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Ask HN: How have you achieved financial independence?
187 points by tsaprailis on Aug 12, 2016 | hide | past | web | favorite | 176 comments
I know this is a niche question, but have you reached a point where you have enough passive income to not to have to work for a living? If so how did you accomplish it?

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant.

My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun."

Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't really qualify for your question, but I'm having fun so I'll answer anyway.

Step #1. Reduce my expenditures below what most people consider reasonable. I lived for more than 5 years on less than $10K a year. It was much easier than I thought. I discovered that spending more than this amount of money, I was no happier. Who knew? What really counted was having so much more income than outgo that money became completely irrelevant to me.

After I did that, I stopped worrying about working. There isn't a job in the 1st world that pays less money than I'm comfortable with. I started taking jobs that interested me instead of jobs that paid me money.

Then I got married. That threw a monkey wrench into the works! But I'm slowly working thought that ;-)

Honestly, people tie themselves to a grindstone to make as much money as possible because they think it will remove stress and give them a nice life. I don't think that works most of the time.

I would like to hear more about living on less than $10k a year. I'm still a student and my parents pay a lot, so I don't actually know how much I'd spend if I paid for everything myself currently. I just always assumed that $40k is about the minimum for a normal living. Doing the math though, counting food, rent and "service costs" (water, electricity, internet), I end up with a lower bound of about 6000 a year.

This means zero other expenditures: you need to already own all furniture and appliances you want, and you can't have a method of transportation other than a bike and feet. There will probably be random other expenses like light bulbs, repairing a flat bike tire, etc., but it seems to be possible. Did I get the math right, or am I forgetting something (like an uncovered expense, or that you can totally have a car as long as it's electric or so)?

It's actually surprising how little you can live on given small lifestyle changes. I haven't gone down to 10k/year but my expenses each year range from 14-17k. And that's on a salary about 7x that.

It's all about little things that add up. If you go to Starbucks 5 days a week, that could easily cost you 1k a year. I mostly buy clothes at thrift stores, you can find furniture/kitchen appliances/etc on Craigslist. Instead of going out, buy a six pack and have some friends over. Another big killer is driving. I live in quite a bike unfriendly city so my car expenses are more that I would like them to be, but insurance + regular maintenance + unscheduled maintenance + car payment + gas really adds up.

Other random expenses do come up, so I budget for them. I make sure I have about $2k/year to spend on things I can't account for. Some years you go over, and some years you barely need to tap into it.

This isn't to say I don't spend money on things though. If I want something I will buy it, I'm just conscious about how much I'm spending.

If you are interested in learning more about this kind of lifestyle, Mr. Money Mustache is a good place to start. http://www.mrmoneymustache.com/category/mmm-classics/

All that being said I realize I am in a very fortunate position. I don't have student loans, I have a well paying job, no disabilities, etc. Some people are in situations that make financial independence very difficult to achieve.

Not sure why this was flagged except maybe the link to MMM (which is generally garbage advice for 80% of the population).

Isn't the core idea behind MMM just spend less, save more? Not sure how that's garbage advice. The particulars of some of the things he advocates aren't possible for everyone, sure. But reducing debt and increasing your savings is a goal that probably everyone who hopes to live another 10+ years should strive for.

Like most finance blogs, the core idea behind MMM (spend less, save more, retire early) is fine. It's the specifics that are either completely ineffectual (don't use AC because you'll get used to the heat anyway), or unrealistic for most people (walk or bike to work; spend $1k on a 20 year old Corolla and be your own mechanic).

Edit: And (3) a lot of the advice is the same old thing rehashed in a different way (never lease a car! index funds!); (4) A large part of his income is from shilling credit cards and other financial services

Also if you are anything near minimum wage in most of the united states its useless advice. Saving that 9 dollars a month won't lift you out of poverty only growth will. Invest in yourself.

Sure, but given that the median income in the US is $51,939 (2013) I think it's safe to assume that most people (in the US) can gain a lot by following the simple tenant of spend less, save more. But even MMM has suggestions for people who make too little - I suspect most finance blogs do. MMM advocates getting into a profession where you can make at least the median income, because that's obviously the easiest way to increase your potential savings if you're low-income.

That's median household income. Median personal income is $32,000

MMM makes a lot more sense if you view it as an environmentalist masquerading as a early retirement blogger. Take a recent post that starts "If you’re going to become rich, you need to either earn way more money than you spend, or spend way less money than you earn." The rest of the post focuses entirely on spending less.

Arguments like point 4 are sort of silly to me. Most of what he preaches he was doing well before he had a blog that could be monetized. Also, he seems to be pretty up front about commissions on the "MMM recommends" (though he could be more explicit about referral v non-referral links).

Interesting, what makes you say that? I haven't read MMM in depth but have a feeling it might be down to certain circumstances (e.g. if you're renting in London, you're pretty much guaranteed you can't save 50% of your income)

You can easily get furniture and many appliances for free, at least around Germany. People will put old but functional things on the street for the truck, and if you're fast you can get some good stuff. Also, there are internet sources where people post what they want to get rid of. And how much do you really need anyway?

At this point, if I needed something specific, I'd just put up a poster, a neighbour probably has it in their basement and wonders how to get rid of it.

I'm on ~7000€ a year, and that includes health insurance, replacement of broken cheaper things (spare parts for the bike, clothes..) and also the occasional splurge like cinema or eating out. A car would not be possible, but if I need one I can either ask a friend or rent. A car is a liability in most European cities too. I could go down some in expense if I needed to, but then it would be less comfortable.

You can track your cash flow for a year and see for yourself where your money goes and what is essential.

Am I right in presuming you are living in Berlin?

Heidelberg. This works in many cities around, best if there are students and established people with stuff to get rid of. My friend in an immigrant quarter in Mannheim finds the best stuff on the street though.

You don't need any stuff if you detach yourself from any location. I spent <10k$/y for a quite a while. My approach was to travel, mainly by hitchhiking and staying with locals through couchsurfing. If you think "freeloading"... I've worked for NGOs on various continents, including couchsurfing (when it was still a non-profit) and in the meantime I built up Hitchwiki that is now the most visited resource about hitchhiking.

I think I spent around 500€ per month like this on average. But I have some friends with a more radical approach, which inspired me translate a Dutch website about living with money into English: moneyless.org.

As a side effect, I'm making some money with this specific site (but not with Hitchwiki or other community oriented projects). Together with a few more websites this is making me enough money from adsense and affiliate marketing to do whatever I want without caring too much about spending.

These days that is building up my fintech startup B2B Pay (Techstars Barclays TLV 2016) and spending time with my family.

