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The highest probability for success for the 'everyday person':

- Earn as much as you can from your own work. Take a 2nd job, change to a higher paying job, ask for more responsibility and a raise at your current job, go back to school for a more lucrative degree, ...

- Spend much less than you earn. Economize, share an apartment, buy an inexpensive car, shop at Trader Joe's and Costco, ....

- Learn how to invest. This is really important. The most deliberate and highest probability of ultimate success is likely mutual funds. Individual stocks can goose it, but should only a small portion of your wealth, as they start to bring a luck factor into the mix ...

- Protect your investments. Health insurance is really a must in the US, might be a must elsewhere. Work for a company that offers health insurance. Car insurance is a must. Other insurance is probably wise.

- Be patient. The compounding effect of investing takes a long time, but once it gets rolling, it's pretty much unstoppable.




Counterpoint: Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range. Investing works mostly because of the current trend of artificially propping up the stock market. Any failure in your investment strategy leave you in the same boat as the current boomer retirees who are trying to get back in the workforce.

Not to mention, your life is going to be pretty miserable if you're working two jobs and spending a lot of effort on living frugal. There's just something off-putting about the thought of spending decades living frugally and working yourself to the bone so you can retire and finally have fun.

The exemplar folks who advocate doing this, a'la Mr. Money Mustache, are real pieces of work too. They tend to hide the fact that they went into the process with an inheritance to fund their their nest egg and are working nearly full time in their "retirement" as paid frugal advocates.


This is a good counterpoint and something my Dad points out often. He was very frugal, worked long hours and saved as much as he could so him and my mom could have a good retirement. She passed away at 42, so that never happened. He has so many regrets and wishes he invested more of his money & time in experiences with her while she was alive.

I think there needs to be a balance. The trend of working crazy hours to save as much as you can, living overly frugal, etc. will not always lead to happiness or fulfillment. I like to think of it as how can I optimize my time and finances for "life" rather than retirement. That doesn't mean I don't have a nest egg, it just means that not everything is going into that nest egg.


The trend of working crazy hours to save as much as you can, living overly frugal, etc. will not always lead to happiness or fulfillment.

This speaks to a common fallacy: the notion that happiness is a permanent achievement. Many people believe that you work hard so eventually you can achieve a position where you live "happily ever after". That's however not how the brain works. Happiness is a reward mechanism for effort bearing fruit. Once you stop doing things to become happy, eventually the happiness goes away because the brain adapts to its situation (this also works in reverse, you can get used to surprisingly horrible situations). The trick to being happy all the time is doing new things that make you happy all the time.


This is so true. A silly example. If you give a child a big bag of sweets all in one go he/she will be very happy for a little bit. But he cannot "consume" that happiness all in one go. The child's happiness level is saturated. So if you spread out the giving of sweets, the kid gets a constant trickle of smaller happy moments. Overall after all the sweets have gone, the kid who got given the sweets one by one, would extract more overall happiness from that bag than the one who had it all in one go.


> The trick to being happy all the time is doing new things that make you happy all the time.

Achieving "Financial Independence" -- when a portfolio meets all basic income needs -- can greatly enable this. The question is why people postpone their own "freedom" in favor of little wins now like trying expensive restaurants, etc.


This is just silly. The brain's reward mechanism is a dopamine hit. But that's not all there is to happiness.


Maybe I'm explaining it wrong, here's someone who actually understands the science explaining why happiness is not and should not be the default state of the brain: https://youarenotsosmart.com/2018/05/21/yanss-128-the-neuros...


This makes me feel really sad. While my grandparents were still alive, I put off visiting them for literal years. They lived overseas and I combated for too long trying to justify the cost of travel for the length of time that I could afford to take off work and see them...unfortunately they both passed away very quickly. I've since realized that if I had a chance to spend just a few days with them again, I wouldn't even think twice about spending the money to do it. A hard lesson to learn.


There are tons of people who spent their money living it up and got old and are really struggling and having difficult times with tons of regrets. I suspect more than those who saved and died young.


Yes, I agree. I am not proposing spending all of your money living it up, but to find a healthy balance. It doesn't have to go in the extreme in either direction.


That's right. For example, an expensive new car isn't much better than a 3 year old used one, and the difference is a big chunk of money to invest. (And also being able to invest money rather than spend it on the interest on car payments.)


This is a perfect example. I have had the same car for 6 years which I bought used and am hoping to squeeze another 5 out of it. Cars are one of those things I hate spending money on.


Don't forget to calculate the increasing maintenance cost, gas cost, and risk of using an older car.


If you buy an American car, the maintenance isn't so bad. The taxes are low on older cars, as well as insurance.

The risk is real, there's been excellent progress in crashworthiness.


In America maybe? Here the maintenance on a car is insane, Canada.


This is a good point. So far I have had no maintenance other than oil changes/tune-ups. Once things start breaking down to where I have to spend $$ to keep it going, that is when I will buy a newer used car. I also mainly use it for local around town driving. If I go on a long trip, I rent a car.


This all depends on how much happiness you derive from an expensive new car. My every day commute is my happy time because of that new car that I enjoy driving. YMMV


Probably because if you died young you by definition have no regrets.


For the misers out there (like me) who don't like spending money, the way I avoid this is set X% to be automatically transferred to a savings account that is my fun money. It helps a lot because mentally I've written off the money immediately and I can enjoy spending it without worry.


This is also helpful if you are a spendthrift. Simply set %X to money that you are going to save. Put it someplace which will take at least a few days to access.


I like this!


this happened to my family as well. The amount of money you can save by being frugal is very limited. IMO you're better off living a reasonable lifestyle and focus on income rather than expenditures.


Disagree, the amount that can be saved by being frugal is pretty great. Lots of people throw money at cars, eating out, expensive hobbies, new electronics/gadgets... etc. etc.

The point is find eliminate spending on stuff that doesn't really make you happier, and focus on the things that do. Also, find cheap hobbies, reading, etc. etc.


depends on your lifestyle and income I guess. If you have high income and high expenditures you have the choice between immediate pleasures or early retirement, and that choice isn't so clear cut imo.

for software guys like mmm I'd wager that it's better to take the time and energy used on frugality and instead try to develop alternative income streams, which ironically is exactly what mmm did.

regrets over $10-30 purchases seem like a complete waste of time to me... https://www.newyorker.com/magazine/2016/02/29/mr-money-musta...


If I recall right, Mr. M.M. defines retirement basically as financial independence, regardless of how you spend your time. Working because you want to is very different from working because you have to, so I'll buy it.

And as far as I know, he and his wife earned their money in tech jobs. The math is believable: let's say your household makes $130,000 a year (which I haven't done), and lives on $30,000 a year (which I've done... not fully voluntarily mind you but it wasn't hell on Earth either). You're saving $100,000 a year. In about 10 years you're a millionaire and could continue living on $30,000 forever without working. (Assuming 3% interest, which is doable without much investing effort, luck or expertise.) That's financial independence. Keep working at that point, and you only improve your lot. You can earn $10,000 a year as a full-time musician and live on $40,000. Or stay in tech and put 100% of your salary into principal while interest or dividends pay your living expenses.

