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How to get rich without getting lucky

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Re: How to get rich without getting lucky

#151

Post by imgabe »

executesorder66 wrote: post #145
imgabe wrote: post #140

Earlier quoted context omitted.

That is assuming the raw materials cost $0 and there is no value to assuming the risk of the sales price. If you pay the worker $800, but it turns out the market only values the widget at $500, does the worker return the difference? Usually not. If you are not providing any value, why is the worker not just cutting you out of the deal and making and selling widgets directly?

> That is assuming the raw materials cost $0 and there is no value to assuming the risk of the sales price. Yes, it was a very simplified model. > If you pay the worker $800, but it turns out the market only values the widget at $500, does the worker return the difference? Usually not. In that case the worker is the one being unethical. > If you are not providing any value, why is the worker not just cutting you out…

> > If you pay the worker $800, but it turns out the market only values the widget at $500, does the worker return the difference? Usually not.

> In that case the worker is the one being unethical.

I don't consider the worker any more unethical than the owner is in your example. Two adults have access to the same information and come to an agreement. If they both consent to the transaction without coercion, there can be nothing unethical about it.

Owner assumes risk for possible but not guaranteed payoff.

Worker gives up potential upside, but gets guaranteed payoff.

Worker has the option to reject the deal and assume the risk themselves if they like, or assume part of the risk by providing some capital of their own or working contingent on future payoff (a la, lower base pay + stock options like startups do).

The value of things in the future cannot be known. Reducing that uncertainty has value. Rewards are distributed in proportion to the risk that is assumed.

Re: How to get rich without getting lucky

#152

Post by shove »

maehwasu wrote: post #101
pavlov wrote: post #55

Earlier quoted context omitted.

> ... the constant “only rich people are meaningful human beings” message that is blared 24/7 from western culture ... I don't think it's only Western culture that is to blame. Middle Eastern, Indian and Chinese cultures seem to have even more ingrained versions of this core assumption.

Correct. Western culture is probably the least materialistic of all major cultures (500M+ people).

>Western culture is probably the least materialistic of all major cultures

Is this sarcasm? What are you basing this on? I don't think I've ever heard anyone opine this before.

Re: How to get rich without getting lucky

#153

Post by Radle »

Aaargh20318 wrote: post #80
Radle wrote: post #71

Earlier quoted context omitted.

Maybe you are misunderstanding what the term consume means? Consuming means using resources on things that immediately loose their value. If you for example buy a house, that's not consuming since the house has inherent value. But if you yourself the newest gaming rig, the gaming rig is consuming the money. This is what Americans mean when they talk about consumer society.

> Consuming means using resources on things that immediately loose their value. You mean like food ? It's literally the first definition of 'to consume' on Google.

The word has a dual meaning.

You can consume food, you car consumes gas and your girlfriends expensive holiday consumes money.

When Americans say "consumer" they mean someone who spends money on things that they are not going to sell again. That can be smartphones, luxury cars, drugs or food.

You could also say a consumer is the opposite of an investor.

Re: How to get rich without getting lucky

#154

Post by gieksosz »

alanfranz wrote: post #105
davedx wrote: post #88

Earlier quoted context omitted.

Put as much of your monthly income into a Vanguard fund as you can afford. Most of my money is in this one: https://americas.vanguard.com/institutional/mvc/detail/mf/ov... You might want to put some into a fund that comprises bonds, though they've performed poorly (for my investments) in recent years. If you're young ( Also: this is a long play. Leave it there.

All those indexed funds suggestions are biased by the fact that the stock market, overall, has increased in value OVER TIME: http://www.macrotrends.net/1319/dow-jones-100-year-historica... Remember, the stock market does not create money, it's not a fundamental advancement for humanity. That just means that more people poured money into stocks, rather than other investments or savings. There's absolutely, ABSOLUTELY…

This is not exactly like that:

- new companies go IPO, they do it because there is liquidity in the market, so they can count on someone buying their shares and cashing in.

- some blue-chip companies pay out dividends

- as much as many people hate on that, profitable companies engage in shares buy backs which is a way to return money earned by the company to its shareholders. If the company makes no profit, it has less to do buy-backs with.

- in the end a share is a piece of a company, big part of their long term valuation will always be driven by their fundamentals like a ratio between profit and revenue or how likely they are going to default on their debts, no one wants to own a piece of company that is going to disappear

in summary, there is quite some connection to the real economy, but I agree that part of the valuation is just because other people pour money in it is just not that bad.

Re: How to get rich without getting lucky

#155

Post by Jach »

whataretensors wrote: post #65
plop_ wrote: post #21

Earlier quoted context omitted.

