How about a 14.5% raise every year (avg.). That is what holders of this run-of-the-mill portfolio would have received from 1997-2007. Blatant plug for my blog below...sorry couldn't resist....
I've averaged a 7.2% annual rise since I graduated, but then I'm only in my late twenties. I expect it'll slow down significantly from this point. Which is ok, I'm not really into being rich through my income.
SavingDiva
· 2 years ago
Since last year, I have increased my pay by 21%, which is a combination of a few raises. Before that...I can't think of it off the top of my head...
dong
· 2 years ago
I think if you want out the rat race, a salary is what allows you to stash enough away for the exit. The exit might be a high risk high reward job at startup, starting your own business, aggresive investing, or even moving to low cost country. Either love your job, or have a plan while you earn the salary.
Pinyo
· 2 years ago
A steady job may not be the fast train to wealth, but you can do it. Although, I do agree that people should really not settle, and continually look for ways to improve their career/income.
bripblap
· 2 years ago
Great comments! I guess to clarify what I'm getting at: waiting on raises to get you rich won't work. You can work on saving, or investing, or alternative income to supplement your main income. For most people, though, if you're waiting for your salary to grow fast enough for you to become 'rich' you'll wait forever. That extra 3% per year will get eaten up by new expenses. The only way to financial independence is through frugality, investing and alternative/"passive" income (the link by moneygardener, above, illustrates how investing beats raises).
Joe
· 2 years ago
You are forgetting that investing comes with RISK of losing your investment - that's why you make a good percentage return on your money. Going to work everyday does not carry risk of loss. You cannot compare investing returns with your salary increase.
bripblap
· 2 years ago
@Joe: I understand that there's a difference, but let me ask you - how much risk is there in an FDIC-insured high-yield savings account? Going to work does carry a risk of loss - your income stream can be cut off if you get laid off.
But I do understand it's a comparison of apples and oranges - I'm merely doing it to highlight how we settle for less of a return on our careers than we would be willing to accept in an investment.
finance girl
· 2 years ago
Yet...salary is only part of the equation. If the total comp is going up every year (incl. bonus and stock) then that's a fair trade.
RE: "you won't get rich off a salary" who says?
Totally depends on 2 factors: 1) what rich is to you (your #) and 2) what you do with the income you receive.
We started with very little 8 years ago and are now flirting with 7 digits for the first time (on balance sheet).
bripblap
· 2 years ago
@Finance Girl - I'll be picky and say I was only talking about salary :) since obviously if you throw in more exotic compensation like options or significant bonuses (like investment bankers getting 110% of their base) you'll have a chance to do much better. I'll actually cover your 2 factors in future posts: what does getting rich MEAN for the first, and just a general mess of investing-related posts for the second.
If your 7 digits are all from salary and don't include the net worth of your home then congratulations! Yet I'll still stick by my point: if you expect to sit back and let raises get you rich, you will be waiting a long time. You may invest your money wisely or be terribly frugal or start a great business, but none of that comes to people who just spend their whole salary and wait for the next tiny bump!
All Comments
http://themoneygardener.blogspot.com/2007/07/wa...
But I do understand it's a comparison of apples and oranges - I'm merely doing it to highlight how we settle for less of a return on our careers than we would be willing to accept in an investment.
RE: "you won't get rich off a salary" who says?
Totally depends on 2 factors: 1) what rich is to you (your #) and 2) what you do with the income you receive.
We started with very little 8 years ago and are now flirting with 7 digits for the first time (on balance sheet).
If your 7 digits are all from salary and don't include the net worth of your home then congratulations! Yet I'll still stick by my point: if you expect to sit back and let raises get you rich, you will be waiting a long time. You may invest your money wisely or be terribly frugal or start a great business, but none of that comes to people who just spend their whole salary and wait for the next tiny bump!