The thing I don't like about all these spend-no-money approaches are exactly these things like not having an apartment. That's not how most people can live. Even if I spend 2 years travelling around I wouldn't feel well without having an actual home I can go back to. So these kinds of methods can only apply to small parts of the general population. Trying to achieve that state for normal joe me is just as hard as getting rich.

You should check out Mr Money Moustache's approach with frugality then. He was able to pay off his house and 'retire' in his 30s. He was also able to make it work with a kid.

Lots of great stuff on there! There's always something about investing you don't know.

Ehh, honestly I'd say investing is where he says the least. His philosophy on that matter seems to be "invest so you don't have to think about investing".

My first thought: you forgot medical insurance. But I guess if you are making under $10K a year you get it for free. I know I pay $11,500 for medical insurance with a $18K deductible, so could have as much as $30K a year in medical costs. Meaning you have to earn $50K just to cover medical (married 57 yrs old, self employed).

Medical insurance (pre-ACA, get it through my employer so I haven't researched it) was very inexpensive for pretty good policies as a mostly healthy twenty-something. In NC I had BCBS, a policy equivalent to my current one through work, with a $2k or so deductible that cost me around $1500/year.

OTOH, pre-ACA you could go without and not pay any penalties if you were feeling lucky (I wasn't, and glad I didn't because two surgeries in that time would've cost me around $50k I didn't have).

The very cheapest medical plan I can find (as a healthy young person) post-ACA is $200. ACA definitely made health insurance more expensive for some categories of people and is a real burden on freelancers.

Wow, that is a lot for insurance. My parents pay this for me so I don't know what it is, but from a random Dutch comparison site I see prices around 100eur/month (1200/year).

I assume "a $18k deductible" means "you pay the first $18k of costs yourself". It almost doesn't seem worth having insurance anymore at all at those rates. Is this normal for the country where you live or are there any particularities?

You pay a percentage of most costs until you hit the deductible. After that you're covered 100% until some much higher limit.

Or copays. I pay $20 to see my general practitioner, $30 for specialists, insurance covers whatever else is left to cover. If I have a surgery (happened two years ago) then I hit my deductible and my medical is mostly free the rest of the year (some things I still had to pay a portion of).

There are some exceptions, but the ACA lays out the maximum out of pocket for individuals and families. It's currently ~$6,500 for an individual and ~$13,000 for a family. The gov't has made it clear that even under a family plan, an individual shouldn't have an out of pocket greater than $6,500 in a given year (medical and pharmacy combined).

Does that include copays or just coinsurance?

Depending on where you live (and how healthy you are), medical care/insurance may be your biggest single expense.

The married part is the one I am more interested in.

I too live extremely cheaply, but my girlfriend has way more expense than me (still reasonable, but too high in my book).

We are not married, but we spend a lot of time together and I am a little afraid that this difference in how we spend money will be a problem.

How did you manage it?

My very first step was to have her create a save account where she deposit each month a little bit of money, after I explained her the why she need one she started to accumulate money pretty quickly and in a very disciplinate way, all those money however disappeared when she bought a new house (but I believe it is fair).

Living extremely cheaply isn't always that great.. you can be frugal, but at a certain point, people take it too far.

I.e., if you spend hours (or days!) comparing prices when purchasing lower value items, you value your time at exactly zero, and it might actually be easier to make (!) money vs spending less. Maybe your girlfriend actually prefers living a little?

I'm not saying to throw your money away on useless stuff (I don't), but at a certain point, it gets tiresome. I've known a guy who, when he was thirsty, refused to purchase a small bottle of water for like €1.5 because he considered it a ripoff, after which he promptly asked a friend if he could drink from his bottle. Honest to god, I hope you don't mean living cheaply in that way.

In the end, it's about finding a balance. Too much spending, and you won't have enough to invest. Too little, and life won't be much fun, 'cause frankly a lot of fun things cost money. I spend about the same (probably a bit more) as some of my friends in terms of monthly burn, yet I make 10x their salary. I consider that frugal, but I live well.

Also, there's no point living cheaply if you don't know what to do with the extra money. Know where you're headed, i.e. financial independence, buying a house, etc

I agree. My advice is focus on growth. Willpower is a finite resource, you can use it to save 2 bucks on a bottle of water or spend a few minutes learning a new skill. One saves money once, one pays dividends forever. If you have unlimited willpower go ahead and do both, I know I don't.

I like this one: negotiate hard on every big purchase you make in life, whether it's a new car / house / new couch worth $2k / bank fees / financing / etc. Make it a habit of negotiating on everything that is negotiable (which is doable on a lot more things than you thought). It's a valuable skill.

The gains you make from that will save you a ton of money during a lifetime. Don't ignore large potential savings by penny-pinching on the small stuff. Heck, if you do this, you can ignore the small stuff.

wow, you are totally right. That's quite mind-changing for me since i never bargain.

If you sum up all the bargains of a lifetime, it will be huge.

Friendly advice from a married guy: be careful about overdoing it with the financial discipline stuff.

Trying too hard to change someone's behavior is an easy recipe for resentment, especially in the turf war that naturally ensues when you start living together. Just as you see her as undisciplined, she could also be afraid that you'll be overly rigid and not allow her to enjoy life in the way she's used to. Once you've made your point about something like this, I think it's usually better to back off and leave making the change up to the person themselves, unless they specifically ask for your help. Being too pushy can also cause the other person to dig in, a counterproductive result.

Disclaimer first that I am not a relationship expert.

I was lucky/fortunate in that my wife and I both have a similar outlook when it comes to financial planning. We both want to achieve financial independence before the traditional retirement age and as such, we keep track of our expenses to ensure we're saving enough each month.

Before we got married, we sat down and talked about these things, a lot. Each relationship is different, but in my opinion, if you're in a serious relationship, openness and honesty are pretty important. Talking about future goals, plans, etc. can go a long way.

I would not use the word "frugal" to describe myself, but I spend less than I make by quite a bit and I try to get the best deal on things you can negotiate (which is most things). That being said, my wife had a very different opinion when we started dating. We both had student and vehicle loans, she had CC debt and personal loans, etc.

The important part is to be very up front and honest with each other. The finances will work or they won't, and if they won't then the relationship will not work. Full stop. You can't live a life with someone who has fundamentally opposed financial opinions. If you want to save 80% of your income and she doesn't care if you have $50k in CC debt, there is no way to make that work. Even separate accounts won't work because once you're married new debt is joint debt (usually) and new assets are joint assets (usually).

If you buy a house in a reasonable fashion the money is not gone though. Sure the prices go up and down and you may lose some of the money, but over a period of 30 years it may be less harmful than keeping the cash and letting inflation do its thing.

you need to have some sort of compromise. It's unreasonable to expect her to cxhange and you not to.

My wife wanted to buy a new car earlier this year but I didn't, so we compromised and bought a new car.

