Millionaire Interview 409

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 March.

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 35 years old, my wife is 29 years old.

We have been married for 3.5 years.

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

We have one little girl, she is 2.5 years old.

We would like to have a second child in the next 2 years.

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

We live in Metro Detroit.

What is your current net worth?

$1.18 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?

• Cash: $160,000
• My Roth 401K: $248,500 ( ETF and Stocks )
• My Wife’s 401K: $27,000 ( Mutual fund )
• HSA : $21,800 ( Mutual fund )
• Taxable brokerage account: $27,000 ( Stock, Options )
• Roth IRA： $23,000 ( ETF and Stocks )
• Crypto: $540,000 ( Bitcoin and Ethereum )
• Home: $130,000 ( Equity )

Our debt is mainly from our condo (current value at $260k) and credit card that we pay in full every month.

I did not include 2 cars (both of them probably worth total $15000.)

EARN

What is your job?

I work as a senior automotive engineer at one of the big three.

My wife is working at a startup company as a senior UI/UX designer.

What is your annual income?

My annual salary is $110,000 including bonus.

My wife’s annual salary is $85,000.

She also made $34,400 in 2023 from her side business. Her side hustle was doing well last year but it’s not consistent. It really depends on her time and how many projects she can get from the clients.

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

I started as a long term contractor when I joined my current company. It took me nearly 10 years to be converted to a direct employee and increase my income by 40%, not including all the health care, 401k and vacation package, etc.

Big OEMs usually won’t hire immigrants directly when they have limited experience. Long story short, the company recognized my hard work and great contributions (I helped launch 4 flagship vehicles since 2015). The good part of being a contractor is being able to make 1.5x the regular hourly rate when working beyond 40 weekly work hours. I worked a lot of overtime during that period.

Tips below come from my personal experience and hopefully can help you:

• Set Clear Goals: Define your short-term and long-term career goals. My short term goal was gaining as much experience as possible during my internship. My student VISA only allowed me to work a maximum of 12 months of full time job after graduation. The company needs to sponsor my H1B VISA to allow me to continue working in the US legally.
• Stay current with industry trends and acquire relevant skills. Consider certifications, workshops, and additional education to enhance your expertise. One of the best advantages of working at a big company is that it offers a lot of training opportunities for free. I signed up for software training and got all the certifications that were required for my daily job.
• Build a Strong Professional Network. Network both online and offline to create valuable connections. Attend industry events, join professional groups, and engage in networking platforms. This is exactly how I got my two internship offers back in 2012-2013 while my classmates were struggling finding jobs.
• Be Proactive and work hard. Take the initiative to identify problems and propose solutions. Don’t avoid challenging projects, find the solution or ask people who have more experience and knowledge than you to show your manager you have the capability to solve the hard issue. I couldn’t remember how many hours I spent over the weekend testing vehicles, analyzing data and writing reports while under tremendous pressure to solve the issue in a very short amount of time.

What’s your work-life balance look like?

Before I got direct-hired, I normally worked 40-50 hours per week depending on the vehicle development phase. Things changed dramatically after Covid19. Not only did I switch to the project management role, but also I was able to work from home 90% of the time which allows me to spend more time with my family (We had a newborn in 2021).

However, I started to work onsite everyday the same as pre-Covid conditions since we are going to launch multiple new vehicles this year and 2025. To be honest, I really like working from home, but it’s not good for productivity in the long run in my opinion.

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?

Yes, both me and my wife have side hustles which allows us to accumulate our wealth faster.

My wife graduated as a website designer and she started helping small business owners build their website and got paid by projects. Each project can make her somewhere between $1000-3000 depending on the difficulty of the job. That’s how she made $30k aside from her 9-5 this year. That being said, leveraging your existing skill sets and making extra income can be a great choice.

I started my Amazon FBA business back in 2017 and made my first $100k (gross income) by selling private label products, however my next two products were a disaster and I lost most of my profit I gained from the 1st product. I closed my E-commerce business in 2018.

From late 2017, I started investing in Bitcoin and all the other crypto coins when the market was at an all time high. For sure I blew up my account and my millionaire dream did not come true. But I did not quit, I started spending all my spare time learning how this technology works and how I can benefit from it by investing. Fast forward to 2020, I put $60k into bitcoin and sold it in a year with $180k profit. Based on the bitcoin four year cycle pattern, I put $150K into both Bitcoin and Ethereum during the 2022 bear market. As of today, they are now worth about $540k.

