
What do the wealthiest know that others don't? - wtbob
http://www.slate.com/blogs/quora/2016/07/15/what_do_the_wealthiest_people_know_that_others_don_t.html
======
jamesroseman
I think this article is short-sighted and poorly written. Its most grievous
offense to me is lumping all non-rich people together.

The 22-year old out of college who needs a place to sleep doesn't need to save
up for a mattress that will last them 10 years... they need a place to sleep.
Especially when (unlike the article) you stop to consider other factors
besides money. With "disposable" furniture/goods, you almost never need to
take it with you when you move, as a 22-year old does frequently. This is an
extreme example, but if the difference between a couch you'd want to keep and
a couch you'd leave is $200 and the cost of the move is $200... it's actually
a wash.

The middle aged parent taking care of multiple children with a poorly paid job
isn't saving up for a nice couch. They're watching their family couch slowly
disintegrate and they're getting years beyond what the author of this article
might consider "useful".

I love the tech community for all it has given me, but the political and
socioeconomic views of so many of its inhabitants ([redacted] in particular)
who were born on third and told they hit a triple give me the creeps. Poor
people aren't poor because they're stupid. They're poor because they don't
have a lot of money, and the root causes of that can be as varied as anyone's
individual life. Articles like this suggest that 500 words and a subscription
to Slate can stand in the way of each and every one of those root causes.

The only valuable thing from this article is to avoid debt, beyond that
there's not much of substance here..

~~~
bluetomcat
Undoubtedly there are a lot of people in unfavourable circumstances who simply
cannot afford to save and blaming them on stupidity is pure arrogance.

The real "stupidity" which causes so many people to remain poor is depicted
with that BMW guy in the article. It is about trying to maintain a lifestyle
that is beyond your means.

~~~
jamesroseman
Exactly. This article should have been retitled "What do those who keep their
wealth know that those who lose their wealth don't?"

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mungoid
Seriously? Life insurance is a great way to pass down wealth?? Depending on
your situation, your life insurance will barely pay for the funeral. What, do
you think everyone can afford million dollar policies for 'a few measly
dollars a month'? Sorry to dissapoint, but teaching people to wait for their
family to die is a horrible way to 'pass on wealth'.

~~~
edc117
Yeah, the rest was fairly coherent, but that one threw me as well. Life
insurance tends to fall into the same category as most optional 'insurances'
for me - you end up paying out considerably more then you get back.

That said, for those with children, I can understand the purchase. Overall
it's very circumstantial.

~~~
Agustus
That is what insurance is for, the unforeseen instances in your life. You may
pay out what appears to be a significant sum, but what if something happens to
you? Life insurance should be something people think about.

1\. Student loans: There was a story floating around of how a family co-signed
on loans for a child and then were on the hook for said child when they passed
away.

2\. Family: If you have a kid, get life insurance. You should have the ability
to leave the living with a sum of money to ease the burden of your absence.
This means the loss of income and life adjusting to a one-parent family, not
meaning that there is a pile of money to blow.

Do not say it is not affordable, grab a term policy that gets you to 65 and
then be comfortable knowing that you have one less thing to think about.

For those who claim it is too expensive, a million dollar , 30 year term-
policy for non-smokers is as follows:

\---------------------------------

| Age | Sex | Monthly Cost |

\---------------------------------

| 25 | Male | $55 |

| 35 | Male | $66 |

| 45 | Male | $160 |

\---------------------------------

| 25 | Female | $45 |

| 35 | Female | $55 |

| 45 | Female | $120 |

\---------------------------------

I am using this as a public service announcement, get life insurance.

~~~
mungoid
I totally agree and I have a life insurance policy through my work, plus an
additional one I pay for. Not 1m dollar policy, but decent and cheap (i'm a
smoker). However, my qualm with the article is that it talks about this as
passing down wealth.

I dont consider life insurance 'wealth'. Its a safety net that nobody should
look forward to, but unfortunately a lot of people do. My wife has a wealthy
grandmother and every one of her children are all drooling at the moment she
passes away. I can't stand all the end of life bickering that goes on and the
way I read this article sounds like it would perpetuate that more.

From seeing how rabid her family gets about money, I would rather be poor than
deal with all the greed involved with such large policies. I believe that a
policy large enough to pay off the deceased's debt and leave some extra money
to help support the family is fine, but way overshooting for too large of a
policy is asking for trouble. Backstabbing, lawsuits, etc.

Sorry for the rant. I just regularly hear my wife talk about all the
selfishness her aunts and uncles display constantly and I cant stand it.

------
deanCommie
What an atrocious answer. Does this guy think "the 90%" are just poor and
irresponsible?

All of these answers assume the 90% is ignorant, short-sighted, and bad with
both money and math.

Newsflash: The 90% includes the entire middle class, and not everyone who is
poor is such because they are bad with money.