10K is indeed unreasonably low. Could you describe where in Japan you live, what kind of work you do now, and the transformation you possibly experienced when you decided to work for curiosity / interest rather than money?

I have had a reverse path - I spent my early career working for a research lab, where the the work was immensely intellectually satisfying and fun for the most part. However, the pay was so ridiculously low that my industry salary was a few integer multiples of my researcher pay.

It's hard to answer this without writing my life story :-) I live in Shizuoka prefecture, right on Suruga bay. We live in what I think is the most expensive apartment in town -- it costs $600 a month. It's a concession to my wife who put up with the $120 a month shack that I loved to death (but that she called a haunted house -- they tore it down after we moved out ;-) ).

I work as a software developer on contract to an English company. We spent 2 years in London, before moving back to Japan. Before that I worked as an English teacher in the high school in this city. Before that I was a software developers for 20 years or so.

I actually started in research labs too. I worked my way through school (or rather, I got free tuition because my father was a prof, and I paid for my other living expenses by working for various departments while I was in school). I didn't always have this idea of living cheaply... I had a house, a car, 2 dogs, the works...

I've had a few times in my career where I absolutely hated my job. One day I just quit. I had no prospects and no idea what to do. I was just done with the place I was working at. The next day, not knowing what to do, I started fixing some bugs on free software projects. I just kept doing that every single day, 12 hours a day, 7 days a week for 8 months. It was at that point that I realised that I liked programming ;-)

I've been very, very poor a couple of times in my life. Once in my early twenties I spent a few months in London. I had enough money for either meat or beer, so I became vegetarian (which lasted... until I got married ;-) ). I remember being happy every day despite being unbelievably poor. There were a couple of times that I ran out of money on a Thursday and was unable to eat until I got paid on a Monday. That taught me the importance of budgeting ;-)

Other times have been like I described above. I got paid a good salary as a programmer, but was often unhappy. I decided to quit my job (or the companies I worked for decided to run out of money) and I took a sabbatical to write free software.

One day I met a guy who suggested I go teach English in Japan. I only meant to go for a year in order to learn Japanese and improve my presentation skills. I stayed for 5 years.

At that point, I asked my wife, "What should we do? Do you want me to make a lot of money? I'm sure I could as a programmer. Or we could open a brewery. Or I could become a tour guide. Or I could..." And then it dawned on me. I could do anything because we had learned over the years to live on tiny amounts of money.

It's freedom more than anything else. These days we spend quite a bit more than we used to. My wife even has a car (bleh...). Getting the balance right is tricky ;-)

"I had enough money for either meat or beer, so I became vegetarian"


So... now that you're back in the black are you enjoying beef and beer again - just as god intended??

The problem is the early years are when it's most important to save as much as possible for retirement. You probably make enough now to correct for it, but running the numbers on retirement savings started at 22 v. 25 v. 30 is terrifying, especially if you have nothing saved in your late 20's.

Note: I think this comment was intended for this comment chain: https://news.ycombinator.com/item?id=12274389

(Maybe a mod could move it over - if that works, this reply can be deleted)

Not really - I read that comment and realised he lives in Japan, but the comment you are referring to was in response to its parent.

Ah, woops. Thanks for the clarification.

> Then I got married. That threw a monkey wrench into the works! But I'm slowly working thought that ;-)

When you have children, it gets even worse on that front. :(

The bright side is that it's still possible to achieve if both of you have the discipline: http://www.mrmoneymustache.com/

Thanks for your reply. I was thinking about the same, while I make more than I spend, and for the time being I can save money, this indeed requires working. The "problem" would start when you have depended family members and you cannot calculate, or rather plan for all expenses in advance, what have you done to plan for this?

Yes, this is a problem. I think the biggest thing I fear is poor health. I live in Japan which has a health care system, but it can still be quite expensive to be ill. Also, my wife and I won't have children probably, so while that saves money up front, I have nobody to look after me when I get old.

Insurance is my main hedge against these risks. I try to follow a healthy lifestyle as well. I used to keep fish and it's amazing how much longer fish live when they aren't stressed. I try to replicate that. Finally I try to buy long term, low risk investments (like government bonds) with my excess cash. However, I keep a few years worth of money available in liquid assets for things like disability.

Probably the biggest risk is getting a mental illness that isn't covered by long term disability insurance. I have no idea how to deal with that one :-( All of my skills to live simply may be useless if I lose the mental ability to use them.

For anybody interested, http://www.mrmoneymustache.com is very much aligned with OP's testimony and also contains a lot of practical advice.

Just turned 30. Invested most of my savings (20k€) into Bitcoin several years ago, and then converted everything to Ethereum in the pre-sale. Those 20k€ are worth roughly 1M€ pre-tax at the current rates.

Started a fintech startup three years ago and we are close to a liquidation event that would net ~1.5M€ pre-tax.

Right now, though, I have less than 10k€ in my bank account. Would be also really curious to hear how to convert that money into sustainable passive income.

Spending 3k€ per month for the next 30 years would be about 1M€. Seems like having <5M€ is far from the "go bananas" type of wealth, but it can definitely be enough to achieve FI.

Achieving ~4% annualized ROI after tax and inflation seems plausible in the long term: https://www.reddit.com/r/financialindependence/wiki/faq

Is there a specific reason you're keeping so much of your wealth tied up in Ethereum? (Not that clued up on it, perhaps there isn't a big enough market there to sell it yet?) It seems to me like having all of your eggs in one basket. Wouldn't it be better to convert a decent portion of it to cash and invest that in a nice mixture of stock and bonds?

Ethereum seems to have great potential to multiply its value in the next 12-24 months. I think the probability of ETH going from 1B$ -> 2-5B$ market cap is far greater than BTC going from 10B$ to 20-50B$ due to several factors.

My line of thinking has been that in order for the 4% to be meaningful, you need to start with at least a million. Saving a portion from the salary and getting 4% annualized growth just wouldn't have ever achieved the type of financial wealth I had in mind. YMMV.

But now I feel like the time has come to diversify and start reducing the risks. Going from 20$ to 10$ per ETH definitely hurt.

You do realise you're gambling, right? There's nothing wrong with that, but be honest with yourself about the risks of having nearly all your money in one instrument (ETH) which could easily wildly fluctuate up or down. If you honestly think it's a bet worth making, go look up the kelly criterion.

This is always a good reminder. Then again, had I not done that investment or cashed out earlier, that 20k€ would be nowhere near 1M€. There simply doesn't exist many ways to achieve 50x ROI in <5 years. Seems like majority of people are happy with lower yield plans, but I personally would have not achieved my goals without some aggressive increase in wealth.

