Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity • Hacker News Board

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#121

Post by idrios » Tue, Mar 30, 2021, 5:31 PM UTC

TeMPOraL wrote: post #117

idrios wrote: post #97

Earlier quoted context omitted.

I've seen this example going around because it's such an egregious example of attributing to hard work what was essentially just gifted, but I think "wealth is accumulated through habits" is not wrong. It's really just a statement about compound interest, that if you live frugally and invest you'll end up with tons of money. The statement is better characterized as something like "wealth is the product of habits and…

I'm going to say something heretical here, but: I'm increasingly convinced that the whole compound interest thing is bullshit. Not math-wise, the math checks out. Just propaganda-wise. In practice, with interest rates available to general population, a typical person isn't going to accumulate any meaningful wealth unless they were already wealthy. Say you're saving $500 a month for 10 years, on an account with 5% int…

Honestly, I agree with everything you just said. I will say that if you continue the pattern for 20 years you end up with $200k, of which $83k was made in interest -- and after 30 years you'll have $400k, $200k made from interest. Meanwhile, the S&P 500 averages about 11% interest annual. The article is vague on some details, but if you did what it sounds like the man in the article did and invested $500/year into the S&P 500 from 18 until 98, you would have $240 million at the end.

But that's money that you would never be able to spend because it's only accumulating for as long as it's still in the S&P 500. This millionaire would wear clothes with holes in them, and probably never traveled or spent money on any of the things outside of basic necessities. I wouldn't enjoy that lifestyle.

Also, as will definitely be pointed out by someone, $500/year is not bad for any person with a reasonable income. But $500/year for someone living paycheck to paycheck is not possible.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#122

Post by jopsen » Tue, Mar 30, 2021, 5:39 PM UTC

ihm wrote: post #107

yboris wrote: post #11

Related: Effective Altruism is a movement & community of people focusing on the effectiveness - > about answering one simple question: how can we use our resources to help others the most? https://www.effectivealtruism.org/ Giving What We Can is a community of people who have pledged to give at least 10% of their income to cost-effective charities. I'm a proud member of 10 years. https://www.givingwhatwecan.org/ Zell…

Effective Altruism is very confusing to me as it seems to only address the symptoms of poverty and not the root causes. In a very abbreviated version, that root cause being that our society requires that some labor in terrible conditions for little pay because it is necessary to maintain profits. And, those people having little power to oppose this state of affairs compared to those who perpetuate the status quo, not…

> that root cause being that our society requires that some labor in terrible conditions for little pay because it is necessary to maintain profits.

Economic theory would argue that: "little pay" is because they produce "little value".

I know pay and value are not aligned. But better education, health prospectives and stability (not war) tends to improve pay throughout an economy.

Individual acts of charity, especially effective altruism, is more like blow with the wind. Contrary to popular belief extreme poverty is rapidly declining.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#123

Post by misiti3780 » Tue, Mar 30, 2021, 5:43 PM UTC

lotsofpulp wrote: post #113

misiti3780 wrote: post #106

Earlier quoted context omitted.

he is certainly and outlier, and probably a bad example, but i read his biography and if i remember correctly he started investing money he made on is paper route in stocks early on. It's true your probably not going to make 188M, but even a lot less than that is still rich.

>if i remember correctly he started investing money he made on is paper route in stocks early on. Yes, and he should be credited with taking that initiative. But note that this was the 1940s. I would posit a high probability that Buffet got advice from his educated father, who had is own investment firm, that 99% of children would never get because they didn't have someone as capable as Buffett's father. And/or the o…

I do not think most (sane) people would disagree that

1. life is not fair

2. there is no such thing as self-made men/women. luck play plays a role in everything, from the country you were born in to the genes you contain.

I was just making an observation about how great and effective compound interest is.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#124

Post by mrwoggle » Tue, Mar 30, 2021, 5:46 PM UTC

jsjsbdkj wrote: post #84

cik wrote: post #17

Earlier quoted context omitted.

That's exceptionally untrue - though it can be true in context. In the city beside mine, renting a place downtown, and working in the grocery store it's very possible to save $500 per month. For reference, minimum wage is the equivalent of $1700 USD, and renting a one-bedroom, all in will cost roughly $454 USD. With cellphone (250GB of 5G speeds) costing the equivalent of $15 USD, and groceries and electricity costin…

> minimum wage is the equivalent of $1700 USD Your first mistake is assuming you can get a minimum wage job for 40/hr (with benefits?). Maybe you can get 2 20hr/week jobs with no insurance, if you can schedule them right and travel between them fast enough. > renting a one-bedroom, all in will cost roughly $454 USD A room in a rooming house where I live costs $400/month, so I find this pretty suspect. Where is this e…

Good analysis. I'd like to add the cost of change. At some point you will move places or change jobs. You will have periods of less income and more spendings. This adds up. A few months of saving evaporate.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#125

Post by mrwoggle » Tue, Mar 30, 2021, 5:55 PM UTC

cik wrote: post #17

borplk wrote: post #9

Earlier quoted context omitted.

