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Ask HN: How have you achieved financial independence?

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Re: Ask HN: How have you achieved financial independence?

#161

Post by desdiv »

charlesdm wrote: post #152
desdiv wrote: post #146

Earlier quoted context omitted.

>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 Arrin…

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.

Re: Ask HN: How have you achieved financial independence?

#162

Post by mywittyname »

n72 wrote: post #14
tsaprailis wrote: post #8

Earlier quoted context omitted.

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?

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…

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.

Re: Ask HN: How have you achieved financial independence?

#163

Post by charlesdm »

desdiv wrote: post #161
charlesdm wrote: post #152

Earlier quoted context omitted.

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 Arrin…

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 h…

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.

Re: Ask HN: How have you achieved financial independence?

#164

Post by mywittyname »

aminorex wrote: post #155
whamlastxmas wrote: post #121

Earlier quoted context omitted.

#shitHNsays

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.

Re: Ask HN: How have you achieved financial independence?

#165

Post by lucb1e »

netman21 wrote: post #71
lucb1e wrote: post #24

Earlier quoted context omitted.

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. Thi…

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).

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?

Re: Ask HN: How have you achieved financial independence?

#166

Post by morgante »

zen_boy wrote: post #119
chillydawg wrote: post #65

Earlier quoted context omitted.

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 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 put…

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.

Re: Ask HN: How have you achieved financial independence?

#167

Post by morgante »

UweSchmidt wrote: post #15
zen_boy wrote: post #10

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…

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.

Re: Ask HN: How have you achieved financial independence?

#168

Post by [deleted] »

aminorex wrote: post #93
maaaats wrote: post #51

Earlier quoted context omitted.

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.

[deleted]

Re: Ask HN: How have you achieved financial independence?

#169

Post by kaybe »

TooSmugToFail wrote: post #138
kaybe wrote: post #59

Earlier quoted context omitted.

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 ha…

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.

Re: Ask HN: How have you achieved financial independence?

#170

Post by Jtsummers »

lucb1e wrote: post #165
netman21 wrote: post #71

Earlier quoted context omitted.

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).

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).

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