Top 3 Years With Largest Net Worth Growth

The larger the opportunity, the bigger the potential gain. Recognizing when an opportunity presents itself is another thing in itself.

Oddly, in the moments of great opportunity, many will not recognize them. As humans, many of us are subject to making irrational decisions in the face of fear. Later to regret and ask ourselves, why we did or didn’t do what we did.

The purpose of this post is to hopefully raise a higher sense of awareness when it comes to the importance of seeking out opportunities in our lives.

My life is a result of one massive opportunity during the great recession. If I had not made the moves to capitalize on the opportunity, my life would be very different today.

It’s highly likely I may still be working long hours grinding away. Luckily, I was born at the right time where I was presented the window of opportunity to achieve FIRE at the age of 35.

Most of my life and even today, I enjoy studying the lives of people with untypical outcomes. In most cases, the results of their lives were a mixture of 9 traits that fed how lucky they would become in their lives.

Now i’m sure, everyone will have different views on what the most important traits may be. However, there is no denying that the more you focus on such traits, the more likely you will feel more lucky in your life. On a personal note, I feel more lucky as I continue to maintain my pursuit of opportunity.

Just to give you a random example, I got 5 pizzas yesterday worth about $50 for free! Just happens to be that I am always looking for a deal and came across one. I was no different in business and in my investing. Always looking for a deal and better opportunities. Not sometimes but ALWAYS. 😅

I guess it’s no surprise to you that I am an opportunist.

“The guy who opens the most sea shells, finds the most pearls” Lifebeyondfire

As much as I enjoy studying the lives of others, I study my own as well. Learning from your own mistakes is vital! Not making the same mistake twice saves you resources and time. Failure without the lessons is a disaster.

As important as studying failure is, I believe it’s equally important to study the favorable outcomes.

So, I decided to study the 3 largest net worth growth years since 2008 to extract and contemplate the lessons.

Top 3 Years With The Largest Net Worth Growth

2010: +102.4%

• Cash & Cash Equivalents: +1,044.6%
• Investment Accounts: +207.7%
• Real Estate: -6.2%

1. Business Investments from the prior year began to pay off resulting in a profitable year. Revenues were up over 80% YOY. Improving margins also bolstered profits for the year.

2. Aggressively stepped up savings effort in anticipation to acquire rental properties. Savings rate during this year was upwards of 80% in some months.

3. Primary home purchased back in 2008 continued to decline in value by -6.2%. Market timing for first purchase was horrible on the short term outlook. Since purchase of primary home in 2008, market value declined by -14.7%.

4. Investment account balances were up 207.7%. All holdings were in individual stocks.

2012: +96%

• Cash & Cash Equivalents: -21.8%
• Investment Accounts: -43.8%
• Real Estate: +144.5%

1. I continued my “1 property per year” campaign and used cash and investment gains to acquire rental properties. Stock investments continued to perform well which helped contribute to my down payments towards real estate.

2. Primary home appreciated 5.6% as markets stabilize.

3. Largest investment property appreciated 22.5%.

4. Acquired property for $30,000 cheaper than market value. Made $30,000 on the purchase adding a nice bump to the net worth.

2008: +91.1%

• Cash & Cash Equivalents: +97.7%
• Investment Accounts: -47.1%
• Real Estate: -3.8%

1. Business was doing very well due to a new partnership agreement established from prior year.

2. Savings rate during this year reached upwards of 90% for some months.

3. Sold investments prior to the market correction to prepare for down payment on first real estate purchase (primary home).

4. Primary home value declined in value by -3.8% by year end.

Conclusion

I guess it’s nothing surprising. Aggressive savings and investing allowed me to purchase real estate that led me to financial freedom. Thinking back at my investments, I’m glad I made the choices to take on aggressive risks. That aggressive investing paid off quite well. If the outcome wasn’t favorable, it would have been OK because I was young and had time to recover.

I’m a big advocate for those younger (35 years and below) to take on larger risks. Especially for those who wish to achieve some level of financial freedom before the traditional retirement age. Not by taking blind foolish risks but one with as much research behind them as you possibly can. Research, understand and have good reasoning for why you are taking on the risks. Don’t let your research and analysis leave you in paralysis. Execute behind analysis and keep your finger on the pulse of your investments. Do not stick your head in the ground like an ostrich when times get scary, because that is when the most important lessons are learnt.

Before any of my luck, I had to earn more. What helped me earn more was understanding how to better run a business. As tough as my business was, it was no different than any other businesses when it came down to the business fundamentals.

Researching stocks taught me a lot about business. It taught me about taxes, management skills, supply chain management, and most importantly about my industries business cycle. What seemed for years, unpredictable and unstable revenues later became much easier to plan for once I began to study the yearly numbers. The simple ability to have better projections alone changed everything in my business. It resulted to making better and more confident business investments that led to improving margins and profits.

There is no doubt I made some risky bets by investing in mostly individual stocks and purchasing run down properties. Which may have had higher risks of failure. Even my business was a risky one. The industry was rapidly moving overseas due to rising costs of manufacturing in Los Angeles. One of the greatest lessons I learned from Warren Buffet was not only about investing but also from his lessons shared from the closure of his textile business. Terrible macro economic factors to an industry requires businesses to adapt or die. Luckily, I was able to sell my business and exit the industry before things got worse.

So there you have it. Few lessons from one single guy’s life. I hope there were some interesting lessons to take from this post. Thanks for reading!