> "Wealth is accumulated through habits" is a great story to tell people but it seems very often to be complete BS. Yes. It's capitalist propaganda. If you are a highly paid heart surgeon or CEO you can "accumulate wealth with habits". If you are anywhere between flipping burgers to many other types of jobs there's just not enough money "coming in" for these things to make a huge difference. You can be more sensible…

That's exceptionally untrue - though it can be true in context. In the city beside mine, renting a place downtown, and working in the grocery store it's very possible to save $500 per month. For reference, minimum wage is the equivalent of $1700 USD, and renting a one-bedroom, all in will cost roughly $454 USD. With cellphone (250GB of 5G speeds) costing the equivalent of $15 USD, and groceries and electricity costin…

Did you live like this for a period of more than 5 years? You just gave a snapshot from an ideal situation. Fact is, income is always less, spendings are always more. Don't know about the US, but in Europe living on minimum wage, trying to cut all costs, there is very little you can save.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#126

Post by SuoDuanDao » Tue, Mar 30, 2021, 6:07 PM UTC

jopsen wrote: post #111

SuoDuanDao wrote: post #45

Earlier quoted context omitted.

You can still leave wealth to your children! Multigenerational wealth has to start somewhere. Not sure about the second part of your question - buy different assets maybe?

Putting some stonks your kids name when they are born might not be a bad idea.. There's probably some tax benefits. And a good chance they won't touch it for the first 18 years -- By which time you might have given them a taste for compounding interest :)

My parents were of modest means, but they set aside some money for 18 years to help me with educational expenses. Not only did it help me graduate debt-free, but discussing what my education fund was doing as I was growing up left me much more comfortable than most members of my generation handling finances.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#127

Post by derekp7 » Tue, Mar 30, 2021, 6:27 PM UTC

sidlls wrote: post #99

misiti3780 wrote: post #76

Earlier quoted context omitted.

Compound interest is a thing. If you are fortunate to have a job that allows you to save money, and you put that money in the S&P 500 it will double every 7-10 years. His wealth was inherited, but if you start to invest money in your 20s, and you invest every month at dont touch it, you will most likely get rich if you live to be a senior.

Yes, if you are fortunate enough to have a job that allows you to save money--that's less than half the working population of the US, where the median bank account value is under $6k. Someone with a bank account that low isn't investing $2000/year starting at 20 years old to achieve a $1M (pre-tax) portfolio at age 67. That's the whole reason people object to these "just start saving and compound returns will make yo…

The thing that's hard to come to terms with is that there is a wide range of incomes of all those that don't make enough money to save. That is, someone making 50K a year has just as much problems saving as those who make 30K. Of course there are reasons for this -- on the lower end of the payscale people rely more on outside assistance, or they forego certain necessities that impact their quality of life. You are still having to pay every penny of income towards physical quality-of-life expenses up to a certain point, then above that level is small luxuries that have a big impact on emotional quality of life. Past that point is where you can start really saving.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#128

Post by sethc2 » Tue, Mar 30, 2021, 6:42 PM UTC

peter422 wrote: post #112

sethc2 wrote: post #88

Here’s a guy who saved his money and invested it and made a huge fortune from an inherited fortune, all so he could give it away. The response - “ugh what an a-hole, who inherited his wealth”. I’m so sick of hacker news. I mean if you were defending someone who squandered their opportunities but the bias was in the system, I applaud that defense. We should be very aware that some people are screwed and oppressed. But…

The comments are not bemoaning the guy, they are bemoaning the article that implies the way to build wealth is with good habits. The guy didn’t write the article, he lived a long life and donated a lot of money to charity after his death. I’m sure he’d be the first to say that he was lucky to have inherited so much wealth.

That’s true. I should be more fair. My comment is a bit out of frustration at maybe one or two other comments.

While the criticism against “good habits build wealth” is legit when it leaves out the inheritance fact, i think I was just annoyed that the focus was on that rather than what was a good use of an inheritance.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#129

Post by jopsen » Tue, Mar 30, 2021, 7:00 PM UTC

lotsofpulp wrote: post #120

jopsen wrote: post #111

Earlier quoted context omitted.

Putting some stonks your kids name when they are born might not be a bad idea.. There's probably some tax benefits. And a good chance they won't touch it for the first 18 years -- By which time you might have given them a taste for compounding interest :)

The only tax benefit is if your state offers one for 529 plans.

I live in Denmark where the first 10k USD capital gain is in a lower tax bracket.

And there is a scheme with yearly taxation of unrealized gains, but at a much lower rate. However, it has a per-person cap around 16k USD.

Re: Man Built a $188M Fortune Investing in Stocks Then Donated It to Charity

#130

Post by noxer » Tue, Mar 30, 2021, 7:06 PM UTC

Kinda funny that people think he makes the world a better place but all his earnings are someone else loses and there is no was to know how much of these loses comes form people who dont need it. Most of it probably came form taking a cut out of someone else profits because long time the marks only go up so by beating other players his assets went up more. He may got it form "the rich" or maybe from a retirement fund who knows.