Increase your monetary needs, i.e. your financial dependence, and it takes longer. Which is what most people do.


No you need to work 15-20 years, depending on tax rates.

Unless you meant 130k after tax (which is doable today for many engineers).


This is a very important point because taxes affect decisions around money.

For example, the ability to contribute to a 401k plan can defer $18,500 a year from taxes per person (more if over age 50, and more if there is a company match). For someone with a $130k gross, the employer having a 401k plan or not could affect the choice of which job they choose.


Only per person if you are are dual or multiple income. For some asinine reason 401k limits are not only very low, but don't take into account how many people are going to depend on that 401k.


In what world are 401k limits low? Between you and your employer, you can contribute up to $55.5k/yr to a 401k, more if you are over a certain age, I think it's 50.


I should have said "per employee" not "per person" which could be misconstrued as "per household member".

As the other commenter pointed out, why do you think 401k limits are low?


You're missing the part where you invest the money as you save it.


Ah, so I was. Fair enough.


To live off of $30k/year, you only need $750k saved, not $1MM (@ 4% annual withdrawal rate).


The 4% withdrawal rate has been challenged, and one shouldn't use it as a guaranteed safe rate. It included massive bull runs that may not be repeated going forward. A lot of research has predicted lower real rates of return (around 4% average) in the next date.


> one shouldn't use it as a guaranteed safe rate

of course not - there are no certainties

> It included massive bull runs that may not be repeated

it also worked through times like the great depression; on aggregate it's amazingly resilient

> A lot of research has predicted lower real rates of return

This is a SUPER-important thing for making your own FI models!


It is based off of the best available information.


Don't forget to include the percentage required to offset inflation.

EDIT: Missed that this was for a fixed period of time - 30 years.

But... what happens if you live more than 30 years past your retirement? It would really suck to retire on $750,000 (or $1M) savings at 45, and live to be 100.


Included in the rate I quoted, per the trinity study, although you might need to reduce your withdrawal rate below that some years depending on your asset holdings (see below for detailed info).

EDIT: Again, the rate quoted is for withdrawals in perpetuity. It doesn't guarantee your savings will outlive you, but it's highly confident it will.

https://www.bogleheads.org/wiki/Trinity_study_update


Some research suggests that a 3.5% withdrawal rate will last basically forever.

See, e.g. https://www.kitces.com/blog/adjusting-safe-withdrawal-rates-...


I know it's not what most people want, but if you retired to a country with a low cost of living that $1M would be more than enough to live really comfortable till you die.


> You're saving $100,000 a year. In about 10 years you're a millionaire

Much quicker than that if you invest it at 7% (average real return on the S&P 500).


You can have lots of fun living frugal. Living frugal doesn't mean not having fun. Having fun is really cheap and free if you set your mind. Walking, hiking, bicycle ride, board & card games. Hanging out with friends at home and watching Netflix. Cooking at home and drinking at home. These are fun and cheap, the fun in it depends more so on the crowd. Going out to party can also be fun but this becomes the difference in spending $20 at home vs $200 in one night. Frugal is buying an old reliable honda/toyota for $3,000 vs picking up a $40,000 entry level benz. So what if you die before you make it? So what? We are all going to die.


> Going out to party can also be fun but this becomes the difference in spending $20 at home vs $200 in one night.

Agreed, but try not to be the person who refuses to ever go out because you're too focused on being frugal. A few times here and there won't really hurt you in the long run (and having fun with friends is important and worth the money), but making it a habit every night will. Just avoid the latter.

> Frugal is buying an old reliable honda/toyota for $3,000 vs picking up a $40,000 entry level benz.

Definitely agree. Americans in particular tend to buy way more car than they need, and the difference in price is on an order of magnitude that really does matter in the long run for many of us (i.e. if you invest that marginal $20k, $50k, or $100k and wait 10-30 years instead of buying a quickly depreciating fancy car).


> Americans in particular tend to buy way more car than they need, and the difference in price is on an order of magnitude that really does matter in the long run for many of us

Not only that, they trade it in (sometimes with negative equity) every ~5 years.

I buy old, used Lexus'. Pretty much all modern features, quiet, and a fraction of the new price. Change the oil, and the timing belt if applicable, it will last forever. But people treat cars so much like appliances these days.


How old, and how roughly how much do you spend? Thinking of replacing my '04 Civic sometime in the next 1-15 years :- )


Idk I'm driving the same bell-free, whistle-less, sedan since 2006. @160kmi. But then again I'm not a bay area high-income developer.


5 years is when maintenance and repairs start happening more regularly. Because these are labor intensive, if one lives in an area where labor is expensive, or if the opportunity cost of one's own labor/time is expensive, does this still make sense?

Also, there are some really modern features like rear-view cameras, sonar, etc., which are pretty cheap in newer cars but almost impossible to find in older ones


5 years? Not really. Pretty much any Japanese car made in the last 20 years, and domestic in the last 8 should last 10 years; 100/150k before anything major is needed.

But, to run the numbers, get a the total cost of ownership (car payment, interest, and non-warranty or whatever maintenance) for a new/virtually new car, divide it over a span of the expected months of ownership (say, 60, 120, 180 months).

Do the same for a $5,000-$10,000 quality used car that you can pay with cash.

The hard part is estimating repair and maintenance costs, especially for non-car-persons. But I believe that car reliability is so good for recent cars that it's wasteful to purchase new.

eg:

$20,000 new car

36 month loan @ 2% = $28,072.59

Estimated average maintenance/year: $500

TCO 60/120/180: $30.5k/$33k/$35.5

$7,000 used car

Estimated maintenance/year: $1,000

TCO 60/120/180: $12k/$17k/$22k

Now an older car will generally cost more over time, eventually, than a new one. But every 10 years or so it's much cheaper to purchase a used one.

And if your stereo is replaceable you can get a rear-view camera hooked up if you desire. They also have wonky standalone ones.


This is misleading, as:

- you're including interest for the new car but not the old

- you're ignoring the residual values of the cars at the end of the 5/10/15 year periods

[edit: and the "cost" of that 3 year/2% loan is $623, not $8073]


Whoa, I'm not sure why almost 50% interest added to the cost didn't ring alarms earlier, you are right.

So the corrected 60/120/180: $23k, $25.5k, $28k.

And true, it will be worth something after 10 years or so, figure $10,000@60, $5,000@120, $3,000@180 but it varies vastly with the brand, mileage, and condition.

Corrected again: $13k, $20.5k, $25k

Damn, looks like it's close to a wash after 10 years. But, consider that the used car is a Lexus with heated/cooled seats, leather, nice audio, power seats and windows, automatic wipers, etc. etc. and the new car is a base model Toyota Corolla.