Hard to say what I would be saying had I lost everything though. It's easy for me to rationalise the decision now that it paid off. And yes, we have to remember to look at the graveyard too.

The non-linear utility of money puts an interesting twist on things though. The effort and risk one should take to achieve additional wealth seems to reduce logarithmically after a certain point. I guess that point seems to be further for me than most people, but I feel it's close now.

If someone won the lottery for $1m and proceeded to dump their entire proceeds back into lottery tickets, you'd rightly think that they were insane. Yet that's exactly what you're doing.

You don't have to liquidate your entire stake. Heck, you could keep a full 100k in Ethereum—if it has a run-up on the scale of Bitcoin, you'd be making millions. But you wouldn't have all your eggs in one basket.

I definitely understand the desire/impulse to make big bets, but as with any gambling operation it's important to consider when you cash out. Right now you're betting $1m on the potential to make $50m, when you could have a guaranteed $900k with the potential to make $5m.

You could probably say that about playing roulette if you happened to win your first spin. Doesn't mean it's a good bet, though.

Comparing an educated crypto investment with a negative EV gambling game seems a bit too farfetched. I'm quite considerate and picky investor, and did extensive research beforehand.

I do get what you are saying, but I think this is over-simplifying things. There were a lot of interesting facts and conclusions available to be made early on about the possibilities.

Again, extremely hard to say what the odds of failure still are and were in the past. And hard to say what my stance would be had I lost the initial investment. It's easy to rationalize the investment in hindsight.

The annoying thing about survival bias is that the survivors who took the largest risks often get the greatest rewards, and then carry the most influence.

So someone who sank her entire life savings into LTC a couple years ago, would sound more worthy than this person.

And, depending on how credulous the reader is, someone who went into debt to buy a few lottery tickets, and was lucky enough to win, could trump both of them.

It does wildly fluctuate up and down, but he's also got a 1.5M startup and he's only 30, so he can easily afford the risk.

I had the opportunity to hear major german bank disappoint affluent customers by telling them that, in stark contrast to the past, there is no risk-free 4% in the stock market any more (when using the basic strategies available retail like investment funds etc). If true, you might have to play a more active role and "run a business" instead of "invest some".

It sounds like they're pushing an agenda (everything else is terrible; buy our products).

No asset is "risk-free" but it's certainly possible to get risk-adjusted returns of 4% in the stock market. Even if you include 2008, you would average 4% over any 30 year period.

At a minimum, you can get ~2% in treasuries. There are even savings accounts offering 1% returns.

What's the "risk-free" amount then? 2%? 1%? 0.25%?

2% just means you need more money saved, not that you need to actively run a business into your 80's to continue feeding yourself.

They said risk-free would be -0.4% or something. I suppose they would have been biased to say "buy our funds", and they didn't really push any other products except maybe real estate. Everyone was bummed out.

Curious to hear other opinions.

Is capital gains tax payable on those coins? If I were in your place, I would probably attempt to find a way to realise that gain (i.e. by relocating to a tax friendly country for a while) without having to pay capital gains tax. Make sure to not throw away your windfall.

In Finland, the capital gains on cryptos are realised once you sell them for floating currencies (ie. USD or EUR). We pay 34% tax on the profit.

For example, I'd pay (1M€ - 20k€) x 34% = 333k€ of taxes on capital gains. I'm not sure how the taxation works if you try to dodge it by relocating to a more tax friendly zone. I've heard some horror stories about Finnish companies moving to Estonia for tax benefits only to be taxed with fines for the gains that the company made while it located in Finland. Would the same rationale apply for personal capital gains?

You can freely trade between cryptos, for example between BTC and ETH, without triggering the capital gains. The moment you leave cryptoland, I believe they use the first-in-first-out (FIFO) principle to calculate the profits.

In Belgium (where I live), these gains are tax free. So that is one country you could potentially move to to avoid the tax. The same applies for the UK, Malta, Cyprus (non dom regime) and Monaco. If I were you, I'd consider doing the perpetual traveler thing for a while (i.e. while having a base in Malta, which is cheap) and cash out + reinvest in stocks. After a few years, move back, and then pay capital gains tax on those future gains.

You can leave most countries without realising the capital gain, even if you've built it up within a country. This is why certain people move to a country without capital gains tax to sell their company. Obviously I don't know Finnish tax law, but within the EU it's generally the case (for now). Have it checked by a _GOOD_ tax lawyer, if that's what you want to do.

Building up capital is important - once you have it there's a lot you can do.

Wow, this advice is very valuable. I'll definitely investigate. Thank you.

Another interesting discussion is the ethical side of things. I do feel some obligation to pay back to my home country for things it has provided (free education, healthcare, etc.), many of which were financed with tax income.

But paying the whole amount from current and future gains would be tad too much. Also, would it be possible to achieve higher and more direct impact with dodging the taxes and distributing that money via philantrophic means? Just some questions I'm thinking about in the whole picture.

1. If you intend to move back at some point, it doesn’t matter. Say you generate €75-100k a year from that million in the future, you’ll be paying 25k a year in taxes anyway. The more capital you have, the more you can generate, hence the more tax you can pay in the future. Pay 333k now vs 25k a year over the next 50 years. But building that first €500k-1m is hard, imo.

2. Always give back. For example, I gift €X,000 every year to local good causes. Yep, I get a 45% tax deduction for it, but I also use it as a way to give back. You’re not going to spend one euro to save 45 cents in tax, if it's not something you believe in.

You can also give back by investing in Finnish companies.

3. If you’re interested in Belgium (low cost of living, high quality of life, free health insurance, relaxed society, high taxes but not on capital), I can intro you to my tax lawyer. He’s awesome.

Great points. Ultimately, it seems to boil down to deferring tax to the future instead of the present resulting in higher gains for everybody, and having the freedom to choose on how to give back. Both of which seem like the obvious after further consideration.

I'm really curious about your story. Would you be interested in continuing this discussion over email?

Sure! E-mail address is on my HN profile.

>This is why certain people move to a country without capital gains tax to sell their company.

Do you happen to have an example of this?

The easiest example I could find: http://www.dailymail.co.uk/news/article-1132957/Piers-Morgan.... But there are plenty of these stories if you go looking.

Note: this does not apply to Americans, because they are taxed based on citizenship, not residency. But even within the US you can save taxes by moving states (i.e. by being based in Texas or Seattle when selling your company, vs California). I believe Mike Arrington did this.

Another example: - http://newsfeed.time.com/2012/12/10/cest-it-aint-so-gege-fre...

From your second link:

>Speculation is rampant that the move has allowed Depardieu to shift his legal residence to Belgium to dodge the 75% tax on income over $1.27 million that Socialist President François Hollande will apply as of 2013 as part of his response to France’s debt crisis.

