Alex’s Blog

Random musings on life, tech, and anything else

Buy me a hot chocolate! | About Me

Financial Advice To My 20 Year-Old Self

date: Fr 16. Jun 21:19:58 CEST 2023


date: Sat Jun 17 12:00:27 PM CEST 2023

Some have commented in the HackerNews thread about this post that my calculations are wrong. Salary is paid 2x a month and the calculator I used said as much. I missed that. So instead of having ~2M USD saved by the end of this excercise one would have > 5M USD!

Check out the discussion here.

Thank you to everyone who reached out to tell me my calcuations were wrong and for keeping me honest and being nice about it.

At the wise ol’ age of 36 I think I know now what I should have done at ~20. What’s crazy to me is that there is a pattern to success that seems to be repeated for a given definition of “success”. If you’ll allow me, let me go on a quick tangent:

A Religious Tangent

In the Church of Jesus Christ of Latter-Day Saints, sometimes referred to as the “Mormons”, young men in particular whose parents are active members of the church (this is commonly referred to as being “born in the church”), have a formula for “success” engrained in them from a very young age. It goes like this. At 8 years of age they’re baptised. At 12 years of age they’re given the priesthood. At 14 and 16 further advancements in the priesthood are available. Then at 18 (it used to be 19) young men of the faith are expected to serve 2 year missions to proseletyze the gospel to all the world, where they go is decided by the church. Then upon returning they’re expected to attend university (any of the Church ones BYU, BYU-Idaho, and BYU-Hawaii are fantastic institutions with strong academics and tuition that is reasonable as it is subsidized by the tithes of the Church but members are encouraged to attend the best universities that they can) and then date and hopefully get married and start a family. All of the previous milestones are required to achieve the next one. In the faith it is preferred for the male to hold the priesthood, have served a mission, to be deemed a suitable mate. (Again I am making very broad generalisations here). So you see the pattern-for-success only works if followed and each milestone met.

The idea is that if the above series of events is followed that the young man is setup to have an education, a good paying job, and a family to the end that he will be a productive member of society, a capable and dependable member of his local ward (congregation), and will raise children who will hopefully follow in the faith as well, and then the whole thing repeats.

It’s seen as good for society, the church, and the boy. Of course circumstances are different for everyone and many either don’t want the above or do and don’t get it for whatever reason, but the idea being, this is the “plan for success”.

Okay, so with that out of the way, but in a similar vein, I think I’ve stumbled upon an almost sure-fire way for a young software engineer to retire before 40 or at least be far, far ahead by then.

I’ll give you the answer now and then justify it with data afterwards:


It goes like this:

The key to making this work is sacrificing your 20s and the miracle of compound interest.

The Data

According to for Google an entry level software engineer “SWE II” known internally as an L3 engineer earns 193,000USD per year which includes a base salary of 152K, stock compensation of 34K, and a bonus of 7K.

For the rest of the levels I will just list the take home as that’s all that matters for the calculations. I assume one is vesting shares to cash quarterly to invest all their excess into the index funds.

The Salaries


According to Smart Asset’s Take-Home Pay Calculator For California I’ve calculated the take-home for each level and after some quick budgeting and taking into account healthcare and 401K contributions we have the following for disposable income after Uncle Sam take his cut:

L3, 9200 USD (4600 paid out twice a month) take-home, and after the following expenses:

The Costs

This leaves you with 5800/month to invest.

The spreadsheet contains the pattern where I adjust rent up a bit every two years and increase other things like the grocery budget as well.

Eventually the income outpaces the expenses by a lot and one is able to invest a lot, by the next promotion the amount being invested after expenses is nearly double what it was when first hired!

The Spreadsheet

See the spreadsheet here

The spreadsheet has tabs labeled by the age of the person doing this. 22-24 would be the first years, then 24-26 etc., etc., until 35.

According to this random forum post it takes 12-20 years to get to principal engineer level making 1.1M/year. I am taking the aggressive approach of ~13 years.


I am not a laywer. I am not an accountant. I am not a tax advisor. Take all of this with an entire container of Morton Salt. That being said. I am thinking a typical brokerage account that has no restrictions on the amount you can contribute might be the only way this can be done. Etrade, Fidelity, etc., any of the online brokers would do here. Just set it up to automatically withdraw funds from your bank account and buy the shares on a periodic basis, monthly, weekly, etc.

Also the spreadsheet is not exhaustive. There are many templates for this online. It, for example doesn’t take into account taxes on the growing stock portfolio, any risk or exogenous shocks like family emergencies or the like. It’s just the idealized or happy-path approach to show what is possible.

The Investment Vehicle

I’ve chosen Vanguard’s S&P 500 ETF: VOO which shows that it’s highly rated by MorningStar at 5 stars, an all-star fund, a very low expense ratio of 0.030%, and 10-year return of 12.63% (note for the spreadsheet I’ve rounded down to 12%).

Note: I’ve no affiliation with Vanguard or any trading firm.

The Conclusion

If you can play the game successfully at Google (I hear getting promoted is all about metrics, launching products, being a bit cut-throat, I dunno but assume you can) and get promoted roughly every 2 years, and then take about 3 to get to Principal Engineer at the 1.1M mark, and assuming no huge downturn or other life event that might cause you to stop investing at the rate in the spreadsheet you’d have almost ~1.9M USD saved~5.4M USD saved.

All the while you’re having fun, I mean there’s a budget for that. You’ve just lived frugally, postponed kids and a family, didn’t buy a house, probably had roomates for the last 13 years, but now with your almost 2M USD5.5M warchest you can retire or go work anywhere doing anything you like.

You could live off of the interest overseas or in Mexico for example.

Let’s try that scenario:

Say you could get some wealth management company to manage your nearly 5.5M and give you a return of 8%. 4% of which you spend, 4% of which you reinvest. What would that look like?

8% of 5.4M USD is $432,000, divide by 2 that’s $216,000 USD to spend and pay taxes on and then the rest is reinvested, added back to your nest egg.

That’s a very comfortable life after giving up the first 13-15 years of life working really hard.

OR -

You could work in Europe where the salaries are far lower but the work-life balance is much, much higher. You could buy a house, though probably not in California, but most anywhere else, and likely pay cash (Don’t. Instead take a loan out against your nearly 2M5.5M in assets). The sky’s the limit now all because you played the game, stuck to the plan, payed your dues (what other terrible cliches can I think of?).

The idea being you’re now rich. Rich enough to have the freedom to do whatever you want. The question is, is it worth it?


I didn’t do this myself because I had no idea what I wanted to do when I was in college. I didn’t apply myself. I wasted my college years having fun and learning little. I did not posess the fortitude to stick to such a plan. I surely would have bailed as soon as the nest egg hit a quarter of a million probably. I most surely would not have passed the Marshmellow Test but if you can find the fortitude to put off immediate gratification for something greater then financial freedom can be had, or so says my back-of-the-napkin math that this blogpost has been using this whole time.


Go Back Home

Copyright Alex Narayan - 2023