Plus, the use car will not be worth zero, hopefully, after 10 years. I guess 60/120/180 would be something like $3k/$2k/$2k:

So for the used car: $9k, $15k, $19k

So a bit ahead again.

It looks like with these napkin calculations the $20-25k mark is the break-even point at around 10 years. So any new car more expensive than that is going to be more costly, obviously, relative to a used car.

Well it was a fun thought experiment.


If it were true that nothing major was needed until 100k or 150k then car warranties would be of that length.

There are reasons why cars depreciate, amongst which are the fact that they need more money put into them over time.


The modern day combustion engine is super reliable if maintained. You just have to maintain it.

I drove my last car to almost 300k miles and my current is at 240k miles. Of course there are major maintenance items but well worth it. When my car hit 200k I changed the timing belt, water pump, seals, etc. This is on a Lexus LS430. As expensive as it can get. Cost $1800. If I had a cheap car, it will be a $1000 job. Now you have to understand. Do I go get another car or spend $1800? Easy $1800. I'm at 40k more miles. What else have I changed? oil, brakes, tires. That's it. Nothing else!

Does it have issues? Meh. Navigation sometimes acts up and freezes which I suspect is the DVD but I can't be bothered. I use my cellphone in those rare moments I need it. Everything else works. All power seats, windows, heated seats, traction, etc And here's the kicker, it's a 2001. 17yrs old.

Most cars will hit 200k miles, some reliable ones like toyota, lexus, honda, will hit 300k easy with minimal maintenance. I rather spend $5k-$6k and add another 100k miles. :D


They are? Most powertrain warranties are 100k nowadays. Recent cars have unlimited miles/10+ year corrosion warranties as well.

Yes, you're taking more risk with a used car. But I have multiple cars, and am a mechanic so it doesn't bother me.


You're much more likely to die by buying an old car. You can't just take all advice at face value.

https://www.wired.com/2017/02/watch-terrifyingly-bad-car-saf...


spending a lot of effort on living frugal. There's just something off-putting about the thought of spending decades living frugally

There's a whole range there. You don't have to live on ramen. But you can be really aggressive about insurance premiums, utility bills, etc. You can learn home & auto repair & maintenance. You can make major life structure choices (Can your family live with one car?). These all can make a huge impact on your finances, and don't hurt the way perpetually living like a college student does.

Counterpoint: Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range.

If this is the "get rich without getting particularly lucky" advice, perhaps we should assume it's also the "get rich without getting particularly unlucky" advice. There's an endless list of terribly unlucky things that would ruin just about anyone, but don't generally bear planning for.


You can learn car & auto repair & maintenance.

As someone who knows a lot about car and motorcycle maintenance, repair, and modification, this is not good advice, and I see it all over.

You're far better off simply buying a new, cheap compact and taking it to Walmart for oil changes. You will come out far ahead of the person who invests money in tools and space, and time into learning how to do something that is so easily outsourced.

The opportunity cost of maintenance is high. Don't get involved unless it's going to be a hobby that brings you satisfaction in and of itself.

Sure, learn some very basics so you don't get blatantly ripped off by unscrupulous shops (bringing you a filthy air filter that doesn't even fit your car is one example), but don't invest much time or energy.


Care to actually back up this claim with some numbers? As someone who buys reliable used cars (Hondas), maintains them himself, and owns them for 10+ years at a time this doesn't seem to be true.

For just the depreciation cost of a new vehicle one could purchase every home auto repair tool they would likely need for a very long time.


If you enjoy doing it, then it's a great incentive. If you do it because it saves money, then how else can you earn more money instead?


I actually had meant to type "home & auto repair...". But anyway, IMO most of the value is learning what's going on in the car and the process of diagnosis. Many, many shops employ the "speculatively replace X and see if it fixes Y" iterative process, and being able to avoid that whole process is useful.

You are right, the cost savings on doing your own oil changes isn't particularly significant. Although it's also worth pointing out oil changes are the most commoditized, sometimes-loss-leader service in the business- if there's a cost savings to be had, it's in moderate repairs that are a little more involved but don't require lots of equipment. Replacing an oxygen sensor or alternator, for example.


Oil changes are pretty easy to do.

Also, walmart f*cked my drain pan, so it had to be fixed for ~$150.

I will do my own oil changes now.


> Can your family live with one car

It's really funny to read that. It's probably very american to think 2 cars per family is the norm. I think if I group the 10 adults I see the most on average, we own 2 cars together. And we are all between 30 and 55.


This depends on where you live though. Midwest basically required a car, living in Seattle and SF my wife and I never need a car. It’s not always as simple as grouping a population. America is big and diverse.


I just came back from the valley, and I get that the american society and infrastructure is encouraging the to use a car. Like Australia.

I also get that, living in a city in France, it's easier to avoid having a car.

yet I note that you could have a motorbike. You could not have kids. You could move close to your work. You could move in an area requiring less car. You could change your job to one not needing a car. You could bike. You could care pool with friends/neighbors/coworkers. You could use public transports. Etc.

But the car is an important artifact of the american culture. You kinda build the country around it, not the other way around.


Yes/No?

Keep in mind, the shift from farming being a major employment sector happened while the current US infrastructure was being built. The highways and population distribution were in part because of that. Also the US is one of the world's largest in area, and while urbanization is being pushed due to changes in the labor needs, it's something that happens over time not over night.

As for "you could do X" most of your statements aren't really proof of an American obsession with cars, just a different infrastructure choice relative to other nations.

http://www.nationmaster.com/country-info/stats/Transport/Roa...

The US has 27% more cars than France per capita. That's statistically significant and reflects difference in city planning/culture, but IDK that I'd draw the same conclusions as you.


Meh I live in the Midwest, in an area that pretty much requires a car. Yet my use is extremely limited (a few thousand miles per year). Mostly going to stores and back as I work from home.

Yet we travel around the area to state parks, bike trails, etc.. every weekend. Even if I lived in a city, that doesn't mean I would want to be confined to the same 10 square miles my entire life. We live in a vast, beautiful country. Why isolate yourself to a tiny little block? Life is too short for that.


Or you can just have a car?

Why is not having a car an ideal for you? Why do you have to bike? Can't you just walk places?

I don't have a car because society is telling me to have a car. I have a car because it's faster to get places I want to go; it's damn hot in the summer; and it's great for carrying around purchases and the family.


I'm just amazed, not mad.


As a childless American with 3 cars, 1 motorcycle, and 3 bicycles... I must say that plenty of folks would find your "don't have kids" comment equally bizarre.

And on the flipside, cars are cheaper than kids :)


My reading of the GP's comment was that those were not suggestions, but a mere observation, where out of many possible and viable alternatives, one is utterly dominant to the point where the others aren't generally considered as alternatives anymore.


