
How to become a millionaire web developer - guyroutledge
http://guyroutledge.co.uk/blog/how-to-become-a-millionaire-web-developer/
======
sz4kerto
This article is full of crap. More precisely, it's full of extremely naive
ideas.

> invested it in a fund with a 6% return - which is nothing special

There's no (close to) zero-risk investment at the moment that yields 6%.

> If you invest in a pension

That's nice, but it's usually only tax-free when you spend it as a pensioner,
not as a lump sum when you're 50 years old.

>property prices double every 10 years or so

Yeah, they do. Except when not. And you also spend money on maintaining the
property.

> This is a return of 100% on the initial investment. That sounds a bit better
> than 6%, right?

OMG, did he just compare a yearly return with a return 'over a few years'?

... and it goes on and on. If you want to have 1M, then first learn the _very
fundamentals_ of investing and finance.

By the way, I have an advice: if your dream is to open a restaurant, do it
now.

~~~
archagon
> _There 's no (close to) zero-risk investment at the moment that yields 6%._

Aside from FDIC-insured savings accounts, nothing has close to zero risk. On
the other hand, something like Vanguard's VTSAX is fairly safe and is
currently doing about 20% YTD:
[https://personal.vanguard.com/us/funds/snapshot?FundId=0585&...](https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT#tab=1)

If we have another financial crisis things are going to suck, but other than
that, since this fund tracks the entire stock market, it's pretty stable by
design. Mix in some bonds and you should be in good shape. (Note: I am merely
repeating advice I've run into on financial advice forums.)

With FDIC-insured savings accounts, the best you can do is around 1%, which
doesn't even beat inflation.

~~~
sz4kerto
The VTSAX index is nice, if you're not unlucky. If you invested into VTSAX in
mid-2007, then until today your annual return would be somewhere around 3.5%.
Not horrible, but not 6% either. It does not matter that this year it's around
20%.

What I'm saying is that you cannot simply take 6% return as granted -- it's
similar to saying that property prices double every 10 years. Yes, usually
they do raise, but not all the time.

>If we have another financial crisis things are going to suck

We tend to have financial crises in every decade. .com-bust, property crisis,
Russian crisis, Black Friday, Japan stockmarket crash... they happen all the
time.

US Treasuries are practically zero risk, but obviously there are a lot of
other risks - if you store your wealth in USD, then you have FX risk for
example as most of your gadgets are produced in other countries like China,
etc.

------
buro9
Personally, I hope he fails. Which sounds selfish but is driven by an anti-
selfishness. The housing crisis in the UK is made worse by buy-to-rent schemes
taking advantage of the incredibly low interest rates and government supported
incentives to reduce the cost of housing.

Buy-to-let housing, as an investment vehicle, is fairly sickening in the UK.
It traps the less wealthy into an almost indentured existence, with them
spending the majority of their earnings to pay your mortgage and give you your
profit. Their lack of future buys yours.

I'm all for people earning wealth, but do it by enriching their lives in some
way. As a software dev able to create things that could help provide value for
others, isn't that a better way?

~~~
cliveowen
Came here for the same exact thing, I was wondering if it's actually legal to
take a mortgage on a house and then rent it out to third parties.

~~~
arethuza
"I was wondering if it's actually legal to take a mortgage on a house and then
rent it out to third parties"

Of course it is legal - why shouldn't it be?

Mind you - you have to tell whoever gives you the mortgage that it's a "Buy to
Let" mortgage - but a lot of mortgage providers offer them e.g.

[http://www.halifax.co.uk/mortgages/buy-to-
let/](http://www.halifax.co.uk/mortgages/buy-to-let/)

~~~
hackerboos
A lot of people are buying houses on regular mortgages moving out of the
property and then renting the property out.

You are _supposed_ to inform your bank when you do this - but many do not
because banks will increase interest as you are effectively converting to a
buy-to-let.

I don't know anyone that has informed their bank and non-enforcement of this
rule is allowing people with 5-10% deposits obtain buy-to-let mortgages when
normally they would require 25%.

Oh and it's not legal. It's a breach of contract if you do not inform your
bank.

