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Ask HN: I made $24k over the last month. Now what?

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Re: Ask HN: I made $24k over the last month. Now what?

#151
post #129
post #124

Earlier quoted context omitted.

The poster expressed the sentiment that the app store ecosystem is fragile and the income will end. If you believe that, investing in hiring more programmers for apps would be a move counter to your own beliefs. Since I tend to agree with that assessment, I couldn't recommend doubling down on building apps. There may be other good reasons to consider that, such as moving in another direction (consultancy, which raise…

Noodle had an excellent point about diversifying, so I won't go into that too much. However, there is still a metric shit-ton of money to be made on the app store. I don't see people leaving it in droves immediately. He knows how to make money in this environment right now , so in my opinion he should spend at least some of the money he wants to invest on something he already knows how to do well. I just don't see th…

Yeah, i'd take at least %50 of your income, and put it in various things, some CD's, some foreign currency investments, govt bonds (tax free), etc... Then save the next %25, for rainy day's in an account, interest rates are terrible right now, so you might try one of those savings accounts which earns miles.

Then with the last %25, use that to invest in more appstore / development projects.

Re: Ask HN: I made $24k over the last month. Now what?

#152
post #25

Hire people to do the things you do which have the worst tradeoff of hours expended per unit of value added. Alternately, hire people to automate those things. And I'd SERIOUSLY consider at the very least a) setting yourself up a SEP-IRA and b) socking away the maximum in an index fund. It is essentially monopoly money to you anyhow at the moment, right? Trust me, you won't regret having 30 years of appreciation on y…

Yes, listen to patio11. I do NOT want to invest in the stock market, or invest in anything long term like bonds or property. I want to somehow use the money to make more money quickly (within a 2 year time span). Excuse me if I'm too harsh, but you should spend some of the money on a membership in Gamblers' Anonymous. Because you talk like a bad gambler. The hallmark of bad gamblers is that, if ever they get ahead, t…

The hallmark of bad gamblers is that, if ever they get ahead, they look desperately around for a way to lose so they can get back to their comfortable status quo: Grifting, in poverty.

You appear to be using a very roundabout way to say that there is no reasonably safe way to turn tens of thousands of dollars into hundreds of thousands in 2-3 years. If that's what you mean, just say so. Implying that everyone already knows this by insulting the OP doesn't really have the same effect.

Re: Ask HN: I made $24k over the last month. Now what?

#153
Invest in yourself.

You've already proven that you are capable of doing great things. Work to increase your capabilities.

To generate wealth, in my opinion it's best to do things that are aligned with what you are interested in. Since you have demonstrated ability with business and technology, and some capital, start with that.

One way to generate wealth is to start a company, then sell it. There are many skills necessary, but the essential one you already have - being able to just plunge in and do it.

I'd say, dive in and see if you can learn to build a small company by bootstrapping it - without taking investment money or going into debt... take it slow and incremental, not going into debt or taking investment unless you think you have a winning team and product. Usually at that point you don't really need investment, but can use it to expand a lot.

These days, software development done by yourself or a few friends and servers in the cloud are so cheap that you can build whole software or software-as-a-service companies with your existing cash flow. Learn the technical and business skills you need. Plan experiments that help you learn - that won't kill you if you fail. You can learn much more from failure than success, so make mistakes as fast as you can.

Oh yeah, and find a good accountant and make sure you pay your taxes.

Here's some resources:

Cheat sheet on how to get people to change - and buy your products. The best summary I've read:

http://www.chrisoleary.com/projects/TheParadoxOfPain/Documen...

. . . .

My bible on how to learn customer problems and turn them into money. Also has a great annotated bibliography of other good books to read, and a methodology for becoming a self-taught entrepreneur. The author founded 5 well-known tech companies that did IPOs, generating a great deal of wealth, and now teaches at Stanford business school. I can't say enough good things about this book:

The Four Steps to the Epiphany - Steve Blank http://www.amazon.com/Four-Steps-Epiphany-Steven-Blank/dp/09...

. . . .

The inside story on nitty-gritty details of how to start a start up, do the legal work necessary to create the machinery for wealth generation. Written from the perspective of helping tech entrepreneurs protect themselves. If I would have had this book when I was starting out, I'd have held on to much more of my wealth:

High Tech Start Up - John L. Nesheim http://www.amazon.com/High-Tech-Start-Revised-Updated/dp/068...

. . . .

Last but not least, a very important short text on how money works. Written by the founder of MasterCard. Extremely helpful in thinking about money, how to work with it and think about it, what it's good for, not good for, and its capabilities and place in ones' life:

http://www.amazon.com/Seven-Money-Shambhala-Pocket-Classics/...

Bonus text - the classic manual on leadership - really helpful instructions on gracefully working with others. How to lead effectively and with a minimum of muss and fuss. This is my favorite translation.

Tao Te Ching - Lao Tzu, translated by Stephen Mitchell http://www.amazon.com/Tao-Te-Ching-Stephen-Mitchell/dp/00608...

- a serial entrepreneur

Re: Ask HN: I made $24k over the last month. Now what?

#155
post #92

Earlier quoted context omitted.

Incorporate to soften this blow.

If the OP is a sole proprietor in the United States, then incorporation won't alter the tax burden. Incorporation is still a good idea, for other reasons (simplified banking, limited liability, etc).

