How Do You Become Worth More Than You Earned?

This month's net worth update!

Have you ever wondered how much money you’ve earned over the course of your life? Depending on your age, it can amount to an incredible pile of money. Even more incredibly, a while back I discovered that I became wealthier than my total lifetime income. How is this possible?

It’s devilishly simple, really: you put your entire first paycheck in a savings account and wait for your bank’s first (low) interest payment.

Of course, this strategy only works if you have never made a dime in your life. To seriously answer the question how you can become wealthier than what you’ve earned over the course of your life, we need to take a close look at two interrelated principles: your savings rate and the return on those savings.

My savings rate has consistently hovered around 70% ever since I first started working, as many long-time readers know. This puts me at a 30% gap between my lifetime income and wealth. To close that gap then, I’d have to achieve investment gains close to 50% on those savings (30 divided by 70, which equals 43%). This sounds like a difficult feat to perform.

And it is, were it not for compounding interest and a time frame that’s long enough. That’s why becoming wealthier than what you earned is a lot more difficult when you’re young, unless you’re able to save close to all of your income. Of course, you can also become an investing genius or try your luck on memestocks and crypto to achieve insane returns on your capital.

It’s difficult (read: a lot of work) to calculate the total return on all of my savings and capital, but my dividend stocks by itself beat the magic number of 43% handily: since my first stock purchase in August of 2014, I’ve managed to achieve a total return on investment of 66%. And that number is set to grow as I’ll be able to take full advantage of time in the market at just 32 years of age.

My wealth

Let’s dive into the numbers and see what my portfolio looks like at the moment. Judging by the overwhelming amount of comments on my last article, it’s what you all are looking forward to the most. For a dividend income investor the portfolio value doesn’t matter too much, but it’s nice to see the long-term effect of diligently saving and investing nonetheless.

AssetCost basisCurrent valueGain
Dividend portfolio111,623.96
(incl. DRIP)
(16.021,96 dividends)
Exchange-traded funds (ETF)2,471.362.459,36-0.49%
Pension fund7,825.009.945,00+27% and 30% tax break
Home equityN/A58.285,36N/A
Second property equityN/A76.496,03N/A
Savings accountN/A7.000N/A

As you can see, five years make a huge difference: 200 thousand euros more than the last update. So what happened?

For one, I’ve bought a new home (i.e. “home equity”) and am still in the process of selling my old place (i.e. “second property equity”). Second, because of my new home, I haven’t been able to keep up the high investment pace I had before. Monthly stock purchases tapered off a bit to save up for a downpayment. When my old appartment sells and clears, I’ll be able to invest those proceeds into the equity markets again. And third, because I had little time to research investment opportunities, I have bought back into my favourite exchange-traded fund, iShares Core MSCI World (IWDA).

If you’re interested in the detailed breakdown of my dividend stocks, I still have to update my detailed portfolio or find a way to automate the process, since it’s very time consuming and draining to write it all up. If you have a good idea, please let me know in the comments.

My income and savings

Having laid out the first part of the equation, my assets, let us now turn to the second part, my salaried income over the past years. Here too it’s difficult to tally up everything because I made some money here and there before starting my first proper job. Nevertheless, my best estimate ends up at 275.769,25 Euros (after taxes).

That’s no chump change! This kind of money could support a pretty lavish lifestyle in most European countries during the eight years it was earned, especially considering that most of my social security costs (healthcare and pension) are socialized as a part of my tax bill.

However, spending everything you earn leads nowhere financially, as we’ve already established. With a 70% savings rate on 275 thousand Euros, I’ve already put myself in the desirable position of owning close to 200 thousand Euros before having invested anything. This feels like getting a lot done for financial independence without really doing anything.

Will this be for everyone?

Definitely not. Here’s a couple of reasons:

  • It’s nearly impossible if you’re young and recently started working. Compounding interest won’t have been able to catch up with the gap between your income and savings.
  • Because your savings rate is vital, it’ll be more difficult if you’re a lower income worker. It’s not easy to save a high percentage of your income when the majority of it is spent on basic living needs.
  • Conversely, (extremely) high income earners outperform the compounding effect because their total accumulated salaried income grows faster than their investment returns.

So if you’re in the category of people who earn enough but not too much, you could also reach this completely arbitrary achievement. Your wealth doesn’t have to be higher than your lifetime income to become financially independent, but it could give you a nice motivational boost. If anything, it tells you that you’re on the right track, nothing more, nothing less.

Has your wealth grown beyond your total earnings? Is it something you’ve thought of before? Or are you perhaps actively trying to reach this milestone too?


  1. That’s an interesting point of view at one’s savings. Turns out I’m at 80% of my lifetime earnings right now – more than I expected, honestly, with a savings rate generally hovering at slightly above 50%. Quite a bit of growth manifesting already.

    1. Skolima,

      I thought it was interesting too, then discovered it hardly means anything, haha.
      Congrats on being at 80%. That means you have done well for yourself investing your 50% savings.


  2. So glad to see you back NMW! But …wait…you disappeared and re-appeared not with one but with two properties! Do tell more!

    1. Diego,

      Magic! Ha!

      I bought an apartment right after I stopped blogging, and now I’m moving into a house.
      The apartment will be sold soon, so until then I own two properties. 🙂 The proceeds will be re-invested into IWDA and dividend shares.

      I used very high leverage to acquire both since interest rates were fixed at slightly above 1%. This really made all of that possible, together with my dividend portfolio, which showed the bank I was money savvy.

      Thank you for dropping by!


  3. I left my first job and due to restucturing I was paid a nice amount which I invested for the full 100%. Rough calculations show this pay out amount to be worth just over 2 years of wages I received there. So if I remain invested long enough that pay-out will have made me more than my entire wage I ever made at that company! I worked there for 6 yeears so another decade might get me there.

    1. Wow! That’s one of the most amazing things I’ve ever heard. If you keep that money re-invested it’ll only grow larger and larger over time, making this layoff one of the best things to have happened to you (financially).

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