I guess you are convinced your generalization is sound in basis. Not everyone can afford to move closer to work, that’s a silly assumption. Big cities that lend well to public transportation are not affordable for everyone. You can’t always move closer to work, what if your spouse and you work on opposite parts of a region? I suppose next solution is one finds a new job or quits. Life’s not as simple as your naive point of view indicates.


If I guaranty 5 million dollars in 3 years for somebody that can go without a car for so long, half of america would find a way.

It's just a matter of priority and way of life, with constraints yes, but a choice none of the less.


"Norm" is probably more than two cars. I have a 17 year-old. When he gets his license, we have a car waiting for him (OK: it needs a bunch of repairs, but whatever). Right now, it's a pain in the ass to drive him places (like to & from work).

In my neck of the woods, the average is probably 4-6 cars per family.


It's really exotic for me :)

I always thought so funny the american TV shows depicting a 16 years old fighting his parent over his/her first car, and finally getting it.

My brother and I, we shared one small motorbike ^^


National statistics disagree with you. IDK what your neck of the woods is, but there's millions of people who live in urban areas in which car ownership is completely foreign that bring those averages down.

http://www.nationmaster.com/country-info/profiles/United-Sta...


Depends on which statistic you look at, I guess. One line says the US has 765 motor vehicles per 100 people and the next one down says it has 816 motor vehicles per 1,000 people.

So which is it?


765 vehicles per 100 people has to be a typo.

816 per 1000 sounds reasonable when you consider how many are childern, live in big cities, are in the military, etc... There are some pretty big classes of people who own no vehicles whatsoever.

If you look at married suburban households the number will almost certainly be over 2. The most common case involves one person driving to work while the other shuffles kids around or has their own job. The public transport option may exist, but is likely inadequate (excessively slow) and undesirable.


And tens of millions out here in the tules who need a car to get around. Otherwise, it’s back to the horse and wagon. There’s no public transportation, and there won’t be any until the tules are gone.


I completely agree, it's kind of nuts. It was only maybe sixty years ago that nobody but the rich could really afford two cars, and yet here we are today where it's basically taken for granted as a basic requirement of life in much of America. Which is why I wrote it that way.


In the vast majority of the US, if you don't have a car, you don't go anywhere.


Vast majority by land area. Per person it isn't so clear cut. Many people live in the city and don't own a car because using a car in the city is somewhat impractical and the public transport options are sufficient.


That's really only doable in a couple cities in the US, though. Not having a car in Los Angeles, for instance, is extremely impractical.


That's because LA is one bigass suburb.


Or maybe a modern car and a classic car? I have a classic car and a few classic motorcycles. Great fun, easy to work on, parts are cheap, no MOT, no road tax, and low insurance premiums. What’s not to love?


> They tend to hide the fact that they went into the process with an inheritance to fund their their nest egg and are working nearly full time in their "retirement" as paid frugal advocates.

Whoah, do you have evidence of this? I mean, yeah, some people have certain advantages, but if they are being paid for advocacy and if it's a trust-fund baby thing that would be really interesting.

On balance though, I'm not really opposed to a message to live frugally. We live in a culture that continuously bombards us with materialistic advertising, and this doesn't really lead to long-time happiness. I'm skeptical that being frugal implies some kind of deprivation or overwork. In fact if you're frugal then theoretically you can afford to work less.


I found it on his own blog, though it's almost impossible to locate now. Basically he inherited a family house, lived in it for a few years, and sold it for a large sum of money (in addition to holding a $100,000 + a year job and saving from it).

As for the paid advocacy, have a look at their financials. You'll see a non-trivial amount of income from advertising on the website and speaking.

EDIT: The house wasn't inherited - he got it from a failed house building business. It's unclear if the costs of building came out of the business funds or his own funds.

> I'm skeptical that being frugal implies some kind of deprivation or overwork.

OP was advocating working multiple jobs and living frugally.


>As for the paid advocacy, have a look at their financials. You'll see a non-trivial amount of income from advertising on the website and speaking.

Because as we all know MMM's plan was always

1. Spend 20's saving 2. Save $600k 3. Quit job 4. Make blog 5. Make millions.

Yes, MMM makes bunches and bunches of money but he is pretty blatant about admitting the "early retirement" was a lie.

He never wanted to retire. He just wanted the option to not work and choose to work on what he wanted.


He went into the house building business with one other business partner. This partner generally failed to meet his end of the obligations, and MMM took a big loss in the process. Getting the house out of the business was not a big win, it was merely a partial recoup of his own invested capital.


>> You'll see a non-trivial amount of income from advertising on the website and speaking

Fuck the modern web. Such a bunch of crap.

Someone needs to build a search engine for sites that don't carry any form of advertisement. charge subscription. seems worthy.


Micropayments were going to be the wave of the future back around 2000. It never happened. People want intangible stuff for what they perceive as free.


Not micropayments. just small subscription fees for that specialized search engine(or maybe even that isn't necessary).

But i want to read content from people just wanting to write, without perverse incentives, as much as possible.


They're the wave of the future today, just in cryptocurrency form. See eg. Brave & BAT.


I think when people describe 'the ideal way to live financially' they are looking at the problem as though they have to solve it all in one go, all at once. That's overwhelming, often leads to a sort of, yo-yo pattern of extreme frugality and extreme luxury.

Frugal living are habits that accumulate gradually, as are any other habits one aims to develop. Eventually you don't have to think about them, things converge naturally. Some people might enjoy working two jobs, because everything syncs together that way.


Is that yo-yo pattern bad?

Periods that are more frugal help you appreciate the pleasures of higher-end lifestyles while realizing that not having them isn't a catastrophe.

Plus the hedonic treadmill is a bitch. Someone earlier in this thread regretted his parents not having experienced certain things. Truly, it's a crying shame to die without having had truly fancy delicious dinners, for example -- that one time is almost priceless. But once a month is a nice, expensive habit. Twice a week you don't care anymore.


I think it's only bad when you don't feel like you have any control over it, and you feel more like it controls you. There's the long term goal you want, but the lack of having control leads to extremes, all of these things increase the number of variable you feel compelled to reason about, to control. With finances, food, 'stuff', that can lead to overload, stress, hence, oscillating between opposites, lacking self control, self direction, autonomy, etc. These are all things people need to feel secure and stable when they have to operate as mostly independent entities.


Nobody hired them for advocacy, but e.g. the MMM webpage makes a lot of money in ads. A lot.


I have no mustache and was born with no silver spoon, Had to work my way through college. This approach to building wealth worked for me.


> I have no mustache and was born with no silver spoon, Had to work my way through college.

My parents said this quite a bit.

Of course, my dad did blue collar labor for an inflation-adjusted $30 per hour (the same position today pays around $11 an hour), plus overtime and a pension. My mom was a part time waitress to pay her way through 4 years of college.

It was surprising how quickly they stopped saying that when they looked at the cost of a new house because they had to move. Or when they looked at what it would cost to put their granddaughter through the same college my mom went to.