Incorporation can help with U.S. taxes by enabling a tax-free retirement account with a large contribution limit. (SEP-IRA has a 25% of salary / $49k annual contribution limit.)

Re: Ask HN: I made $24k over the last month. Now what?

#156

Seems like there MIGHT be some real estate opportunities in some parts of the US. Short sales in Vegas or parts of CA might be interesting. Income properties (strip malls) might be available for cheap. Fourplexes, too. I tend to lean towards our current irrational spending/printing resulting in hyper-inflation (or at least inflation) though plenty of smart people support deflation, too. If you buy the inflation argum…

I am quite sure there is not going to be any inflation or hyper-inflation. The U.S is spending a lot, but it's also very very high income. And a lot of countries have no interest in one of the biggest consumer group for their products disappearing.

The U.S dollar will stay weak because this promotes manufacturing, which is what the U.S needs to be doing right now. But it will not weaken much more.

The one thing you can use to measure the long term financial stability of a country is its infrastructure, and when you start seeing roads decaying then start expecting inflation in a year or two. Till then, things are fine.

Re: Ask HN: I made $24k over the last month. Now what?

#157
Judging from responses here, and my own experience, I think you need first of all to make some life decisions.

Here are the questions I'd try and answer first:

1) What sort of life do I want for myself? Do I want to keep programming cool stuff as ecosystems come along? Do I want to manage programmers? Do I want to run a business, become an internet marketing guru, based on my experience, or try and live off of passive income?

The answers to those questions will shape your decisions, whether or not you're thinking about them. If you do think about them, you'll have a better shot at structuring a good outcome for yourself.

Based on your post, it sounds like you currently want to double down your current income on the hopes of getting 'rich'.

Here's what I'd guess: I'd guess this is your first 'business' venture. It's gone really well. You are used to seeing such rapid returns in business because it's all you know. You are now trying to invest more money than you previously have (since your time was not previously worth $24k / month), and trying to get the same rate of return.

You will do yourself a huge favor if you give up on this plan. It is incredibly unlikely to happen. I'll be clear: my guess is that you are currently experiencing the best ROI you will get in your entire life. Never again will you see these sort of _percentage_ returns on your money.

That's of course very different from what sort of _dollar_ returns you may see.

If you're able to give up on your high ROI dreams, you'll be doing yourself and your family someday a giant favor.

Now, if you're still on board with me, you're wanting to invest this money, but you understand you need to follow the basic rules of capital, make sure you can preserve your capital at all costs, and need some way to deal with your total incompetence in the area of financial investment, while learning, and without losing your nest egg.

Simplest advice here is to 1) choose some areas you're interested in, 2) give yourself a couple _years_ to fully deploy the capital in those areas of interest, 3) keep 3 to 6 months liquid assets in case your business blows up.

If I knew no more about you, I'd probably go with some average of the advice here:

Split up your money into

a) reinvestment, become an app store publisher or app store angel investor with 33% of your money. Stick with what you know here, and it will magically become investing rather than 'gambling'.

b) cash -- 33% toward high liquidity cash alternatives until you've got 6 months or so set aside

c) long term investment -- 33% into index funds, split up between national and international super low load index funds

Don't forget to hold onto .3-to.4x of (Revenue minus a) for taxes, or .4xRevenue depending on how you structure your investments.

So that would equal like:

$24k

- 3k living expenses

- 7k deductible investment (a-la signing up apps to publish them)

- 7k taxes

- 3k cash

- 4k long term investments

----------------------------

super-smart young business person.

That's not quite what my upper paragraph math was, obviously the more you can put into the deductible column, the more efficient you'll be. You could rebalance it to like 4.5/4/5 or so with the balance going to taxes, if my back of the envelope calcs are accurate.

Re: Ask HN: I made $24k over the last month. Now what?

#158

Buy AAPL, they made you some money already - they will make you more with "iSlate" soon enough.

iSlate is an opportunity I am watching for. Let's see what Steve tells us. I'm appropriately positioned, seeing as I have all this know how.

Re: Ask HN: I made $24k over the last month. Now what?

#159

Like others mentioned, keep in mind you owe about 45% taxes. 30% ish for actual taxes then 15% for self-employment tax. SO that 24K is really about 14K. Also keep in mind that was during the holidays it seems or maybe after a few game launches that did well. You won't see the same level of revenue steadily unless you keep releasing and have good pricing strategies. My advice, save it up or use it to reinvest in your…

Question for drawkbox: if this guy had formed an S corporation, would that have changed the self-employment tax? He'd owe taxes for his own income, but the S corp (IIRC) doesn't pay taxes, right?

Re: Ask HN: I made $24k over the last month. Now what?

#160
Even if you know the app store flow is fragile, I doubt anyone can tell whether it'll turn in 6-months or 6-years.

If you are an expert in making money there, ride that wave -- looking for something comparably-lucrative-but-different is a distraction. Optimize the hell out of your current flows -- find ways that spending $1 in marketing makes you >$1, create small variants, port to other platforms, outsource -- with careful metrics so you detect early when your strategies are played out.

Meanwhile, on the side, sock some away in a completely safe non-distracting portfolio. When it makes sense to turn your attention elsewhere -- either out of the app store opportunity ending, or a desire for something new -- then that safe cache of money will help. But at this point, you've already got a lucrative place to spend your attention -- why dilute it with other plans?

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