~~~
gwbas1c
Actually, this guy gives a very well-written common-sense guide to getting
rich. There are a lot of people in the middle class who live paycheck to
paycheck because they manage their income poorly.

~~~
jamesroseman
I'd love some citations there..

~~~
eli
[http://www.npr.org/2016/04/24/475432149/could-you-come-up-
wi...](http://www.npr.org/2016/04/24/475432149/could-you-come-up-with-400-if-
disaster-struck)

~~~
jamesroseman
This is a citation for the claim "people in the United States are poor".

What I want a citation for is:

> There are a lot of people in the middle class who live paycheck to paycheck
> because they manage their income poorly.

What I want is definitive proof that, as claimed, _most_ poor people in this
country are poor because they manage their money poorly.

------
gwbas1c
"Those people who got a 'great deal' on Ikea furniture or faux leather couches
will be buying another one sooner than the person who bought quality goods"

But what will you sit on while you save?

~~~
leftnode
Moreover, a really nice couch will probably run you north of $2000. We have
dogs, three kids six and under, things get messy. A cheap pleather couch from
Big Lots is $350 (and is plenty comfortable). I'd rather buy a handful of
those over the next 15 years and just throw them out when they're destroyed
than a nice $2000-$3000 couch.

(Note: I haven't read the article yet, I'm planning on doing so, and I
generally agree with buying nicer well made things, BIFL, but sometimes it's
easier/cheaper to buy something you know will be ruined and you won't care as
much).

~~~
bluetomcat
Financially responsible people are far more likely to keep and maintain their
stuff in good condition over long periods of time. That is a huge (and often
overlooked) aspect of saving.

------
ap22213
Move to where the money is.

Befriend those who are already wealthy. Emulate them.

Befriend people who are on the fast track and believe in loyalty. Be very
useful to them. Help them rise.

Invest at least 25% of your income.

Get out more. Talk to more people. Increase your opportunities to get lucky.

Eliminate toxic people in your life (you can help them later if you want).

And, don't burn bridges.

Edit: forgot one - dump bad investments (and places, people, etc.) quickly

~~~
jamesroseman
> Move to where the money is.

Oops I was born in a small poor suburb outside of Pittsburgh and barely make
enough each week to feed myself and pay rent, where am I getting money to
move?

> Befriend those who are already wealthy. Emulate them.

> Befriend people who are on the fast track and believe in loyalty. Be very
> useful to them. Help them rise.

This entirely depends on living in an area "wealthy" people would live. In my
hypothetical poor suburb the richest guy is the guy who owns the only bar
within a drive.

> Invest at least 25% of your income.

I make $1200 a month post-tax. In any given month:

\- $500 rent

\- $50 car insurance

\- $200 food

\- $80 enjoyment ($20/week)

\- $75 utilities

That leaves me with $295 for everything that's a non-essential in my life.
This is a flat tire. This is a doctor's appointment. This is medication. This
is Christmas gifts. This is a leaking roof. This is a broken stove. This is
money that I need to be liquid every month, you suggest I invest all of it? I
probably wind up spending this money just to get by, it's less than $75/wk for
expenses outside of a pretty barren lifestyle.

> Get out more. Talk to more people. Increase your opportunities to get lucky.

Again, this is entirely dependent on there being people of value in my
immediate vicinity.

> Eliminate toxic people in your life (you can help them later if you want).

> And, don't burn bridges.

Believe it or not, these are the _only_ valid points you've made to apply to
my hypothetical life... And this is for a single person who makes 15000

~~~
JoeAltmaier
Hypothetical lives often are for very conservative people who make up reasons
why nothing will help. Moving for a poor single person can be as simple as
hitchhiking or, for $90 more, taking a Greyhound somewhere.

And 'wealthy' is relative. There's always somebody better off. And you can
contact people all over the world these days, with something called the
Interweb.