There is a certain amount of inflating expectations going on, IMO. I'd bet a lot of the people who worked their way through college, went to community college. Also, even comparing like for like- my father attended Berkeley in the 60's. I think he'd be one of the first to tell you it wasn't quite the same world-famous ultra-elite school kids are applying to today.

Similar to complaints about how one's parents were able to afford a house in Silicon Valley, why can't I? Well, gee, fifty years ago Silicon Valley was an orchard.


It's also generational because of the increasing costs of college, not just the reputation of certain schools.

I started college in about 1992. My in-state tuition at the University of Utah -- a major university, not elite, but not community college -- was, I think ( * ), less than about $1500, which is about $2700 in today's dollars. In-state tuition today is $8,824, reflecting a substantial reduction in state support -- a 3.2x real dollar increase.

People in my generation and older who say "work your way through college", or "don't take out loans" need to make sure they've updated their mental model of the cost of college.

(*) I can't find historical data going back to '92; In '98 it was $2711: https://www.chronicle.com/interactives/tuition-and-fees which is $4203 in today's dollars.


It is impossible to 'work your way through college' now unless you are making $50k/year part-time. State schools start around $10k/year just for tuition. All in costs are $30k/year+.

I'm so glad I went to school 15 years ago. Students today are totally screwed.


This is so untrue. I just looked it up, and costs aren't that much different than they were when I graduated in 2006: https://trends.collegeboard.org/college-pricing/figures-tabl...

Looks like the median for tuition and fees at state 4-year schools is around $10k. My contention: if you can make ~$15k per year, you can put yourself through school.

First, you can start at community college, which is very cheap in most states. And many states have a deal where you are guaranteed admission and transfer to the 4-year system if you get good grades at community college. So that'll save you some money.

Second, many states (and possibly the Federal government) offer grants to help defray these costs. You can also apply to tons of private scholarships.

Third, you can live very frugally in terms of lodging and food. Not fun, but doable.

Fourth, you can take out a little bit in loans. If you take out $5k / year in loans, you'll have $20k at graduation. Hardly crippling.

I actually did this, though I also had the GI Bill so I didn't have to do the loans part, so don't tell me it's not possible. It's not easy or fun, and I'm not saying we can't improve it, but today's students are hardly totally screwed.


To be clear, you didnt do it bc you had the GI bill so dont claim you did.


If in-state tuition is 11k (my case), you don't think you can make that while going to school? Granted, I worked and of course, there were other expenses, so I didn't get out loan free. But it's possible if you're some sort of penny-pinching masochist...


The math is very simple, you need about $30k/year which is $50k pre-tax. That is 50 hours a week at $20/hour with no weeks of vacation + school.

It is extremely difficult to make $50k/year with no degree or experience. That is almost the house hold median income in the US (2 people working). (Currently: $59k/year)


> The math is very simple, you need about $30k/year which is $50k pre-tax.

This is wrong.

$30k - $12k standard deduction = 18k taxable, 0% tax on 0-$10k, 12% tax on $10k-$18k = -960 taxes owed, then you get 2500 American Opportunity Credit or $2000 Life Long Learning Credit. So if you earn 30k as a "full time student" you would take home ~$31k less 0-10% state income tax on $18k


Good point. I can no longer edit my post. Even still, $30k per year is too much for the majority of people.


College tuition has sort of switched to "sliding scale". For example, 40% of UC Berkeley undergraduate students pay zero in tuition despite the sticker price.


Berkeley is an exception. Most state schools do not offer nearly that level of aid. If you are upper middle class (i.e. parents make $70Ksh-$150ksh), and you don't have exceptional grades, you will pay the sticker price and you will leave school with $20k-$75k of debt. That is before adjusting for the rapidly rising price of college which will no doubt continue rising at 7%-10% per year over that 4 year period.


Honestly, leaving school with $20k-30k in debt is hardly the end of the world. That's what, $200 - 300 / month? Seems well worth it for a 4-year education of even decent quality. Beats the alternative.

Note: I'm not saying that we shouldn't do a better job of funding higher education, but this level of debt is not crippling. The real issue to me is people who run up high five figure or low six figure levels of debt for low-quality degrees or institutions, or who don't finish, or who are being trained for a career that will never make enough to have that be a positive ROI.


While students may be especially fortunate to live in California, my understanding is few even in other states at the $75k family income level pay sticker price. Note also that median family income in the US is around 60k. For example, at UW, CollegeSimply reports the net price for a family income of $48,001 to $75,000 is $10,231: http://www.collegesimply.com/colleges/washington/university-...

Average student debt of those who borrow is in the 20s-30s of thousands at most schools. $75k of debt for an undergraduate degree would be an outlier anywhere. https://lendedu.com/blog/student-loan-debt-statistics-by-sch...


> Investing works mostly because of the current trend of artificially propping up the stock market.

This belief could cost you a lot of money.


it can also save him from wasting even more.


Just like there "could" be dinosaurs living underneath the earth's crust plotting for revenge against all mamals


I, within the last decade, watched a housing boom in my hometown go bust. I watched hundreds of houses stay vacant for many years. And it wasn't just houses going vacant, it was even many more houses being vacated because they were bought by people who built houses.

Watching something that once was a "sure bet" go bust is very humbling. Watching those speculators go bankrupt by the hundreds is very sad. It made me realize that this particular dinosaur could be very real.


Long term investment isn’t speculation. That’s why we call it investment.

Yeah, if you are dumping money into a bubble hoping to cash out at the top, you are taking a major risk. If you’re investing long term in an asset with literally centuries of history of growth, then you’re probably going to be okay.

And realistically, what’s the alternative? I guess government bonds?


Long term investment is speculation if it's predicated on an economic system that requires infinitely increasing growth on a completely finite planet with diminishing resources and no clear guarantee that we can fix any overshoot by going interplanetary in a cost-efficient way, or that technology will always magically step in to create enough new efficiencies to further exploit the resources that are present.


I’m not sure how to formulate a response to this. It’s so utterly misplaced. This is like saying that investment isn’t possible because eventually entropy will consume the universe. Yes, in some sense this is true, but in a much more practical sense you should still be planning for your retirement.

Even if you believe that in your lifetime the human race will collapse under the strain we’re creating on the planet, investing is still the appropriate hedge for your doomsday “die in a catastrophe” plans. You can refuse to call it “investing”, but then you’re just arguing for a pointless definition that no one else really agrees with.


