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10 Things Millionaires Won't Tell You

smartmoney.com

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Re: 10 Things Millionaires Won't Tell You

#81

Post by huherto »

ambition wrote: post #51
lsemel wrote: post #9

Earlier quoted context omitted.

Just because a business isn't suited for investment by VCs doesn't mean it's not a great investment for its owners nor that they necessarily possess lesser business ability or some kind of inferior mentality.

I didn't intend to imply anything about inferiority. The people described here have a different mentality. They get rich by avoiding risks and cutting costs. It is a slow and systematic process with guaranteed results. Startup people get rich by taking big risks and working hard to increase their top-line productivity and wealth-creation. It is relatively fast and chaotic process with unpredictable results.

At the same time startup people have to cut their costs to the minimum.

Re: 10 Things Millionaires Won't Tell You

#82

Post by notauser »

hhm wrote: post #80
linhir wrote: post #78

Earlier quoted context omitted.

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

Bill Gates has a mortgage on his house??! Is that real?

It wouldn't surprise me at all:

- His cost of capital is undoubtedly very low. Lending $4-5m to someone with that much money (and secured on property!) is practically risk free.

- He probably has access to a lot of good investment prospects.

- Tax breaks on mortgages will make the gap between cost of capital and likely return even larger.

Re: 10 Things Millionaires Won't Tell You

#83

Post by pg »

linhir wrote: post #78
pg wrote: post #44

A lot of this is wrong. For example, no one rich would "leverage their home equity to finance purchases." And though rich people often have assistants, they're not drawn from a special guild of "concierges" with connections for getting restaurant reservations. Nor would anyone rich rent handbags or Ferraris. The parts that aren't false read like a description of someone who made money from e.g. developing shopping ma…

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

I didn't say that rich people don't have mortgages, but that that they wouldn't borrow against their house to finance purchases. There may be some tax advantage to having a mortgage, but it wouldn't make sense to borrow against one's house to buy stuff that was going to depreciate in value.

Where did you hear that Bill Gates has a mortgage on his house? It seems very unlikely. You can only deduct the interest on the first million of mortgage debt, so it wouldn't seem worth the trouble.

As for the handbag question, try giving a woman the choice of buying a new handbag or renting a used one, and see what she says.

Re: 10 Things Millionaires Won't Tell You

#84

Post by dgabriel »

iamelgringo wrote: post #64
pg wrote: post #44

A lot of this is wrong. For example, no one rich would "leverage their home equity to finance purchases." And though rich people often have assistants, they're not drawn from a special guild of "concierges" with connections for getting restaurant reservations. Nor would anyone rich rent handbags or Ferraris. The parts that aren't false read like a description of someone who made money from e.g. developing shopping ma…

If you've ever spent time in Newport, RI, and seen what the old money in this country drives... it's Honda's and Toyota's. You don't see so many Bentley's, Ferrari's or Bugatti's.

I grew up in Newport, and the numerous non-rich people driving cars around might fool you...

That said, it looks like Volkswagons and Volvos tend to be the cars of choice among the wealthier. Not Ferraris, sure, but a step above the Toyota.

Re: 10 Things Millionaires Won't Tell You

#86

Post by lurch »

linhir wrote: post #78
pg wrote: post #44

A lot of this is wrong. For example, no one rich would "leverage their home equity to finance purchases." And though rich people often have assistants, they're not drawn from a special guild of "concierges" with connections for getting restaurant reservations. Nor would anyone rich rent handbags or Ferraris. The parts that aren't false read like a description of someone who made money from e.g. developing shopping ma…

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

Where can one get 7% risk free return?

Re: 10 Things Millionaires Won't Tell You

#87

Post by aswanson »

lurch wrote: post #86
linhir wrote: post #78

Earlier quoted context omitted.

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

Where can one get 7% risk free return?

Where can one get any % risk free?

Re: 10 Things Millionaires Won't Tell You

#88

Post by ivankirigin »

pg wrote: post #83
linhir wrote: post #78

Earlier quoted context omitted.

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

I didn't say that rich people don't have mortgages, but that that they wouldn't borrow against their house to finance purchases. There may be some tax advantage to having a mortgage, but it wouldn't make sense to borrow against one's house to buy stuff that was going to depreciate in value. Where did you hear that Bill Gates has a mortgage on his house? It seems very unlikely. You can only deduct the interest on the…

On the last point, the same applies for cars. The market for used 1 or 2 year old BMWs is very strong. Rich people buy new ones, and dump slightly used ones.

Re: 10 Things Millionaires Won't Tell You

#89

Post by linhir »

pg wrote: post #83
linhir wrote: post #78

Earlier quoted context omitted.

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

I didn't say that rich people don't have mortgages, but that that they wouldn't borrow against their house to finance purchases. There may be some tax advantage to having a mortgage, but it wouldn't make sense to borrow against one's house to buy stuff that was going to depreciate in value. Where did you hear that Bill Gates has a mortgage on his house? It seems very unlikely. You can only deduct the interest on the…

Ya, I would agree with your comment about financing purchases, and I read that slightly incorrectly. My point, even for bill gates, is that if your rate of return on capital, or expected rate of return, is higher than the rate at which you can borrow capital, than you should borrow. That differential is what's important, with the tax break being icing on the cake.

And on the handbag question, haha, I think you're likely correct.

I am less sure about cars, since if you are going to buy and dump a car, it seems like you should lease it, no? I don't know...

I think the other important thing to realize is that the rich aren't, like any large group, unified in their behavior, which is something that article like this always avoid. There is no one way to become a millionaire and there certainly isn't one set of behaviors they exhibit.

Re: 10 Things Millionaires Won't Tell You

#90

Post by linhir »

lurch wrote: post #86
linhir wrote: post #78

Earlier quoted context omitted.

But, as a percentage, what subset of all rich people actually earned their money through technology? Either way, if those people aren't leveraging their home equity, than they don't know much about finance, truth be told. Assume you have good credit and a steady income or assets; there is absolutely no reason to own your house outright. Bill Gates, for example, has a mortgage on his house. The easier way to think abo…

Where can one get 7% risk free return?

Well, there are very few risk free returns, obviously. I guess the standard would be US treasury bonds, which don't pay more than mortgages, obviously. But the S&P has an annual rate of return of almost 10% over the last forty years, so if you're risk averse (aren't we all) a good index fund will likely beat your mortgage rate.
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