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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
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Sustainable Net Worth Percentage Gains

Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
Posted Aug 3 2014, 19:35

There is a thread on BP about getting to $100M with some interesting commentary.  A lot of the comments revolve around compounding rate and what is sustainable.  It seems that growing your net worth should have some sort of logical saturation point as your base of wealth grows.  For instance, it seems logical that making 20% is much easier when you only need to increase from $100k to $120k, but that should be harder to do from $1M to $1.2M and even harder still from $10M to $12M.  The reasoning would be that as your wealth grows:

1.  The places to park money diminish because there are fewer projects that demand that much capital and are willing to pay high rates for capital

2.  People are likely to have marginal propensity to want to grow their wealth past a certain point.  At some point they're content and slaving away for incremental dollars has little utility past some point

This board has some fantastic investors and is probably one of the biggest collections of active real estate investors in the world.  I was wondering what people's thoughts are on what a sustainable growth rate in net worth is.  Is 20% up to some number impressive and then it drops to some other number afterwards?  Is 20% too low for initial growth rates?  Where do you figure it stabilizes and what is the general net worth that this occurs?  Are there other barriers here?  Any thoughts?

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