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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?

#21

Post by n72 »

EliRivers wrote: post #17
n72 wrote: post #14

Earlier quoted context omitted.

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…

"The benefit of the dividend is already priced into the stock, so they are no better than any other stock." I hear this sort of thing a lot, and in my experience, everything already being priced in isn't true (both of dividend stocks, and stocks not paying dividends). This relies on the efficient market hypothesis being broadly correct, and based purely on my own experience, it isn't. My findings are very much based…

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

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

#22

Post by javitury »

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…

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

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

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

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

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

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

#23

Post by barrkel »

javitury wrote: post #22
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…

> Spending 3k€ per month for the next 30 years would be about 1M€ That is only withdrawing the principal without taking into account the real interest/yield rate you can make off the investment. That money would probably last longer or yield more for the same time period. In fact, as you point out it can last indefinitely with an after inflation and tax ROI(real yield) of 4% which converts to ~3k/mo. You would have t…

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

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

#24

Post by lucb1e »

mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

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

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

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

#25

Post by maccard »

siscia wrote: post #20
mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

The married part is the one I am more interested in. I too live extremely cheaply, but my girlfriend has way more expense than me (still reasonable, but too high in my book). We are not married, but we spend a lot of time together and I am a little afraid that this difference in how we spend money will be a problem. How did you manage it? My very first step was to have her create a save account where she deposit each…

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

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

#26

Post by MarkCole »

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…

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

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

#27

Post by lubonay »

embwbam wrote: post #18
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 just switched from Wealthfront to Betterment, because their software does a good job of helping you with this. It asks you what you're using the money for, when you'll need it, and about your tax situation. It'll automatically provide different investment options based on what you answer. So, for your situation you could put some of it into an income producing "goal", and put the rest into something more growth ori…

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

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

#28

Post by EliRivers »

n72 wrote: post #21
EliRivers wrote: post #17

Earlier quoted context omitted.

"The benefit of the dividend is already priced into the stock, so they are no better than any other stock." I hear this sort of thing a lot, and in my experience, everything already being priced in isn't true (both of dividend stocks, and stocks not paying dividends). This relies on the efficient market hypothesis being broadly correct, and based purely on my own experience, it isn't. My findings are very much based…

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

I believe that dividends are not priced in.

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

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

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

#29

Post by repomies691 »

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

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

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

#30

Post by chaostheory »

mikekchar wrote: post #3

I'm only responding because nobody else has replied to your thread. Feel free to ignore me if you think it is irrelevant. My favourite Dr. Who quote: "Work for? I don't work for anyone. I'm just having fun." Describes me, even though I receive money every month. My expenditures are considerably less than the money I receive every month by having fun. If I didn't receive money, then I would be in trouble, so I don't r…

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

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

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

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