Besides crypto, I am also obsessed with stock investing and trading. In 2020 right after the COVID market crash, I smelled opportunity. I sold all my mutual funds (about $65,000 ) and invested in individual stocks near the bottom of the crash. Since then, I have always maxed out my 401K (my company will match 8%) and I keep buying high quality stocks when they drop to my target level. Today, my 401k portfolio value is worth $253,676.09. BTW, I only contribute to Roth 401K since the gain won’t be taxed.

How could I achieve such a great return from the past 5 years? It all comes from hard work and never giving up:

• I spent countless hours reading books, blogs, and twitter from successful people who are already millionaires.
• I spent lots of money on courses and online workshops. I found my mentor through YouTube and have followed him ever since. The most valuable investment is to invest in yourself.
• Practice your skill, don’t be afraid of making mistakes. Instead, view them as stepping stones towards success. Each misstep can provide a chance to refine your approach, enhance your skills, and ultimately achieve better outcomes. Remember that even highly successful investors (Warren Buffett, Charlie Munger, Peter Lynch) have encountered setbacks along their journeys.
• Be open minded, nothing in the world is extremely right or wrong. For example: Buffett and Munger don’t like crypto, they said it’s rat poison. Well, I disagree but it all makes sense to me because they don’t like to invest in something they don’t understand.

SAVE

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

We don’t spend a lot. Especially for vacation and entertainment.

We believe delay gratification is the fastest way to achieve our financial goal.

The categories for 2023:

• Child Care: $21,022
• Mortgage: $12,066
• Shopping: $8,317
• HOA fee: $6,437
• Miscellaneous: $3,389
• Restaurants: $2,508
• Gas & Electric: $1,242
• Everything else: $5,137

Total: $60,117

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

We do have a budget now since we are looking to buy a single family home in a good school district. We need to maintain a certain amount of cash in the account for the down payment.

We are using financial software like Mint to track our spending and income. We check it once a month and make sure we don’t overspend on something and keep 6 months of emergency fund available.

The rest of the savings goes to my investment account.

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

I always maximize my company 401k and HSA contribution.

As long as I maintain 6 months emergency fund and 20% house down payment for our next home, the rest of the money I will put into investment portfolio (stock and crypto.)

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

Set a goal and always pay yourself first.

Saving money is never hard for me, I guess it comes from my parents.

What’s your best tip for spending less money?

Don’t buy things that are unnecessary. And if you do need to buy, do some research to see if they offer coupons or discounts. For example, we buy clothes once a year only during Thanksgiving because the brand we like offers a 40-50% discount.

We have never bought a brand new car or leased a car. Typically 2-3 year old used cars offer the best value.

Avoid spending money on restaurants. Both of us love cooking and we try to avoid going out for dinner to save money. But once in a while, we go out for a nice meal during special occasions like holidays, birthdays, etc.

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

Books, courses: I spend money on paper books, audio books and online courses which can teach me how to save and invest money.

I love exotic cars (R8, GTR, 570S, 670S, Huracan…). I can afford one of them now but I have bigger goals, so again, I need to delay my gratification and build my cash flow first.

INVEST

What is your investment philosophy/plan?

Long-term holding:

• Hold 20-30 great high quality stocks forever, keep buying when they are undervalued.
• Have a diversified portfolio in different sectors (Technology, communications service, health care, consumer discretionary, ETFs.)

Crypto Medium-term swing trade:

• Crypto has very clear cycles. When the dollar is trending down, plus global liquidity injection starts, the risk assets will move ahead of stock and real estate. Typically a 4-5 year cycle.
• Using dollar cost averaging to buy and sell, I don’t need to time the exact bottom and peak. No one can!
• Another option is to hold Bitcoin for the long term.

What has been your best investment?

Bought Bitcoin low in 2019 and sold after the peak.

What has been your worst investment?

Bought Bitcoin peak in 2017 and sold at bottom.

What’s been your overall return?

Stock: up 38.83% from the past 3 years, 8.52% year to date (March 2023.)

Crypto: I made 4x my initial investment during the last cycle (2019-2021). Currently I am up 200% from a year ago.

How often do you monitor/review your portfolio?

Everyday by 4PM EST, I will check my stock portfolio.

For my 401K long-term stock portfolio, I focus on buying the stock I like that is undervalued.

For my personal trading account, I am looking for both buying and shorting opportunities using option trading strategies.

NET WORTH

How did you accumulate your net worth?

I don’t make a lot of money from 9-5. I think my salary is within the range of average automotive engineers.