~~~
arethuza
I don't think it's usual to describe breaking a contract as "illegal" \-
that's generally used for something that breaks laws.

~~~
hackerboos
I suppose in certain cases it might be classed as fraud.

------
jacquesm
So you'll slowly save a million pounds to lose it on a restaurant?

6% returns are not so easy to get by if you want to keep your money liquid.
Performance in the past etc, funds can go down just as easy as they can go up.

You forgot to include the payments for those mortgages, upkeep of the
buildings, the potential of a housing market crash (not that that would ever
happen).

Also, you forgot to correct for inflation. A million pounds in 20 years is not
the same as a million pounds today.

If you want to open a restaurant, go work for one today, live, eat, breathe
and sleep restaurants for the next 5 years, save every penny you've got and
offer to buy out your employer.

All in all, I appreciate your attitude and the effort that went into writing
it all up but there are some bad holes in your reasoning and I think that it
would be quite risky to follow your advice the way it stands right now,
especially in combination.

Best of luck with your plans though, I hope that you will open a restaurant
one day.

~~~
goatforce5
Just a few days ago someone on Reddit opined about the failure rates of food
establishments quite eloquently:

"If your goal is to build your ideal cafe, set that. Be aware these are
usually called "hobby cafes" and are mostly just a way for the moderately
wealthy and idle to fill their time and reinvigorate their need for real
employment by pissing money up the wall."

[http://www.reddit.com/r/Coffee/comments/26el3b/what_do_you_l...](http://www.reddit.com/r/Coffee/comments/26el3b/what_do_you_loveloathe_about_your_local_coffee/)

------
aculver
Guy, this plan is like giving public transit directions to Superman. I love
that you're lifestyle hacking and I love the dream you're going for, but if
you're a web developer, you have a present day super power that is not only in
really high demand itself, but you can put it to work for yourself to create
derivative works for which there is a substantial demand.

My recommendation is this: If you're currently salaried, find out how to
become an independent consultant to free yourself from full-time employment.
If you do this wrong, it's worse than full-time employment. If you do it
right, you'll make the same amount of money working half as many hours.

From there, identify pain points that still exist across multiple clients or
leverage some insight you have into an industry you've worked in to create a
business-to-business software-as-a-service product that generates recurring
revenue.

It may take a couple years to figure it all out, but I have no doubt you can
eventually launch a product that is bringing in the £4166.67 a month you want
to save £1,000,000 over 20 years while also doing 20 hours a week in
consulting if you still need that to cover your ongoing expenses. (I know a
serious lifehacker who has that number down to 5 hours a week with a spouse
and two kids, and he doesn't have a SaaS product yet. They're currently
driving around the U.S. in an R.V. on a hunt for their perfect town to live
in.) That would be on the low end of success in this space. It's also quite
likely, you'll make much more in monthly recurring revenue and you can get out
of consulting entirely if that's what you want to do.

There are a handful of people who have done this one way or another who are
super open and transparent about it, which may be really helpful for you and
other people who are interested in doing the same. A couple that come to mind
are Patrick McKenzie and recently Josh Pigford. However, if you connect
personally with other people who are doing this in chat rooms and such, you'll
find that many people are quite open and willing to share numbers, tactics,
advice, etc. if they feel it will help someone drum up confidence and help
guide them along the way.

I think the first step is transitioning from full-time employment to
consulting, because then you can scale your time commitment to people paying
you up and down as you need to in order to build your business. And you never
have to kick the coffee and wine habit you enjoy... just do another hour of
work every two weeks.

~~~
chourobin
Just curious, are you a consultant yourself? If so, could you elaborate what
"doing it right" means?

