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How to get rich without getting lucky

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Re: How to get rich without getting lucky

#521

Post by kudokatz »

Joeri wrote: post #391
20years wrote: post #236

Earlier quoted context omitted.

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 s…

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 ef…

> 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.

Re: How to get rich without getting lucky

#522

Post by 0xfeba »

davidgay wrote: post #475
0xfeba wrote: post #433

Earlier quoted context omitted.

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…

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.

Re: How to get rich without getting lucky

#523

Post by apineda »

mrhappyunhappy wrote: post #503
shams93 wrote: post #229

Earlier quoted context omitted.

We have all these ideals about hard work but in reality the economy is largely a casino. With crippling student debt most young people have been hamstrung from the gate. Milleneals don't generate wealth like boomers because most milleneals were effectively born into indentured servitude with the exploitation over education. Sure you could try to go without a degree in 2017 but good luck getting your foot in the door…

If you can’t find work, create your own. Worked for me and I’ve been at it happily for a few years now. Best decision ever made.

What do you do if you don't mine me asking?

Re: How to get rich without getting lucky

#524

Post by kudokatz »

kentm wrote: post #425
toomuchtodo wrote: post #237

Earlier quoted context omitted.

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!

Re: How to get rich without getting lucky

#525

Post by frgtpsswrdlame »

morgancmartin wrote: post #496
frgtpsswrdlame wrote: post #202

Earlier quoted context omitted.

>Wouldn't you agree that the harder someone works, the greater their chance of becoming rich? No. >You seem to argue that the OP has absolutely no claim to the wealth that he has worked for and his preferable situation is due entirely to luck. Well let's start from the base. Do you think someone has a claim to wealth that they earned entirely due to luck? >This is of course preposterous and easily disproved, so I'm c…

Well now I'm curious about what your views on free will are. > Do you think someone has a claim to wealth that they earned entirely due to luck? First off, this is a difficult question to answer because it seems yours and my definitions of "luck" are not the same. Or perhaps they are the same but we view the surrounding context and their individual manifestations as dissimilar. I would say it depends on the situation…

I know this is three days later but I just saw your comment and wanted to leave a reply (though it may never be seen.)

>Essentially, I'm asking you to consider these two farmers "in a vacuum" such that their wealth is due entirely to their own actions and not to any outside forces. Absolutely nothing left to chance, or "luck." By my definition of the word at least.

I don't think it's enough to refute this by simply saying that 'people don't live in a vacuum' as others might. I think it's actually impossible to conceive of a person 'in a vacuum.' I reject this sort of individualistic view of a person in favor of a more communitarian view - which is to say a person is made up of their social attachments and environment as much as those social attachments and environments are made up of individuals. It's impossible to conceive of a person in a vacuum for the same reason it's impossible to conceive of a cat that's a dog. A 'person in a vacuum' just isn't a person.

>They are twin brothers and received the same upbringing. One of the farmers tends his lands diligently while the other is concerned with other aspects of life and only does the bare minimum to survive. As you might expect, over time the first farmer prospers due to the hard work he has put in to cultivate his lands while the second farmer stagnates because he has prioritized other matters. They both understood the benefits of tending to land diligently from their shared upbringing, but they made different decisions for whatever reason.

You seem to posit that they are exactly the same in upbringing and everything but then behave differently. What do you believe is the source of this differing behavior? If we traced it back far enough would we eventually reach a point where it becomes apparent that this difference originated in 'a thing' which the farmers had no control over? I believe so.

Re: How to get rich without getting lucky

#526

Post by Jommi »

charlesdm wrote: post #131
Jommi wrote: post #123

Earlier quoted context omitted.

I guess it might slow you down from getting surpr super rich, but in the end it's surely worth it.

No. It slows you down just getting rich as well. If I want to make €5 or €10m and retire, it's inefficient to pay a lot of tax if you can legally get around it. It's one thing to pay on gains you make after you've gotten rich, i.e. if you're making 5% a year on €10m, than on the initial capital you're building up.

But if the tax goes into something like education, it also has an accelerating effect.

I think this is an issue that just isn't that black and white as you want to portray it.

Re: How to get rich without getting lucky

#527

Post by tru2changes »

falcolas wrote: post #187
11thEarlOfMar wrote: post #158

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. Thi…

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 wor…

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.
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