My parents stopped supporting me financially ever since I got my first job in the USA. They live in a 2 bed apartment (owned) in Shanghai and don’t have other properties. They were both retired years ago.

I simply just make money from work, save and invest. I do some short term option trading once a while.

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?

My greatest strength is investing and trading.

I have seen 2009, 2018, 2020, 2022 big drops in the stock market. I have seen people lose everything, and I have seen people make a fortune.

The key is to buy fundamentally good assets in pessimism and sell during the euphoria. It’s easy to say but hard to do.

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

Lost money when I bought good investments at the wrong time.

But I have never given up. I understand losing money is part of the game, as long as I don’t make the same mistake again.

I love shadowing successful people, learning everything from them and keep practicing.

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

Continue working on my 9-5 job and keep investing in great companies.

Get ready to take profit once the Crypto market is overheated again.

I will start buying/selling option contracts to generate cash flow once I have $2 million cash saved, and eventually quit my job.

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

$10 million by 65.

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

Reached $1 million sometime this year (2024).

Nothing major has changed. Surprisingly, we do not feel any excitement. I guess we both know this will happen and just a matter of time. Now we are up to our next target. ($2 million)

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

• I have a strong desire to be financially free. I want to spend more time with my family and be able to provide them the best I can.
• I set a goal and I take action. I learn as much as I can after my daily job including weekends.
• I am a learning machine and I am humble. The Internet helps me find my mentors to achieve my goals quickly. I don’t need to reinvent the wheels, all I have to do is listen and practice.
• Diversification is the key to persevere wealth. Don’t put all eggs in one basket. Invest in different asset classes. One of my next goals is to invest in real estate.
• Never risk your permanent loss of capital.

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

My biggest regret is not investing earlier. I did not realize that the US stock market is the best place to park your hard earned money and compound wealth through time. Take S&P 500 as an example. The average yearly return of the S&P 500 is 11.13% over the last 50 years.

Another mistake was getting greedy when I was making great profit. There is nothing wrong to take the money out of the table when you are in profit.

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

• Always pay yourself first. Save money and invest for long term.
• Learn how to invest (stock, crypto, real estate…)
• Find something you really like to do and also can pay you.
• Be teachable. Most people are overly confident and think they know a lot. That prevents them from learning new ideas and seeking new opportunities.

FUTURE

What are your plans for the future regarding lifestyle?

I am considering quitting my job after I reach $2 million cash in my brokerage account.

My plan is to generate 2% monthly cash flow to replace my income.

What are your retirement plans?

Trading and investing does not require much time daily, so I plan to start my real estate rental business in parallel.

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

My wife will keep working if I decide to quit my job. The greatest concern I have is that my trading and investing performance won’t be consistent.

However, I will test my strategy for at least a year to be comfortable before leaving my job. If not, I will keep my 9-5 job.

MISCELLANEOUS

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

Learned my first financial class from Dave Ramsey. I was living with my host family in 2013 and the church we often went to offered Dave’s program (Financial Peace University).

I joined the class and that’s when I realized the power of compound interest can help me accumulate wealth sooner than I used to know.

The book “Rich Dad Poor Dad” has undoubtedly had a significant impact on me when thinking about personal finance and wealth-building as well.

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

My parents taught me a lot about saving money. Don’t buy anything that’s unnecessary. Always live below the means.

They are the ones who sent me to the USA even though I was reluctant at the beginning. They understand that there are numerous advantages to studying in the U.S (language proficiency, better education, job opportunities…)

When people ask me what really changed my life, I tell them that coming to the US alone and starting a new life is the tipping point of my life.

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?

• “Rich Dad Poor Dad” by Robert T. Kiyosaki — Rich Dad emphasizes the importance of understanding the difference between assets and liabilities. By focusing on acquiring assets and minimizing liabilities, individuals can build wealth and create financial independence.
• “Profit from the Panic” by Adam Kholl — When fear and panic happens and people sell irrationally, fundamentals and intrinsic value are thrown out the window. This is when good companies get dumped together with the bad. Because EMOTIONS always overcomes LOGIC in life, even in the markets.
• “The Psychology of Money” by Morgan Housel — Happiness is a complicated subject because everyone’s different. But if there’s a common denominator in happiness a universal fuel of joy it’s that people want to control their lives. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.

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

We don’t give to charity consistently.

Once a while, we give money to homeless people on the street.

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 think we will pass the money to them but before that, I want to teach them how to catch fish instead of giving them the fish.

I will teach them how to earn, save and invest. That’s the best inheritance that builds a long-lasting legacy.