Two things stand out:

1. Depardieu is avoiding a hit on his future income. The story is from 2012 talking about a future French tax hike in 2013. Avoiding tax on past income i.e. unrealized capital gains would be much harder I believe.

2. The story doesn't mention capital gains at all. I'm specifically interested in cases where people have successfully avoided a capital gains tax.

As long as the country you live in does not levy an "exit" tax of some sorts (on the individual, not the company), you should be able to move. Only the individual shareholder is moving, you are not moving the company abroad.

This is a relevant article: http://www.bloomberg.com/news/articles/2001-07-22/if-youre-w.... It's from 2001, but still relevant today.

Another article, specifically on Belgium: http://www.bespaarbelastingen.be/algemeen/belgium-tax-haven/

Third: http://www.wealthprotectionreport.co.uk/public/704.cfm

This law does not just apply on the disposition of shares, but on nearly all types of assets, with the exception of property.

> Spending 3k€ per month for the next 30 years would be about 1M€

That is only withdrawing the principal without taking into account the real interest/yield rate you can make off the investment. That money would probably last longer or yield more for the same time period.

In fact, as you point out it can last indefinitely with an after inflation and tax ROI(real yield) of 4% which converts to ~3k/mo. You would have to plowback excess returns on good years and withdraw part of the principal on bad years. Plus readjusting your expectations from time to time.

One of the best investments you can make is to get a financial education. You don't need to get a pedigree to show on your job interview, you should go only after the knowledge which will be cheaper.

And lastly a diversified mix of stocks, long term bonds and short term notes will earn you that passive income. Now that you are young take a little more risk and shift your allocation gradually towards short term debt as you age.

The real interest rate is usually negative in today's environment; I'd love to know where you're getting a risk-free 4% after inflation and tax.

Why does it have to be risk free? Did you make your money not taking risks? Taking calculated (not stupid) risks helps you get decent returns above 5% quite easily.

Put half of it in a low fee index fund, and half in stocks you believe in. Those stocks are higher risk, but can have a much higher (or lower) return than the index, i.e. risk 20% of your capital for a potential 50% gain. You can add bonds to the mix if you want.

Half in picked stocks is a very high risk strategy. I wouldn't recommend it.

And I would. Look, it all comes down to what you're comfortable with and how you've made your money. Some people are terrified of losing even a penny. Others don't care if a stock goes down 20%, if long term the business is solid / healthy and the price makes sense.

If you're looking for stock tips on the internet, then yes, half in picked stocks is quite risky. If you're willing to put in the work to do the research by plowing through SEC filings, reading annual reports, trying out the product the business is selling, in sectors you know and understand (i.e. tech for us) and you have common sense, then it's quite reasonable. You won't always get it right, but you can at least do better than others who haven't done their homework. That also means saying no to 90% of the stocks you could invest in.

Muni bonds are the best way to go for that. You can still nail 4% plus after inflation and taxes there. You're not going to get risk-free anywhere, there's no such thing.

Can you provide some example names? I'm seeing returns of only 1.65% on the Barclays Muni Index[0]

[0]: https://index.barcap.com/Benchmark_Indices/Aggregate/Bond_In...

You're looking at the yield; not the returns. You also cannot directly invest in the index but there are ETFs that track it.

Sure - so you're factoring capital appreciation in to the total return for your 4% after tax number? Which would imply that you're not holding these to maturity though right?

Nothing is risk free.

> Invested most of my savings (20k€) into Bitcoin several years ago, and then converted everything to Ethereum in the pre-sale

Haha. I did the same except with only 30€ worth of BTC, now worth ~15K€ in ETH. If only I had had slightly more balls at the time…

Hey, I bought zero bitcoin because by the time I looked at it - when the price was still in two digits - I thought the bubble had come and gone and there were rumors of an impending government crackdown. So you did 15k better than I did!

+1 ditto. :(

So easy to say in hindsight, right? I try not to be too hard on myself about past decisions. I bet you did the best decision you were capable of doing with the information you had at the time.

Similar opportunities will come in the future.

If you only have 10k€ in the bank and not a second "survival" account with around 10k€ then this should be your backup fund. Make the money as easily assessible as possible. It should be at least 3 months of expenses, and I personally spend less than 10k in 3 months but still have that goal.

Great advice, thank you. I'll prioritise increasing this amount in the near future.

I just switched from Wealthfront to Betterment, because their software does a good job of helping you with this. It asks you what you're using the money for, when you'll need it, and about your tax situation. It'll automatically provide different investment options based on what you answer. So, for your situation you could put some of it into an income producing "goal", and put the rest into something more growth oriented.

Definitely worth checking out: http://betterment.com/invite/seanhess

(disclosure: that is my invite link which gets me free months without fees. I do love the service a lot).

Both this and Welathfront only operate within the US, which is a shame. Anyone aware of a similar service operating within the EU?

https://www.nutmeg.com in the UK are quite good. I can provide a referral : you get 3 months fee-free (and an additional £100 if you invest >£15k) and I get a small bonus.

There's https://www.yomoni.fr/ in France too

I'm pretty sure Moneyfarm are based in Italy, so definitely in the EU !

Hi there, can you explain to us why you chose to invest so heavily in Bitcoin and Ethereum? What gave you the certainty that they would go so well?

With bitcoin, I'm kinda sure there was never any certainty, only faith; for a few, that worked out very well. But bitcoin has always been a gamble, a very unstable and easily influenced investment product, with unsafe and corrupt trading platforms.

I didn't have any magical crystal ball, like no one else did. The key transition point was moving the Bitcoins into the Ethereum. For me, Vitalik's early posts convinced me that Ethereum wasn't just another altcoin and it had great potential.

I didn't have any debt at that point and the traditional model of saving portion of salary and getting 4% annualized growth wasn't going to achieve the wealth I had in mind. So cryptocurrencies seemed like it had the huge upside potential I wanted and the worst-case scenario would have been that I'd lose the initial 20k€. I'm fairly opportunistic and risk-seeking. YMMV.

Hard to say what the probability of failure (ie. Bitcoin collapsing or the value of Ethereum being far less than the pre-sale price) has been.

Typically the best / simplest way for sustainable mostly passive income is rental property. Lots of how to guides out there. Mortgage rates are really low at the mo if you want to leverage.

I did some calculations about owning your own apartment vs renting. At least in Finland with the current housing prices and interest rates, the difference in a 25 year period between owning and renting was surprisingly small. Personally, I'm happy to pay rent and have the money in more liquid assets as well as enjoy more freedom and being debt free.

I assume renting out would only be worse with the additional risk of having bad tenants.

This helped a lot https://www.khanacademy.org/economics-finance-domain/core-fi...