~~~
karmajunkie
Won't speak for GP, but to me it means:

\- charging what you're worth to your client, not what you think you'd pay;
(made this mistake for years)

\- doing enough networking to keep business coming in. When you've got too
much business coming in, see my first point.

\- doing enough self promotion to keep business coming in

\- learn something new frequently. New language, new toolkit, new mode of
hacking (hardware vs software, for example)... Something that keeps you
interested and engaged, and keeps you valuable. This is one of the harder
ones, and probably the most important to future-proof yourself as you get
older and have a family or other obligations. And it's damn hard for me to do
if I don't follow #1.

There's a few other threads on HN about this subject that are worth reading,
lots of good advice there. I don't always follow my own advice (and the above
certainly isn't comprehensive) but I can say I've got a pretty good idea that
I know what it takes.

------
hluska
While I appreciate the writer's dedication, this article contains
exceptionally bad advice. Unfortunately, the writer is choosing to use the
absolute best case scenario in each of his points. This is dangerous.

Consider his spreadsheet showing his rental income. First, the spreadsheet
assumes that 100% of his units will be occupied 100% of the time. Second, he
says that most property owners will be looking for a 10% ROI from rental
income alone. In practice, a 10% cap rate would be considered exceptional.
Some very, very large real estate companies get close to 10% because they can
take advantage of economies of scale. But, that is a horrible estimate for
planning purposes.

In the real world, investing in rental properties requires either hiring a
company to manage a property for you, or doing significant amounts of work
yourself. When a tenant decides to throw a big party when they leave, you're
on the hook for all the damage they do. And, you won't have access to a steady
stream of income for all 12 months of every year - vacancies are extremely
common.

If rental properties were as safe as he assumes and truly offered 10% cap
rates, there would be too much demand, prices would skyrocket and returns
would plummet. The invisible hand is an asshole.

Then, there's his talk about free money from the government. The program he
references is for retirement.

If the numbers worked, this plan would be amazing. Alas, they simply don't.

------
BornInTheUSSR
I really admire that you are capable of thinking that long term but 20 years
is a ridiculously long amount of time. You're on hacker news - what lean
approaches can you take to test out ideas for making your dream come true now?
Can you open a pop up for a weekend with a landing page to market it? Buy a
food truck after saving for 6 months? Take the money you're saving and invest
it in yourself, maybe you won't be guaranteed the mil, but at least you will
move toward your goals now.

------
archagon
I've heard of some people successfully getting into passively buying and
renting property. How easy is this to do in reality? By my calculations, it's
pretty difficult to break even on mortgage when you're starting out, and
that's if you decide to play landlord — which may very well end up being a
full-time job! And if you want to live somewhere else, you have to hire
somebody to do the landlordy stuff for you, which is even more money down the
drain. How do people do it?

------
tomwalker
There is no mention of tax on any of the interest gained when calculating the
compound gains.

I think he would be extremely lucky to average 6% if he kept it all in savings
accounts:
[http://swanlowpark.co.uk/savingsinterestannual.jsp](http://swanlowpark.co.uk/savingsinterestannual.jsp)

Regarding stocks + shares: "For most of the past century, anyone investing for
a 30-year period has been rewarded with a return in excess of inflation of
between 4pc and 8pc a year if they were sensible about re-investing the
dividend income from their holdings."
[http://www.telegraph.co.uk/finance/comment/tom-
stevenson/846...](http://www.telegraph.co.uk/finance/comment/tom-
stevenson/8469660/What-history-tells-us-about-returns-over-the-
next-30-years.html) (just from a quick search)

You then take into account management fees, tax, relative currency value etc.