I have a little retirement fund, and I also think that if I focused too much on it, I would neglect enjoying our present level of civilization while it lasts. You're the one arguing to absurdity (heat death of the universe), because it really does matter if for all intents and purposes one will likely not get to enjoy retirement investments due to social collapse. It's not a far away possibility, but very likely to begin within my lifetime. You see, it doesn't take depleting everything on the planet, but just enough so that the growth engine based on debt stalls. Inevitable conflicts will follow. Climate change is already causing considerable financial damage and instability, and that is only going to grow more pronounced. On the current emissions route, most of the land closer to the equator than Canada or New Zealand may be barely inhabitable by 2080 (At around +3 or +4 C). There's already trillions of dollars in property value at risk just from flooding that's basically certain in places like Miami, let alone whole latitudes. Some tangible investments will still be valuable, but the idea that the market will keep churning out monetary growth indefinitely is ludicrous. My investment hedge is only for very unlikely scenarios, such as plentiful fusion energy, or exponentially cheaper carbon capture being developed in time to prevent the global financial shock that will happen when the market realizes that whole latitudes of property value are simply disappearing in several decades, or that trillions will need to be spent to mitigate the natural disasters that are coming. It's not a one-day Rapture to expect, but decades of decline that await.


From what i can tell, the difference between speculating and investing is merely long term vs short term investing.

according to that definition, your parent poster would be correct, even if (or maybe once) your fears come true.


Waiting for the "Treasury Notes are assuming the government will still exist 10 years from now" from people who apparently hoard cash in 1.2% Ally Savings Accounts


It's 1.6% now /s


Gold.


If so, it's likely we are all so far screwed as to not make it worth planning for. Global economic collapse is not much better than giant asteroids.

This is not to say I don't think we are in a large bubble.


I regularly hear "what if the stock market goes down 80%?" Then I'm totally screwed anyway, whether I'm in the market or not, because everything else will collapse as well.

So there's no point in worrying about such scenarios.


At this current point in time, you are both correct. It's gotten to the point where I'm genuinely starting to wonder if this state might be permanent, even though it's theoretically "impossible" because there will "always" be a reversion to the mean.


Yeah. It's gone on long enough that I'm wondering the exact same thing. Of course, if it doesn't, that return to mean is going to be a real bitch to ride out.


What mean exactly? Companies are more profitable than x years ago, our economy is bigger, etc. The mean you think exists perhaps doesn’t?


Printing money can achieve both of those, but it isn't necessarily sustainable. When I was younger, I would have said it isn't sustainable, but now I'm not so sure.


Dont feed the trolls..this is their plan and they’ll be back in the future to tax the winners.


>Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range.

I'd like to see how you came to this conclusion.

Painting with broad strokes, one can retire after working in tech for 15-25 years. Start at 25 and they are done by 50. Current death rates for dying between 25 and 50 are less than 0.7% [0]; that's not even correcting for the fact that the wealthy likely have a reduced mortality rate [1].

[0] - https://www.cdc.gov/nchs/products/databriefs/db293.htm#age_s...

[1] - https://scholar.harvard.edu/files/cutler/files/jsc160006_01....


I don't think that's the right way to look at the graph. It says that out of 100k 15-24 yr olds 74 died, and also out of 100k 85-1xx yr olds 13k died. This is purely a measure of death rates and doesn't take the age distribution into account.

to get the probability of dying before 50 you have to look at the total number of deaths/pear, distributed by age: https://www.statcan.gc.ca/pub/91-209-x/2013001/article/11867...

the area under the curve for 0->50 looks about 1/10 of the overall, so I'd say the op is about right.


>It says that out of 100k 15-24 yr olds 74 died, and also out of 100k 85-1xx yr olds 13k died.

Yes, which is why I took the sum of those numbers for ages 25 to 50.

>the area under the curve for 0->50 looks about 1/10 of the overall, so I'd say the op is about right

You're describing the conditional probability that, given you have died, you are under the age of 50.


what you're doing is (129+192+405)/100000 = 0.7%

this means that out of 100k 25-50 yr olds 726 died during 2016. This is the probability that you will die during this year, given that you are a 25-50 year old, which is different from the probability that you will die before the age of 50. (the prior number ignores the cumulative probability that you have died as a <50 yr old during all years prior to 2016)

Given that all of us will die, the only question is the age at which we die. The conditional probability that, given you have died, you are under the age of 50 is exactly what we should be looking at.


>the prior number ignores the cumulative probability that you have died as a <50 yr old during all years prior to 2016

Ah you're right about that. Looks like I'm probably way off. This random thing google turned up [0] says that a 25 y/o male has like a ~70% chance to make it to 50!

>Given that all of us will die

Something doesn't feel right about this, but I can't figure out what. I'll let it simmer and assume you're correct in the meantime.

[0] - http://flowingdata.com/2015/09/23/years-you-have-left-to-liv...


yeah, the probability of death depends on a ton of priors so assuming the distribution is uniform is not quite right either.

just intuitively though, a probability of .7% for dying before 50 seems way too low


Saving 60% of your income is an achievable goal.

Start at say 25 and that's going to give you a much better than 1:10 chance of being able to very comfortably retire someplace cheap. If nothing else 1 year of work = 1.5 years not working, but at 4% return (over inflation) and 15% investment taxes you can retire in 15 years.


I'm currently working on this. In 2016, I saved 60% ($36,000). In 2017, I saved 65% ($42,250). This year, I am working on saving 70%-75% ($46,200). I'm 23 and planning on transitioning from devops to a software engineer role by 25-26 (working on the skills I lack!). I never need anything and am extremely content! I think I might be able to get to 80% but that will cut into some things, so still working on 75% for this year.


The reality is you need to increase your top line earning power. Working for decades earning average compensation for your location will get you an average outcome (which means a late in life, short retirement, at best). You need to super charge your earnings and savings for a number of years. Ideally through doing higher value work, as opposed to simply working more hours.

If you’re not making enough, and having financial flexibility is important to you, then considering a career change is in order. You might need to go down before you go up. Invest in yourself through education and experience and leverage that to get into a higher paying path (see more on this here: https://ramenretirement.com/2018/04/30/wealth/)

Once you have some real savings and wealth, then it’s all about investing it properly to generate inflation protected passive income (IPPI). I prefer real estate for this (see here for more on RE investing: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). I don’t think enough people consider alternative investments. Putting all your eggs in public markets is a low cash flow proposition, along with lower long term returns (see how returns compare here: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). If you have excess savings, you don’t need all that liquidity and should consider less liquid investments that might have higher returns: https://ramenretirement.com/2018/02/23/youre-too-liquid/

Lastly, people talk about the 4% rule, but that’s bullshit for a whole host of reasons: https://ramenretirement.com/2018/01/21/4-percent-rule/

Save money. Build wealth. Invest it wisely, considering alternatives other than the stock market. That’s the path. Simple, but not necessarily easy.


The fastest rate of return in the public markets is betting on the contract market not holding stocks long term, imo.


A simple investment thesis of investing in a low index fund (S&P 500) which has yielded about a 9% return over 50 years would product result most would find supremely satisfactory. Consider this, $10,000 compounded over 50 years without any additional capital and without taking any capital out would yield a return north of $25 million. However, the hardest part is not reacting emotionally to market dips and irrationally withdrawing your funds before the compounding machine really works. The other challenge is no one wants to get rich slow.