Here in Finland, the status quo seems to be that you obviously save for your own apartment as the first thing. From purely financial gains perspective, I couldn't find the rationale.

But isn't it always good to own the property you live in ? If instead of paying $1000 a month for rent, you pay that $1000 a month for a loan for your own apartment you still have the same money to invest that you have now but you will eventually own the place you live in and free that money up. Of a big amount of that monthly payment will be interest, but at least not all of it is gone. This only works if you can actually finance a place for similar money as it would be to rent, which i am not sure of.

This depends on the country. Property isn't exactly passive income, when compared to other types of investments.

For example, in Belgium, stamp duty (a transfer tax) upon acquisition of a property is 10%. It takes a long while before you generate that back in rental yields.

A mix of consulting, products and bitcoin. Happened to just be in a right place at the right time, and took (mostly) the right risks. Basically I went from zero net worth to 2-3 million liquid, within about 7 years. Also have some other illiquid assets which could be worth more or less.

First I started with consulting, then slowly started developing different apps/products/services, and funded the development from consulting/contracting income. Soon the products themselves gave me 2-3k/month, and I didn't need to do that much consulting any more. As Bitcoin came, I already had some money to invest. I lived very frugally, and invested heavily in Bitcoin when it was around $10 or something. Also I have invested in stocks/ETF:s/etc all the time but those play pretty minor role. Mostly got one thing right.

Are you also from Finland? Would love to share stories and insights! You can find my contact info on alexhanh.com, if you are interested to talk. :)

I haven't achieved it, but I'm taking the safe route: Avoid lifestyle creep. Invest as much as I can for long-term gains (index funds, bonds etc.). Then live off slowly selling it off. So no passive income from a business. (I feel most people claiming "passive income" from those are actually working on them anyway, though)

By living off 50% of my paycheck, I can invest 50%. This roughly means for each year I work, I have one year saved up. However, after saving up many years, interest of interests have accumulated, so the first year I saved gives me more free years when I choose to "spend it". That's how I think about it, for the math, safe withdrawal rate etc. reddits r/financialindependence has a lot of resources. Most can achieve FI on modest income, so as a developer it should be double-doable.

I described this in pretty great detail over on IndieHackers (https://indiehackers.com/businesses/complice) and also answered a bunch of related questions on this HN thread: https://news.ycombinator.com/item?id=12269425

TL;DR = spent 20h/week for 2 years building a product that people wanted. But there are a lot of juicy insights etc in those links.

Thanks for the links, I will take a look. Your story seems like what I have in mind trying to replicate.

I consider myself as financially independent. I worked for a number of years in London as IT contractor (£400-500pd). Then I moved back to my home country and my hometown in Poland (reasonably affordable, not a capital). I don't have a car and I try to keep my spending to minimum (no fancy holidays, which I don't need. I cook, etc). I try to ensure my spending doesn't exceed equivalent of €500 a month.

I still spend most of the day in front of the computer. The only difference is that I wake up and finish when I want. I work on my personal projects (without aim to make money), which I find more interesting than doing commercial CRUD apps.

My decision was largely influenced by a Danish guy living in the USA, who wrote this blog: www.earlyretirementextreme.com

In the USA the surest and safest way to do this is to follow the American Dream... ie: buy a house. Specifically, buy a multi-family in a constantly in-demand area / big city. The devil is in the details on the economics of all this... how much you put down vs how much you borrow, etc.. etc... But within 30 years (assuming you get a 30-year mortgage) you will certainly be financially independent. The key is to manage this wisely and ensure you are in a location where you can get near 0% vacancy. Why am I so sure this will work? Because the US economy is designed for this... it's designed to massively leverage yourself up against the collateral of the home. The tax code is designed to basically writeoff your expenses - and even more so if it is your primary residence.

The downside is that you need to be a landlord and this can be a risky proposition. You have to navigate a potential mine-field of tenant friendly regulations and pray that a tenant doesn't destroy your property.

You deduct business interest and expenses from a business too. The difference is banks will loan you 5:1 on a multifamily but will not for a non-real estate small business. A multifamily is just a small business.

Any areas specifically come to mind?

Austin, Portland. anywhere near a large university. university enrollment is counter-cyclical to the economy.

As others have mentioned, financial independence isn't hard. The hard part is financial independence without lifestyle compromises.

I'm making roughly $2k/month with books and workshops. The marketing and content producing takes about 2h/day on average. It makes my life a lot easier and less stressful.

But rent alone is $3500 in this stupid city (San Francisco). So I still need a day job for now.

> The hard part is financial independence without lifestyle compromises.

My point exactly.

But I also think you don't need to live in one of the most expensive cities of this planet. A few lifestyle changes should be acceptable, though. I would say if you spend more than $50k/year it should be possible to have quite a good life with some modifications.

Until remote working becomes more common, living in a big city has a lot of benefits for a tech worker. Even with the higher living cost, I make a lot more than back home in Texas. Sadly just not enough to become independent :-)

Agreed. But there are many many cities that are big and a lot cheaper than SF, NYC etc.

What genre of books and workshops? Might as well sell us a book here!

1. Started working full time at 19. 2. Still alive at 60. 3. Worked hard in every job. 4. Maximized retirement contributions. 5. Only owned two houses. 6. Paid off current home as quickly as possible. 7. No debt other than credit card paid off monthly. 8. Only married once (and still) 32 years ago. 9. Spousal unit has same fiscal strategy as me. 10. We never had kids. We can both afford not to work, although we both choose to. I can't say we're especially frugal. I own four Swiss mechanical watches, a brand new Subaru WRX Limited, and lots of other toys, and have traveled all over the world, all of which I paid cash for (or paid card off each month).

Doing pretty well from consulting these days, however I can't manage to generate any passive income. Having saved about 30k in the past years doesn't seem to help either, interest rates are ridiculously low. Stocks and bonds are not really my area of expertise so I decided to stick to cash. Investment funds might be an option in the nearby future.

Just buy index funds. They have low fees, and beat most (if not all) managed funds long term anyway. Find a fond tracking S&P 500, one global and maybe some other markets, and you should be set.

Keep in mind that index funds will probably decline by about 3-4x over the next 10 years on the demographic cycle.

How can something "decline 3x?" Lol.

Invert the multiplier silly.

Not a chance. Sure, it will almost certainly decline at some point in the next decade, but to predict the biggest stock market decline in history is really far fetched. Especially in an era when investment funds are holding onto record cash reserves in hopes of buying up cheap stocks during the next decline.

What do you mean?

There's a good San Francisco FRB white paper on it. Should be an easy Google whack. Boomers sell the world during their retirement burn.

A link would be useful.

Thanks, any brokers you'd recommend?

Vanguard is considered the best in the business.