Do you have advices for young people in long term investments ?

Don't listen to risk-averse engineers. You are young, invest in high risk things you believe in. Make it an active investment if you can. Recognize who is giving you boring advice(index funds), look at the risk levels in their life, and then disregard them if they don't take chances on anything. At a young age your risky investment % should be at it's highest. The exact amount will depend on your appetite.

I'm not sure if it's true that your investment percentage should be at its highest while young. Maybe as a percentage of your total assets? But then it's just a consequence of when you're young you have lower assets. Whereas if you're instead talking about a percentage of your income, say, then perhaps your risky investment should be highest when you're older, because by then you've developed a nest egg that will basically secure your retirement so long as you leave it alone (e.g. with "boring" index funds) you can devote all of your income to whatever risky endeavors without having to worry about the high probability downside of losing it all.

There's some basic math around compound interest that comes into play that young people should consider. While growing up my state required a "financial literacy" course for everyone, I assume that's expanded across the country so most people should be able to do the math if they're so inclined, but I also think charts like these are useful and good enough to get the point across: http://www.businessinsider.com/amazing-power-of-compound-int... Generally speaking, start-time for getting the investment nest egg rolling dominates.

Also even if your appetite for risk is large now, you have to really ask what you want out of any risky endeavor, when you want it realized, and what you'll be satisfied with, since if you'll be satisfied with X there's little reason to pursue some high risk activity that if it works out returns Y >> X but most likely (being high risk) you won't even break even. Consider a risky endeavor that's less risky in that if it works out will give you X, but with the nature of risk the probabilities of not working out are lowered. Boring index funds are a type of this lower risk investment that can satisfy "effectively able to retire" in your 30s, but they're not going to satisfy rich startup gains leading to double-digit millionaire+ status. It's at least a path if you want that certain state of "retirement nest egg" when you're in your 30s, and by extension works if you just want it for your 60s too. On the other hand, maybe you're someone indifferent to when you want unicorn-success riches to be realized (great if tomorrow, fine if 20 years from now after you finally catch a break and haven't died first).

Re: How to get rich without getting lucky

#156

Post by gnode »

keiferski wrote: post #51
zuck9 wrote: post #44

Earlier quoted context omitted.

How does money get you social skills?

If you’re poor and rude, you’re just an asshole. But if you’re rich and rude, well, then you’re “eccentric.”

That's not riches; that's status. They often go hand-in-hand, but it's important to not confuse the two, as the article mentions.

Re: How to get rich without getting lucky

#157

Post by avoutthere »

siberianbear wrote: post #97

I got rich in Silicon Valley from my equity compensation. I bounced around various companies and startups. Two of them were successful and had public offerings. Of those two, one was spectacularly successful. Sure, luck played a role. But my pure grit and tenacity also played a role. Taking on hard bugs and solving them played a role: I solved a lot of hard bugs that others couldn't solve. Spending Saturday afternoon…

> I read through the list and agreed with every item.

I'm not particularly wealthy, but I agree. And you have my sincere congratulations on your success, which I, unlike others, recognize as the product of your hard work and risk-taking.

Re: How to get rich without getting lucky

#158

Post by 11thEarlOfMar »

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.

Re: How to get rich without getting lucky

#159

Post by justherefortart »

keiferski wrote: post #33

I’m going to take a contrarian view and say: figure out why you want to be rich, first. For most people, money is a proxy for respect, status, power, security, social skills, romantic attraction from others, free time, or otherwise. If you can ignore the constant “only rich people are meaningful human beings” message that is blared 24/7 from western culture, you might find that it’s easier to just go after what you w…

Wealth is freedom.

Laws don't work the same, you don't answer to the same people, life isn't a constant grind to make ends meet, etc.

I'm what I consider rich currently. I'm not remotely wealthy.

Re: How to get rich without getting lucky

#160

Post by charlesdm »

AnIdiotOnTheNet wrote: post #144
charlesdm wrote: post #102

Earlier quoted context omitted.

This has a flipside though. If you do manage to find success (and say, own a profitable business or have an exit), you'll be taxed into oblivion. It might not be the popular opinion on HN, but I would hate that. Make sure to structure things properly from the beginning so that you can leave when appropriate.

> This has a flipside though. If you do manage to find success (and say, own a profitable business or have an exit), you'll be taxed into oblivion. Ok, but if I'm already living the life I want to live... who cares?

Then it doesn't matter. But what if you're halfway there, and would be there if you could legally avoid the tax?

Some people care about this, others don't.

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