------
apierre
I stopped reading after counting how much you would save if you'd cut your
daily coffee. In 2034, £1 million will be worth way less than today anyway.

~~~
marcus_holmes
I stopped reading when the ridiculous statement that property will always rise
in value and doubles in value every 10 years came up.

Simple (and I mean really simple) mathematics would make it obvious to anyone
(who didn't really badly want to believe otherwise) that nothing can continue
to rise in price over inflation indefinitely. There will always be a
correction at some point.

Especially, nothing can double in price every 10 years consistently and
indefinitely.

Sooner or later, the bottom falls out of the market for one reason or another
and people get burnt.

~~~
apostate
While I agree with your sentiment about property values, your statement
"nothing can continue to rise in price over inflation indefinitely" is not
true, unless I'm misunderstanding something.

It is possible for an asset class to have greater returns than inflation (in
fact, most do), but with increased risk. While this increased risk does mean
'corrections' will happen, returns for most asset classes (especially equity)
are significantly higher than inflation in the long run. A world in which no
asset class could outpace inflation would require zero economic growth.

~~~
marcus_holmes
I guess if the asset class is divisible it can rise in value indefinitely. But
simple logic says that if anything rises in real value every year, eventually
no-one can afford to buy it. Of course, this assumes that the average earnings
don't rise alongside it, but that's the definition of inflation.

The London property market has been around for about 2000 years, more or less
in its current form. If property prices really doubled every ten years
indefinitely, and assuming it cost 1 penny to buy a London townhouse in 0ad,
then ridiculousness ensues.

The last thirty years have been atypical of property prices. My theory,
bolstered by little other than observation and deduction, is that we're seeing
the effect of women entering the workplace. House prices are constrained by
affordability (or the availability of money, which is why interest-free loans
from Japan enabled Northern Rock to give 100% 100-year mortgages to people who
couldn't normally afford houses) and over the last thirty years we've gone
from most families having a single income to most families having a double
income, so house prices rose consistently over the period and will settle at
this new high. It used to be that your house was worth roughly 3x your annual
salary, logically it should settle at 3x your combined annual salary. It'll be
interesting to see if it does that.

~~~
apostate
Interesting insights into a market that I have little experience with. Thanks!

------
sean-duffy
After reading this I was interested to read on his about page that in the past
he was in the business of exporting "Audis, Aston Martins, Porsche and
Japanese performance cars" to the Far East. Unless there's something I'm
missing, surely something like that would require an amount of capital
comparable with what you'd need to open a restaurant?

------
hengheng
Easy if you choose not to have a family, or a social life spiced up with
things that cost money to enjoy. The reason why most people decide to get rich
is they enjoy spending money. If you live like a monk, you might as well say
goodbye to the concept of prosperity, as there won't be any difference, and in
20 years your plans may well have changed.

------
bluedevil2k
Most people who open restaurants don't have all the required capital in cash,
they get a loan from a bank. Then you can pay the loan back slowly over X
years from the profit of the restaurant (or, more likely, since something like
90% of restaurants fail in 5 years, the profits from his next job).

------
gremlinsinc
My path: Become CTO for a startup, join an accelerator, accelerated companies
have a 70% chance of success, if company can get to 10 mill and you only have
10% of shares, guess what, you're a millionaire! -- if it fails, rinse and
repeat w/ other startups and accelerators.

------
sebastianconcpt
>property prices double every 10 years or so

Prices yes, value? no. Try measuring a property value in quantity of gold or
oil barrels (or a highly traditional commodity mix) and see an almost flat
valuation for most properties.

It's inflation magic baby!

AKA, Governments playing tricks with your currency.

~~~
turnip1979
Interesting point. When I used to make 50K a year, nice houses used to cost
300K. Today, I make x2.5 that amount and houses cost x2.5 that. Definitely not
going to be able to afford a nice house in my area :'(

------
jeffehobbs
Best of luck. Saving money is always a good idea. Just make sure to have some
fun along the way.

------
jmstout
How to become a millionaire web developer?

See web development as more than a means to an end.

------
paulblei
perfect example of what's wrong with our society. The best part was for me the
"property prices double every 10 years" part. Some people never seem to learn