Have you tried to automate some of the tasks of your business? Meaning you structure them in a repeatable fashion and find people who want to work on the steps of your defined process. That way you can also achieve passive income.

My business is writing code, so basically automating processes for other businesses. Not sure how I can turn that into a passive income. My tasks are hardly automate-able. What I started doing is teaching programming to others and partially outsourcing tasks to them but it's not going so fast :)

Obligatory link to ERE Journals : http://forum.earlyretirementextreme.com/viewforum.php?f=9&si...

You can read tens of life stories centered around early retirement/ financial independence there.

Related, I am wondering if any of you have any tips on securing financial independence / passive income that will hopefully be Tech recession proof.

I.e, best way to see yourself through a Tech downturn without taking a severe hit to your wealth.

I say this because I've had recent experience with people losing huge amounts of their wealth, and almost going bankrupt during the Oil price crash.

For instance I know Oil workers who had most of their wealth in oil company shares, a house in an oil related city and lose their oil industry job.

I'd imagine their are lots in tech that are the same, large amount of Tech shares, a house in the Bay area and a job in Tech.

Anyone got any tips on diversifying for a downturn? What shares (if any???) are likely to do well if Tech has a bad patch.

Well, it doesn't help me at all in the tech job market, but my primary residence is 0.75 miles from the beach in the Northeast (Maine). At some point I'm pretty sure we'll move one more time for a career opportunity, at which point this becomes the 2nd home and an investment. We weren't really part of the housing bubble or the collapse here - things just kind of kept moving along at reasonable rates of appreciation. As a result, there aren't any bargains here, but I know a few people with similarly located homes renting them by the week in the summer to tourists and keeping them completely vacant from October-April. I'd like to get another property up here. Now, if you're talking about market investments, do yourself a favor and diversify. Just hold indexes and keep your expenses low if you don't quite know what you're doing.

That said, disclaimer, I'm not financially independent. I very much need my job, as I have a mortgage and student debt from law school, plus a child and probably having 1 more in the next couple of years. I'm nearly certain I'll never be financially independent, since I'm really trying to set that up for my children instead. I have no idea what college will cost in 15-20 years, but I see the direction it's headed and my financial plans are more around making sure they come out of school debt free. My folks did that for me, but then I was dumb enough to go to law school in 2005. I really can't complain, I have a pretty solid career doing fintech and data for a large company, but it's one major expense I could have avoided and been okay - although it does check the "advanced degree" box. I have some side projects and more coming, but if I make a few dollars there, it goes directly to my kids' savings. I do have US and EU passports, so there's potentially that option for retirement with affordable healthcare and housing, but that's projecting years down the road.

Investment-wise, everything has ups and downs. The only way to be recession proof is to diversify and periodically reinvest. For example, you could buy a sack of gold coins, but then you'd be subject to the ups and downs of gold's value throughout your lifetime.

Passive-income-wise, market forces will eat away at passive income. Easy ways to make money are copyable; or the customers will catch on and figure out how to lower their expenses and cut you out. (Think about how everyone stopped paying for CDs.) Those who do make passive income keep it a secret because they don't want competition!

Things like utility stocks tend to hold up. In the 99 crash Berkshire Hathaway was countercyclical and hit a low on the day tech stocks peaked. Also oil stocks were roughly negatively correlated with tech in 99 and may be today. Reasonably priced property not in the bay area?

I think farmland still has a ways up to go - that could mean a spot in the country, a share of a working farm, or a financial vehicle like AGRO.

I'm not financially independent though, so take my advice with a grain of salt.

Forces pension, various websites, P2P lending (ZOPA, Funding Circle, Lend Invest, etc) and soon (hopefully) Bonds & shares via CrowdCube.

Thanks, do these provide a passive income or just capital gains?

I worked for a very large company for over 20 years, and the stock I received, bonus and standard issue, made my wife and I fairly much independently wealthy given our frugal life style. We spend a fortune on travel, otherwise we live on very little money.

The other thing that helped was buying some income property when I was younger. Getting rent money from tenants every month is wonderful.

I can pay my rent and bills from investment income and capital gain on investments. This is, of course, not remotely guaranteed, but over the last few years it's worked out. I do still work, though.

I did it by putting large amounts of my income into low cost index funds focussing on various sectors, and some specific shares that I thought would do well.

Thanks for the feedback. Could you clarify if you only use the capital gains? I have read that dividend stocks are also a good way to have a passive income. Additionally have you thought about what you would do in case of a market downturn?

Currently, I don't use any of it. I keep track of the gains (which is how I know they outweigh my rent and bills), but because I still work, I pay the rent and bills out of wages and leave the investments alone.

All my dividends get reinvested. I'm in the UK, and I've taken full advantage of the tax free savings scheme, currently allowing about 15000 GBP a year to be put into stocks and funds with no tax to pay on dividends or gains.

There have been market downturns during the time I've done this (started around 2005). Generally, during a downturn, I scrape together as much spare cash as I can and invest it in things that seem cheap. April 2015 to April 2016 was something of a downturn, for example, and I ploughed extra money into the markets while prices were low.

Dividend stocks are not a good way to have passive income. The benefit of the dividend is already priced into the stock, so they are no better than any other stock. Prefer, rather, to just go for good stocks and not worry about the dividend. If you need income, sell some stocks.

Also, the % that you're pulling out of stocks should be determined by looking at, say, a 30 year window, not a very recent one. That is, if your savings can sustain a 2% withdraw every year, taking into account inflation, then take out 2% every year. Some years this will be less that your cap gains and some years more. The key is making a long term outlook.

FWIW, these are some very brief thoughts of mine on investment: https://github.com/nickgieschen/investingguidelines

Dividend stocks absolutely are a great source of passive income. You don't do anything (passive) and you get a check a few times a year (income).

Companies that pay dividends plan ahead for distributions. So they have the cash reserves to pay dividends even in a recession. Which is great because you get a payout but you don't need to liquidate your holdings at a discount.

"The benefit of the dividend is already priced into the stock, so they are no better than any other stock."

I hear this sort of thing a lot, and in my experience, everything already being priced in isn't true (both of dividend stocks, and stocks not paying dividends). This relies on the efficient market hypothesis being broadly correct, and based purely on my own experience, it isn't.

My findings are very much based on my own experience, but I have had no small success simply reading the news and seeing that a company is doing well or is looking at a brighter future, and buying shares in them and making a nice profit on it out of both increased share price and increasing dividends. The EMH suggests that it shouldn't work; that by the time I get round to buying the shares, the efficient market has priced all that in. But it just doesn't seem to be true, in my experience.

>My findings are very much based on my own experience

In my experience, people think they're far better at stock-picking and investing than they really are. Have you calculated your actual, after-all-expense returns? Because if you are consistently beating the market, risk-adjusted, start a hedge fund. I'm only half joking.

