You can Stop Investing Right Now (Maybe)

zero day finance stop saving number
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Did you know that you might be losing out on $100,000 for every single year that you delay investing? So it’s time to start now, right? Right. The earlier you start investing, the easier it will be to retire. But at what point have you invested enough? When can you be confident that your investment portfolio will provide for your retirement? This is called your “stop investing” number — when your portfolio is big enough to achieve your goals without contributing another cent. And you’ll reach it much earlier than you think.

Let’s Talk About Exponential Growth

Before we get into your “stop investing” number, we need to understand a bit about exponential growth, and how it affects our investment portfolios. For a more in-depth explanation, check out this post. But as a TLDR, exponential growth is the math that powers your investment gains. Over time, your investment portfolio increases. How much does it increase by? The answer to that question is determined by the following equation:

Future Value = Current Value * (1 + rate) ^ time

For example, if you currently have $100,000 invested and you expect your portfolio to grow at a rate of 7% for the next 10 years, your future portfolio will equal $100,000 * (1.07) ^ 10 = $196,715. Not bad for leaving your money alone for 10 years! We will use exponential growth to show that you might be able to stop investing right now, and still retire comfortably with a sizable nest egg.

Let’s go over a quick scenario. Say you are 30 years old, and your goal is to retire at 65 years old with a $1,000,000 nest egg. We can re-arrange our previous formula, and solve for Current Value. This will tell us how much money you need save at age 30 to hit your goal of $1,000,000 by age 65.

Current Value = Future Value / ((1 + rate) ^ time)

What this means is we can efficiently calculate a target net worth that lets you stop investing, but still hit your portfolio goals.

What is your “Stop Investing” Number?

Using the above equation, we can calculate your “stop investing” number. This number represents a portfolio that, if left alone in the stock market, will increase in value to achieve your goal without any intervention.

If you hit your “stop investing” number on time, you can just stop investing. Your portfolio will realistically hit your goal in time. Let’s use the previous example. If your goal is to retire at 65 years old with $1,000,000 in your portfolio, the following table shows you your “stop investing” numbers by age.

zero day finance stop investing numberThe way to interpret this chart is “if I’m the age in column 1 and have column 2 invested in the stock market, I can stop investing.” Looking at these numbers, they aren’t crazy. Who knew that if you saved $71,500 by the time you were 26, you can stop investing and enjoy a $1,000,000 nest egg by the time you retire at 65.

You can use the following form to calculate your own “stop investing” number. Just fill in your Future Value goal in dollars, your Time in years, and expected Rate (for example, 7% = 1.07). The form will then tell you exactly how much money you need invested right now to hit your goal.


Financially Secure at Age 21?

Looking at the above Excel sheet, we can see something crazy: if you have $50,000 invested by the time you’re 21 years old, stop it. You’re done, you don’t need to invest anymore. At least if you want to have $1,000,000 when you’re 65.

Hitting $50,000 NW by the time you are 21 isn’t impossible. Let’s say that you decide not to go to college at age 18, and work really hard. You’ll only need to save $16,700 per year during those 3 years.

That sounds like a lot but, just live with your parents! After doing this for 3 years, you’re set and can do whatever you want. Maybe go to college, travel on the cheap. Whatever you do, invest that $50,000 and enjoy the ride. You could always try and hit $70,000 by age 22 or 23, and you’ll be really far ahead.

It’s fun playing around with these numbers, so I created a simple spreadsheet that lets you manipulate your portfolio goals, estimated growth rate, and your goal retirement age. If you’re going to use this to create “stop investing” targets, I would check back every year to make sure that you’re still on track.

If you are lagging behind, you can always start investing again to get back on track. Plus, you can always add in a cushion, say 10% to your portfolio goal (cell E2) to improve the likelihood that you’ll achieve you goal.

After you Stop Investing, What’s Next?

This information is really interesting. In fact, it’s empowering. So many of us work very hard, saving as much as possible to hit our retirement goals. Well, you might be done already. You might be able to stop investing, enjoy your money now, and enjoy your money in retirement.

It also might stress you out. For example, my goal is to have $1,000,000 by the time I’m 35. I’m almost certain that I won’t achieve this goal, but I’m trying anyway. Right now, I’m $400,000 behind my “stop investing” number. This knowledge is enough to make me push harder to achieve my goals. Maybe I’ll get there, maybe I won’t. But now I know how I’m doing.

