got me to where I am today.

Beyond that, I believe in investing in experiences, like travel, spending time with my wife and children.

Are there any issues in retirement that concern you? If so, how are you planning to address them?

I sleep pretty well at night – no major issues to speak of.

I try as best I can to live intentionally, when means paying attention to things, financially and otherwise.

MISCELLANEOUS

How did you learn about finances and at what age did it “click”?

When I think of the term “click”, it sounds like a tipping point.

When I think about finances, I feel like it is a life-long journey, where you are always a student, always learning.

Who inspired you to excel in life? Who are your heroes?

Without a doubt – my parents were a huge influence.

Aside from them, I must give credit to the department chair when I was in grad school. He taught me so many valuable lessons, not just about my major, but also about life in general and believing in myself. All of that influence became a solid foundation for me to learn and grow in the world of finance and investments.

Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?

The Millionaire Next Door, Rich Dad, Poor Dad.

No other books really stand out for me – I’ve learned so much along the way from meeting and learning from people smarter than myself.

The Millionaire Next Door resonated with me as it made me realize how many wealthy people do not need to live an extravagant lifestyle, in fact, that’s a big reason why the achieved that status. Robert Kiyosaki got me seriously thinking about the benefit of investing in real estate.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

I do.

Some years ago when I was still working, I established a giving fund. Each year, I donate to the local homeless shelter, and also to one-off causes, like the Boulder County fire that upended so many lives.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

I do have a plan, and established a trust many years ago.

I believe in helping my family as much as I am able. Keeping my spending in check as I have done over the years, they will all receive a decent amount of the wealth that I accumulated.

In the meantime, I want them to experience getting themselves on their own financial track, so that they will have a greater appreciation for what it takes to build their own wealth.