There's nothing off-putting about living frugally and taking care of your financial health. Working yourself to the bone is not necessary, but stopping and forming good financial habits that last a lifetime is a great thing to do. Just like there's nothing off-putting about becoming fit and taking care of your physical health. However you can over-do it on diets and exercise too.


> current trend of artificially propping up the stock market

I've been hearing that forever. Yet still the market goes up an average of 7% per year after inflation.

> Any failure in your investment strategy

You'd still be doing well with a diversified portfolio even living through the 2000 and 2008 crashes. The 100% guarantee of failure is to do nothing.


Look at the S&P 500 for the last 100 years. Does it always recover. Your scenario is far out and would require the entire society to change. Might as well take advantage of the fact you know this information, if true.


> Not to mention, your life is going to be pretty miserable if you're working two jobs and spending a lot of effort on living frugal.

Agreed. A few follow-up points:

1. Frugality isn't a binary state. There's a balance to be struck. Some people really do waste money on frivolous things that don't actually bring them much real satisfaction, and in that sense being more frugal is definitely worth it. But once you've eliminated most of the excessive spending habits, the payoff of frugality really starts to drop aggressively as you cut out more and more (diminishing returns). Skipping your $4 latte isn't really gonna change the game for you if you're trying to become Bill Gates.

2. Frugality to me is kind of the "lowest common denomitator" of financial strategies, which is why so many "experts"/"gurus" tend to preach it. "Spend less than you earn" is a dead-simple concept and worthy advice to a certain extent. But trying to increase wealth more and more by cutting out less and less is not really a great long-term strategy, especially if you're interested in achieving significant gains in wealth. It's arguably much more effective to invest time and energy into things that will increase your earning potential over time rather than fretting about small guilty pleasures or trying to squeeze a couple more basis points of return out of your portfolio of mutual funds. Things like: gaining a valuable skill that's in-demand; honing and improving those skills over time; taking on leadership/management responsibilities; starting a business; meeting and forming relationships with people who are smart & successful or at least aspiring to be; etc.

See also: https://xkcd.com/947/


The reason frugality is so fundamental is because everyone needs at least a little of it, no matter how much they make. Just as with the diet saying "You can't outrun your fork", lifestyle inflation will perpetually dog your every increase in income, until you learn some form of frugality.

Also, after being a small time landlord for a while, I've decided the true magic of interest is, over those ten years you didn't have to lift a finger. If you've got money to park while the rest of your life is chaos, interest is the totally-hands-free option, and I am coming to see that as magical.


I just said this elsewhere on this thread, but I'll make it shorter: the hedonic treadmill is a bitch.

If you're having $4 lattes once a week, they're worthless. If you have a $100 dinner twice a year... man, those are nice.


Recently my wife and I were discussing one of the big benefits of rural living being far less easy access to impulse $4 lattes, In-N-Out drive thrus and the like. A trip to a major suburb becomes a planned event (and more meaningful), just like those $100 steak dinners.


My wife and I lived in a small town about 20-30 minutes from the nearest major city. This was enough, for us, to significantly change our eating habits. There was a nearby small-town grocery/post office/liquor store where you could grab small things, but if you needed anything beyond the basics, you had to make a trip into the city. When it's a 1hr round trip, you're not just going to go grab McDonalds, especially when there was shitty weather. It was great, and I'm going to be trying to re-adopt that soon when I start working from home again. (She had to commute to town for work when we were out there, I didn't... which is why she was way more interested in moving into the city than I was :))


If your just slamming it down thoughtlessly, then yeah it's probably worthless.

Your mileage will vary. Personally, I love a good latte: it gives me a great deal of pleasure, especially when I can hang out at an inspiring 3rd place, read a good book or get some work done.


Health insurance is a must in US because the entire country systematically doesn’t give a shit about how inefficient it is. I guess some people make fat bucks at the expense of people’s lives.

My pay + company benefit == $650/month to Anthem.

I still end up paying $5000 for all pre-pregnancy costs out of pocket and the baby isn’t even here yet.

In Australia it would be 10% of that, purely because they got their shit together a long time ago.


In the US insurance companies themselves are meant to fight to keep prices down, but right now due to a miscalculation during the creation of Obamacare ("Patient Protection and Affordable Care Act") they're incentivized to INCREASE medical costs...

Why? The 80/20 Rule ("Medical Loss Ratio" rule).

> The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

Meaning insurance company executive wages can only come out of 20% of your premium, so if the CEO wants that pay increase they have to increase overall healthcare expenditure, premiums, and by extension their 20% cut.

While the 80/20 rule was a fantastic idea on paper, it changed insurance company's incentives in such a way so that premium increases are good for them.

You might be thinking "but in a competitive landscape people would just switch!" but there's nothing competitive about health insurance, people cannot even pick their own (their employer does) and most employers only offer two of the larger ones from that state.


Increases in premiums have always been good for insurance companies, just like increases in revenue are always good for other companies

Insurers do actively try to reduce healthcare costs but in many cases they are at the mercy of providers


So insurance in the US wants to take even more than 20% as profit? Am I correct in thinking that this actually makes socialized systems more efficient? They never have to front any profit overhead.


No, they want to increase how much that 20% share is worth.

If premiums increase from e.g. $500 to $600/month, the insurance company makes $20 more per insured via their 20% share.

The other 80% ($480) really does go towards medical costs, but the issue is that insurance companies aren't incentivized to help you keep those medical costs down (via negotiation with hospitals/drug companies), but may be incentivized to increase them. That's a problem.

In an ideal world insurance company's incentives and their customer's goals should be aligned (e.g. both save money). That makes them the ultimate advocate for you and fighting to keep healthcare costs low, that isn't what is happening (either before or after Obamacare).


Not profit. The 20% is supposed to cover all overhead. 80% is mandated to be spent directly on claims.


No, they want to grow the costs so that same 20% represents more money.


I’m in New Zealand, have a six month old son, we paid $0 from finding out she was pregnant up until going home after she stayed three days in the hospital to get comfortable with feeding him (there were no complications, no caesarean).

All checkups + scans pre-birth were free.

It would have cost money only if we decided to go for a private obstetrician, I think it’s the same in Australia.

So if it’s one of the 90% of births with no complications, going for the free public option just makes sense.


Even simpler, it is an equation with three variables: income, expenses, and rate of return on savings. An important point is that you do not need to hyper-optimize all three variables to achieve a good outcome, which makes it adaptable to many lifestyles and circumstances. Hyper-frugality is not the only path. There are multiple viable strategies that can be built around optimizing one or two variables and paying minimal attention to the others.

Frugality (minimizing expenses) is the easiest strategy to execute and it covers the broadest range of individual situations.

I know some engineers that take the approach of aggressively maximizing income, which requires a different kind of investment/sacrifice, allowing them to achieve their goals without hyper-optimizing expenses or rate of return. I would make the observation that this strategy tends to take a human toll, so not for everyone.