Are you close to your “stop investing” number? If you are, will you stop investing and enjoy more today? Why or why not?

Good Hunting,

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15 Responses

  1. I see on Reddit sometimes a lost 22 year old who doesn’t know what to do with his money and I so wish those subs allowed links. It seems counter intuitive to shut out the information but that’s Reddit…

    • David says:

      Yeah I’ve seen plenty of people that I could help, especially with the ZDC. It’s usually people who end up mindlessly spending. But I can’t post links. My zerodayfinance account was actually banned from r/pf -_-

      • I knowwww. It’s really dumb because…I don’t think we’re offering bad content or being pushy. Would the mods rather they don’t get the help or answer they need?

        • David says:

          The mods can’t have people advocating for their own sites because the subreddit is so popular. Before it was a default, maybe. I was banned because my username was “zerodayfinance,” just imagine what they’d do if you posted an actual link.

  2. Great info David!! Makes me want to push even more to get to my ‘stop investing’ number. I’m behind based on the spreadsheet(I’m in my late 30s and hoping to achieve a million by age 50) you have set up but that it won’t stop me from trying to catch up. And even if I can’t catch up I hope to come close. Thanks for this, gonna save this spreadsheet for my personal goals

    • David says:

      Thanks! I’m pretty far from mine, but the proximity keeps pushing me harder every day. You’ve still got plenty of time to hit $1 million in the next 15 or so years.

  3. We’re beyond the stop number these days, but have not stopped. Why? We spend to the level that makes us happy, no more or less. So what else would we do with the cash we didn’t save? I can’t see wasting it. We do donate. Also there are no guarantees of future market returns. As such we continue on.

    • David says:

      It’s a good way to hedge your bets. But consider the following. Let’s say that you have $100,000 as a 21-yer old. Roughly double the $50,000 you need to hit $1 million at age 65. You’re looking at hitting closer to $2 million just by leaving it alone. If you don’t have any plan for your current money then keep on doing what you’re doing. But you might find something else productive to do with it as well.

  4. davemwm says:

    Truth be told, until I’m actually “ready” to retire and see that amount in the bank, I’ll probably continue to contribute, or at least pretty close to that day. Sure my $100k could grow to $1M, but that also ignores inflation and makes quite a lot of assumptions.

    Still, I think the point is still valid. 🙂 I feel like a lot of folks in the FIRE community suffer from ‘OMY Syndrome’ (One More Year) and tend to work a bit longer than they all really NEED to. I’m sure I’ll be in that crowd…

    • David says:

      Hey Dave, my 7% calculation already takes 3% inflation into account. The annualized return of the S&P 500 Index since it was created is about 11.69%. Assuming that your fees are 0.69%, and inflation is 3%, my calculations actually provide a 1% buffer. We’ll never know what the market will do in the future, but we do have data for the past 40+ years so we can at least make an educated guess about long-term behavior.

      • Good to know. 🙂 I take it back then!!

        Buuut I’m still not risking it, haha. Besides I don’t have enough immediate income to last me from now till the time I hit my target amount in 35 years.

        But once we’re within a few years of our date (~15 years from now), we’ll likely build up a more significant cash buffer, retire, and watch our money grow for a few more years.

        • David says:

          No problem, there’s so much math that goes into it, and delineating everything can be very tough. For people who want to FIRE, it’s really tough to get ahead of the numbers. The way I interpret the situation is if you hit your “stop investing” number early, you can relax a bit and do something more fulfilling. Maybe work for a non-profit, travel a bit, volunteer.

  5. Andy Hill says:

    Very interesting concept and thanks for including the calculator! I’m shooting for $1.5M in retirement funds to live comfortably.

    Through the calculations, it looks like I can stop investing for retirement before my 40th birthday. With the extra money, we can double down in real estate investing or do a taxable brokerage account for passive income we can use before retirement age.

    • David says:

      Exactly! If you are ever able to “hit” your number, you can keep investing to increase your net worth goal, or accelerate your progress, or do that, double down on real estate to build even more passive income, great idea!

  6. zeejaythorne says:

    I love thinking about it from this angle. Especially since I want to eventually stop doing gig work and just do my business at a less than 100% capacity. Once I have enough in the IRA and brokerage that I could just let it ride, I can focus my funds and time elsewhere.

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