It's important to interpret EMH "realistically", in that prices, on average, will reflect all relevant information. But it obviously doesn't occur instantaneously or perfectly. Everyone who has traded stocks has a few wins. The question is whether you can garner an advantage consistently.

"Have you calculated your actual, after-all-expense returns?"

Yes. I very rarely sell, so I can see it clearly, and the purchase costs listed in the interface include the purchase commission (I buy in lumps of 1000 GBP, so take a hit of about 1% on initial purchase). Holding charges comes out to a couple of hundred a year, which comes out of dividends.

In one account, I invested gradually over three years, from April 2012 to March 2015. That's up on the order of 50% as I look at it today - looking at it this very second (it's a little rough as I reinvest the dividends, which count as fresh purchases in the accounting - it's up exactly 46% if reinvested dividends are considered to be fresh money). Some of the early purchases are up 100 to 200 percent, later purchases less so. There are some losers in there as well. I have sold only once at a loss in that lot; some BP shares that I changed my mind on. All other losers are still in the mix, and I leave my worthless shares in KAZ there to remind me of my losses. Big winners - ARM, Nokia, a global smaller companies fund. Big losers - KAZ, Bonmarche Holdings, Tesco.

Another account that I opened (because I didn't want to exceed the government insurance limit) and placed money into for the last 15 months or so is currently up 20%. I've never sold anything from that. That is principally US and Japanese index funds, although some ARM in there is up 70% thanks to Softbank buying ARM.

An earlier investment from about 2009 (which was nothing but safety) is up a little over 50% today, but that really was safety. Likewise never sold anything.

I have done this by doing absolutely nothing special. Absolutely nothing. I simply took the common advice; low-cost index funds. I also read the news and sometimes buy into companies with brighter futures. A couple of years ago I read many articles about how GSK and AZN had been through tough times and were coming out of it. Bought some shares. Worked out well. That's all I do. For as long as I can remember, ARM has had nothing but growth in the news. Bought into them repeatedly.

I have significant advantages over hedge funds; they have to trade. I can sit and do nothing for month after month, and when I suffer a 20% drop, I can continue to sit still and do nothing. If anyone wants to pay me to tell them when I buy something, knock yourself out :)

This is not nearly enough evidence to conclude that EMH is invalid. Yes, it's not perfect, but to conclude from this evidence that dividends are not priced into the price of a stock is... well, it's not sound reasoning.

To quote myself, from earlier:

"The reason I believe this is not related to stock picking working for me."

So it seems we agree that my stock picking success is not evidence for my beliefs on dividends and stock pricing.

You're talking about two different things: Stock picking and whether dividends are priced in. Because stock picking works for you (let's ignore the sample size issue), doesn't mean dividends aren't priced in.

I believe that dividends are not priced in.

The reason I believe this is not related to stock picking working for me.

I believe it because the market is not efficient, and dividends being priced in relies on an efficient market. Any success I have in stock picking relies on this inefficiency; it's just a symptom.

If dividends weren't priced in then prices wouldn't dip when stocks go ex-dividend.

Sometimes they don't. Sometimes they go up. Lots of people think they're priced in, and the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less. Was it "priced in" before? No idea. Going ex-dividend is a single, identifiable point at which people can say it surely must be worth less now.

I personally value dividend paying stocks more highly than non-dividend paying stocks. A history of dividends makes the stock appear more valuable to me (given that the majority of companies are rubbish at investing in themselves, giving me the money and letting me reinvest it myself is preferable). If they just went ex-dividend, that's a excellent very fresh data point that makes the stock look more valuable to me.

>the point at which they go ex-dividend is a convenient point to decide that it's now worth a bit less.

The company has less cash ex-dividend, so as a matter of fact is worth a bit less.

Valuation isn't, however, a matter of fact, but of values. We distinguish descriptive facts from prescriptive valuations. It is an important distinction, lost on many Rijksbank "Nobel" prize-winning economists.

Valuation isn't, however, a matter of fact

No, but that variation caused by going ex-dividend clearly is.

And while I do care what it is worth, that is only one factor in what its price will be, and of those two, the latter is the one that counts.

I'm trying to get closer to this goal by renting out rooms in my house. It's not something that a lot of people do and there are legal issues. however it does get me a nice amount of passive income. this is about 1k EUR per month. I'm hoping to get it up to the level of my salary (1700 EUR) within the next year.

Not me, but the last time I talked to the CTO of my last company, he was making ~$120k/year passively via LendingClub with ~$1M invested (which he acquired via our exit).

Has he reevaluated his investment at all with them since some of their sketchy business? I've been trying to decide with the chunk of money I have invested there.

I don't know the full details of how they inflated the creditworthiness of their lendees, but I do know that he wrote his own software to determine that and offer loans based on his own criteria. I'm not sure if he was actually affected by what they did.

There was a UK equivalent of that but it got pretty rubbish. The rates dropped very low as too many people with cash were chasing too many borrowers. It got to the point that, even with a 10% loan portfolio, you might not make money as the borrowers were so bad.

I'm not yet. 31 years old and working on it. I have a good chunk of money invested, but my magic number is 1 million and a paid off rental (maybe 2) + 1 primary residence. I have 12 years left on my mortgage. This house will eventually become one of my rentals.

The idea is just to reduce expenses a ridiculous amount and invest everything in the stock market + rentals. I should reach my goal by 40 - 45.

Income is superfluous if you have enough to burn for a hundred years or more. For me, it was as simple as buying some monero and relocating to a lake home: No city burn rates, and my stash rose 12x so far, with another 50x foreseeable in the baseline scenario, 10000x in extremely low-probability tail scenarios.

Watch out for Survivor Bias. Ask how people aimed to FI and failed, too.

Wall street programmer :)

Super high burn rate. 200k is a slave wage in Manhattan, or in SFO bay for that matter.


It's just true. You live like a galley slave at that rate. It takes about 300k to approximate the lifestyle that 40k can get you in Omaha.

What? No dude.

$300k is still $16,000/mo net, worst case scenario. $40k is like $3k net, best case.

So, unless it's impossible to live in SF for less than $13,000/mo, SF wins.

You can live like a king on 40k in Omaha. You can have a yard, a garage, drive a car, eat at restaraunts, shop at Walmart. In Manhattan some of that is inaccessible even to the very rich. There are no walmarts. Parking your car may cost 40k.

That's assuming all people want to live like that. I wouldn't know what do do with that much space, and I hate having to drive anywhere. Give me decent public transportation and access to world-class restaurants over a house and a yard and a car any day.

Politics, not technical work causes high burn rate in WS.

Layoffs around the corner...

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