I saved over $300,000 in my 20s. Here’s the single best piece of advice I can give you about money.

  • I’m currently 29, and I’ve saved $US312,000 in my investment portfolio.
  • The yearly returns of my portfolio are nearly half of my yearly savings from my career as a financial analyst.
  • Because of this, I’ve learned that your money can work a lot harder than you can.
  • Read more personal finance coverage.

Back in 2016, Business Insider ran a story about how I’d saved up $US150,000 as a 26-year-old.

A year later, I was featured in an update, after I’d hit $US200,000. Two years after that, I just passed $US300,000. If you’re curious, here are the exact numbers:

  • September 2016: $US149,844
  • September 2017: $US202,942
  • September 2018: $US271,569
  • September 2019: $US312,918

Looking back on the progression, I still have a tough time believing the pace. Growing my net worth by anywhere from $US50,000 to $US70,000 a year for three years straight might make you assume I’m sort sort of a workaholic or mega-earning businessman.

Here’s the truth:

I work 40 hours a week, enjoy my weekends, and take plenty of vacations. And I’ve never even earned a six-figure salary. Which is why, $US300,000 later, I’ve got one huge piece of advice about money that you need to hear:

Your money can work harder than you can. A lot harder.

How a few digits on a computer screen worked harder than a professional financial analyst

As a financial analyst, my take home pay is about $US5,000 a month. Add back my retirement contributions, and my job as a financial analyst builds my wealth by somewhere around $US6,000 a month.

Not bad, and I definitely feel fortunate to have a decent-paying job. That said, my job is a bit of a slacker compared to my investments …

Between January and February 2019 alone, my net worth grew by $US13,584. Of that $US13,500 of growth, $US2,000 could be attributed to my paycheck. The remaining $US11,500? That’s my money working for me. And working hard!

Looking back on the rest of the net worth log that I keep on my blog (how’s that for a rhyme!?) my portfolio’s returns outgrew my salary in six of the past 12 months:

Money wizard net worth chart

I realise this is a bit of a weird comparison. Investment gains can be volatile, and what goes up can and often does come down. And yet, on average, my investments have grown at a rate around 10% per year for the past several years.

Exactly how hard does my $US312,000 portfolio work?

Well, let’s think of it this way. Through diligent saving and living frugally, I’ve built my net worth towards a total value of roughly $US315,000. Assuming nothing else, even just 6% returns on that $US315,000 equals $US15,750 per year.

What does this mean? It means that even if I personally start slacking in bringing home the cheese, my portfolio is still working away to bring in a $US15,750 salary.

On one hand, that amount sounds impressive. On the other hand, $US15,750 a year sounds like less than minimum wage. So let’s put it into perspective.

Last year, I saved $US36,253 from my salary as a financial analyst. If my portfolio also earns an additional $US15,750, that’s an amount of money that would otherwise take me at least five months to save.

Think about that!

I could slave away at a desk job, day in and day out for five months straight. Or, I could just have a $US315,000 portfolio, which by itself, automatically spits off five months’ worth of my usual savings. Every year. For doing nothing.

Hinting at a future of financial freedom

As cool as it sounds to claim an army of money employees who are essentially working half a year for you, for free, I think we can do better.

More specifically, what happens if I keep growing that portfolio? What happens if my portfolio isn’t $US315,000, but instead $US500,000, or even $US1.5 million? Imagine a $US1.5 million portfolio. Sounds nice, doesn’t it?

Yet I believe from using the frugal techniques I’ve honed over the past few years (the same ones that now have me saving over 50% of my salary) this is entirely achievable through consistent contributions and compound interest.

In this case, a $US1.5 million portfolio works so hard that assuming 5% returns, it’s earning $US75,000 every single year. At this point, all bets are off. At this point, you portfolio really is working harder than you are, and it makes no logical sense to continue working.

This is true financial freedom.

Tying this back to reality

My biggest pet peeve with most financial advice is just how unrelatable it seems. I mean, it’s really freakin’ hard to imagine a $US1.5 million portfolio, especially if you’re struggling to save your first $US100,000.

And one of the biggest struggles in saving that first pile? It usually feels like you’re not making any progress. Here’s what I suggest.

Calculate how much money you’re saving. Then, calculate how much money your current portfolio is earning, by itself. Or even a portfolio that’s completely attainable in the future, given some minor tweaks.

Say you earn $US50,000 a year, and you’re saving 10% of your take home pay. (About $US4,000 per year.)

Now, let’s say you make a few minor tweaks to your lifestyle. Maybe you start bringing your lunch to work instead of spending $US8 a day on yet another burrito. Over the course of a year, that $US8 a day adds up to $US2,080. A 50% increase in your savings rate!

An $US8 tweak here and there, and it’s entirely possible to build up a $US50,000 portfolio in just a few years. At even just 5% a year, your newfound portfolio is earning $US2,500 per year, or a whopping 63% of how much you were saving when you started this journey. Your portfolio is now building up 7.5 months of your old savings each year, compared to when you started.

This is why your money can work so much harder than you can.

So, is saving $US8 a day actually worth it? Despite how we may feel in the moment, the answer is a resounding, abso-freakin’-lutely. Every dollar you save makes you exponentially richer. And over time, each dollar works harder and harder than the last.

I get it. It’s hard to imagine yourself building up an investment portfolio from $US0 to $US1 million dollars. But that outlook is a mindset trap, because it’s not just you building up that portfolio. It’s you and every single dollar you’ve ever saved. Together, you’re all working towards making this dream of financial freedom a reality.

Good luck!

Sean, who goes by “The Money Wizard,” is a 28-year-old blogger and financial analyst. He grew his net worth by more than $US100,000 in two years and is on track for an early retirement.