The rarest strategy in the wild, because it is the most technical to execute, is hyper-optimizing rate of return. I only know a couple examples of this, including one who went from -$50k (debt with no assets) to financial independence in ten years (and handily beat the S&P500 every single year) on a modest engineer's salary. This requires a deep investment in understanding a foreign domain almost no one is familiar with and achieving a degree of mastery. It has the highest payoff long-term but it also requires the most diligence and effort upfront. Making this work requires an unusual kind of person.

Being frugal and investing in index funds is definitely the path of least resistance for many people, but many people (or their partners!) do not want to live a hyper-frugal lifestyle. Fortunately, there are other options available with their own set of tradeoffs and engineers are well-positioned to take advantage of them.


As an investing noob, most of my money is parked in low interest savings accounts. How much of my life savings should I park in index funds? Any smart investing resources/guides you recommend? Thanks for your time.


Rule of thumb:

6 months of living expenses in liquid cash (savings accounts, rotating CD ladder, money-market funds, etc.).

Any money that you'll need in the next 5 years in low-risk, non-volatile investments (eg. bonds, T-bills). This usually applies to retirees, but also to folks like entrepreneurs or commission salespeople that have unsteady incomes.

Only invest in real-estate, individual stocks, crypto, precious metals, foreign currencies, collectibles, etc. if you know what you're doing. If it's not your full-time job (eg. a venture capitalist or real estate developer), no more than 10% of your net worth in these investments.

Put the rest into broad-based stock index funds.


Thanks for the info!


Hmm... I’m still sitting here waiting for that “magic” of compounding interest to take effect. So often HN (and r/personalfinance) investment advice reminds me of the ol’ Draw the Rest of the Owl meme[1]. Just “do mutual funds” and you’ll one day be a millionaire because Compounding Interest. Ok well thanks to a few recessions, poor timing of grad school and bouts of unemployment, my retirement is not much more than what I put into it. So there seems to be some other secret step between “buy mutual funds” and “retire comfortably“ that I’m missing...

1: http://i0.kym-cdn.com/photos/images/original/000/572/078/d6d...


'bouts of unemployment' this is bad luck and you are correct that it can take the wind out of anyone's sails.

Looking at the math, it's not difficult to find a mainstream mutual fund like FCNTX that has been pretty big for a long time. Since 1993, 25 years ago and encompassing both the dot com bust and the sub-prime catastrophe, it has returned, on an annualized basis, around 9%. I use that example because it's a pretty mainstream fund that has been highly rated by Morningstar most of those years, so it isn't hard to identify it as a fairly safe place to get excellent returns. I've been in it for most of those 25 years and when I first chose it, I was for sure a novice at investing. Note that today, it is only one of several funds in multiple sectors that I hold, I've diversified over time.

There really is no way to get rich quickly that does not involve a large dose of luck. The <30 multi-millionaires in Silicon Valley tilted the odds in their favor via a variety of means, but I'd guess that for every example of those people, you'd find dozens who moved to the area, worked their asses off in startups for a few years and then crashed and either settled for a regular job or moved elsewhere.


> Ok well thanks to a few recessions

I'm interested in this guy's[0][1] approach to take most of the downside risk out of recessions/bear markets/crashes compared to buy-and-hold. Basically, start with a diversified portfolio, and when any of them closes below their monthly 12mo moving average, sell it and buy treasuries.

I'm sure there are thousands of more sophisticated models out there, but the nice thing about this is its simplicity - minimal management, just rebalance once a month according to a single rule and forget about it. Looks like it works well, backtested against lots of historical market data sets.

[0] http://michaelritger.com/2017/10/19/tactical-asset-allocatio... [1] https://www.youtube.com/watch?v=YGnNGuo5ywg


What matters most is actually selling when your strategy tells you you should. If you ignore your sell signals, you are toast.


Look into the options market. Especially in choppy markets you can make a lot of money.

Edit: To add to this instead of using the mutual funds as a store value and being scared of holding stocks, you can buy puts as protection on your stock. Or you can buy spreads on stocks you like.


You have to wait a really realllllly long time.


> shop at Trader Joe's and Costco

Huh? Was that trying to say save money at the supermarket? Because those are two stores I don't associate with saving money, they're stores that offer premium products at reasonable prices, but they aren't going to compete with actual discount retailers.

It is just really odd examples/usage in that context...


Yeah, for sure you can find $60k diamond rings and $30k cognac at Costco (not kidding, see Costco in M.V.). But you can also get the least expensive per weight corn flakes, milk, potatoes and beans. And croissants...

I used those examples as a versus to the daily $7 Starbucks breakfast that many young folks seem to go for.


The lowest end Grocer in my area is Safeway. Trader Joe's is still cheaper.


N=1, but shopping at Trader Joe's in NYC will save you money -- if you can bear the crowds.


NYC is definitely an N=1, most other places in the country Trader Joe's is quite expensive. The food is high quality (and value good) but in absolute terms, more expensive than discount supermarkets.


> NYC is definitely an N=1

Where I live in California, my options are Safeway, Whole Foods, Trader Joe's, and a co-op more-organic-than-thou each egg has a name tag and resume type place. Trader Joe's is by far the cheapest of them all. The fact that Trader Joe's fixes their prices nationwide makes them much cheaper than the alternatives in expensive metros.


Also, this only helps if you're living in some place where food is expensive.


- Make sure you don't marry, or if you do absolutely don't have kids.

- Become a hermit

Saving money was so easy before I had kids. Once you have kids you need a car big enough to transport them. You need a house big enough to hold them. The missus insists that just going camping isn't really a vacation and they need to see some sights (real travel). And travel with kids isn't cheap. You gotta start getting the family insurance plans and the million little school fees and your bigger house has more stuff to break in it and the kids break stuff... Worst of all you multiply your chances of having some big medical problem--the death knell for any frugal living plan--the more people you have to care for.

Also, Costco doesn't really save you that much money unless you were the kind of person who always bought the top-of-the-line premium whatever. For people who typically only buy the base model widget the price is pretty similar or slightly more expensive typically.


I do agree with your assessment that kids are the biggest expense and possibly the biggest joy in life. Well it’s a risk and difficulty worth for many of us. But do your math.

After certain age family is the biggest and maybe the only close friend.

Social ties are important and usually healthy. Having kids and family can also be very motivating. After all, why do we live?


"Work for a company that offers health insurance. "

Small nitpick: You can always buy your own insurance. Obamacare made it harder to buy good high-deductible plans for yourself but even so, you can get your own directly. Don't go without health insurance, especially catastrophic coverage, unless rent and food are all you can afford.


this is way better (and more real) advice than a collection of disjointed, pretentious one liners.


Read MJ Demarco’s book “Unscripted” and you might come away with the opposite opinion.


also don't have kids. They are a money suck.


Don't get sick. Don't have kids. Don't get laid off. Don't have any unplanned emergencies that wipe your meager savings out. Don't enjoy life now.




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