~~~
jamesroseman
I'm really not trying to say people below the poverty line can't function or
move cities, what I'm saying is a lot of people can't do a lot for financial
reasons and it's unhelpful advice to suggest things like the parent. A lot of
people in this country are in financial situations they didn't put themselves
in that keep them there implicitly.

------
dmichulke
A life insurance?

I'd rather say don't trust anyone with your money other than yourself. The
insurance (like anyone investing your money) will take a nice chunk of
everything it earns and if something is left (a big if in times of zero or
negative interest rates) you might get it.

------
baking
"life insurance is hands-down the easiest and lowest-impact way to pass wealth
on to the next generation. . . . If you’re retired, your adult children should
be paying the bill for you."

Can anyone explain the math and/or logic behind this to me?

~~~
gwbas1c
Because, at that point, life insurance is basically your children's
inheritance. Everything beyond what goes to paying burial costs and remaining
debt is your adult children's inheritance. If you don't believe in
transferring large inheritances to adult children, then there is no point in
paying for life insurance beyond funeral costs.

What the author didn't explain is that life insurance is a way to avoid
inheritance tax. Depending on circumstances, it's cheaper to pay an absurd
amount of money for an insurance policy, because the payout to the
beneficiaries is taxed differently than a straight-forward inheritance, and
thus might, after taxes, result in a better payout.

~~~
baking
I understand the idea of avoiding inheritance tax, but that has become less of
an issue with a $5.45M estate tax exemption. Leaving that aside, my question
is why would my kids pay for my life insurance as an investment.

Assume they have paid of their debts, maxed out their 401k and Roth IRA
contributions and they have extra money to invest for retirement. If they put
it in the stock market they will pay income taxes and any dividends they
receive, which they don't have to pay any taxes on life insurance so I see
that. But it still seems to me that life insurance is a bet on when I die and
if they are not dependent on my income I don't see why they would want to take
that bet.

I am 57 and I can get a 20 year term-life insurance for $5k/year with a payout
of $250k. If I outlive the policy that is $100k in sunk costs and the next
term life policy will be even more expensive.

Whole life makes even less sense at my age. The only way this makes sense to
me is that if you had a whole life policy that you started wen your kids were
younger and now you are retired and can't afford the payments do you cash it
out? Well, if I cash it out then maybe I end up spending it or the nursing
home gets it, but if my kids take over the payments then they get the benefit
(unless the nursing home still takes it.)

This still assume I bought whole-life 20 years ago which everyone at the time
told me was a sucker's bet so I'm still not sure that this makes any sense.

------
drabiega
This should be: What can the wealthiest afford to do that keeps them wealthy?

------
ceejayoz
"Answer by Ron Rule, CEO of As Seen on TV"

Where's "how to scam low-income folks out of their money with cheap useless
crap" on the list?

This is someone whose business model is literally marketing shitty,
unnecessary products to low-income folks via infomercial advising purchase of
"quality goods".

------
mdisc
I wonder if Slate has an arrangement with Quora... and if I posted an answer
that they wanted to republish, could I insist on just rewriting it into a
different piece so it was more like I was published on Slate? Why wouldn't
they do that with all of these Quora "articles?"

------
pystack
Society has a limited amount of resources and manpower. Your capital is your
share of society's resources and manpower. The capital can either be used on
yourself or to build new products and services. Some people are better than
others at building products and services people want. The free market attempts
to redistribute capital to the people who are better at building products and
services people want.

Most people use their money for themselves. They use the money to pay for
food, clothing, and cars. If they get a pay raise, they use the additional
money to pay for better food, better clothing, and better cars. They don't see
the money as capital to build products and services people want.

------
pjc50
Generally, they know other wealthy people who can get them better
opportunities.

------
overcast
First rule my parents ever taught me is that quality only hurts once.

~~~
ceejayoz
Quality hurts every time your kids spill their chocolate milk on the $2k sofa.
:-p

~~~
overcast
Don't put your children on $2000 sofas. Also, don't have kids :)

~~~
ceejayoz
As a parent, I'm well aware "don't have kids" is a good way to get rich, at
least money-wise. Holy hell, summer camp is expensive!

~~~
overcast
I grew up going to a free summer camp, it was the sixty acres of woods behind
my house :)

~~~
matwood
I was about to say the same thing. My summer camp was everywhere between the
highway and the river.

~~~
ceejayoz
Try that today and CPS will show up.

------
MrTortoise
not to click on link bait?

