The money I saved as a child would buy one picogram of gold today • Hacker News Board

Re: The money I saved as a child would buy one picogram of gold today

#171

Post by grog454 » Sun, Apr 17, 2022, 9:09 PM UTC

PheonixPharts wrote: post #167

Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

> even though the utility function doesn't make a ton of sense. What if it never makes sense? One thing I didn't realize until embarrassingly too late in life is that savings should only function as a buffer for emergencies. Anything else is just burning your money since there haven't been savings accounts that consistently beat inflation even in the US. I was fed these same myths as a kid, and earnestly believed tha…

> No one I know who ended up very successful did so by living conservatively and within they're means. They're people who aggressively pursued improving their conditions, often times because they were forced too precisely because they didn't have a savings.

This also seems like bad advice. You can aggressively pursue higher earnings and simultaneously spend conservatively (on anything that does not contribute directly to higher earnings). You seem to be setting up a false dichotomy.

That said, I agree that at least in free market economies, high risk / high reward + tremendous luck is a requirement for extreme wealth generation.

Re: The money I saved as a child would buy one picogram of gold today

#172

Post by epgui » Sun, Apr 17, 2022, 9:10 PM UTC

plandis wrote: post #135

epgui wrote: post #33

Earlier quoted context omitted.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

> If you want to win at life, you “save money” by purchasing non-cash assets like stocks Just be born wealthy enough to have free money to invest as a child!

I hope I did not come across as that out of touch.

The reality is, most people barely can meet their basic needs. If you hate that as much as I do, then vote for politicians that care about wealth inequality.

Re: The money I saved as a child would buy one picogram of gold today

#173

Post by NoLinkToMe » Sun, Apr 17, 2022, 9:11 PM UTC

moonchrome wrote: post #94

Certhas wrote: post #8

Earlier quoted context omitted.

As a childhood lesson you don't need crazy inflation for this to hold true though. Anything that takes more than a few of months to save up to just doesn't make sense as a kid. Your disposable income goes up by factors of ten every few years. You have 2$ to spend at 5, 20$ at 10, 200$ at 15. Then it slows down but you might still get to 2000$ at 25. Saving as a kid really never seemed worth it to me.

>Saving as a kid really never seemed worth it to me. Also saving during 20s for this reason - if you're just starting out in a career and expecting your income to rise rapidly the money you save on interest is going to be irrelevant.

It's pretty universal as a kid, as someone in their 20s? Much less so. Sure, if you're getting a degree in CS and will land a 150k a year job soon, saving anything significant from your $14 an hour parttime job as a student makes little sense. But I was making $50k in my late twenties and was not going to jump in income significantly, I saved quite a bit and was able to buy a house and later stocks which have appreciated a few hundred thousand since then. Now starting my 30s with around $80k salary. Saving is a lot easier now, but the housing market got a lot harder, too. Inflation-adjusted I don't even make that much more. But with the few hundred thousand equity, at a 7% annual return my retirement at age 65 could be reasonably locked in at >$3 million, even without saving an extra penny. Saving in my 20s made a big difference. Outside of a few fields like tech, most people don't see crazy income growth to not have to bother with saving/investing in their 20s.

Re: The money I saved as a child would buy one picogram of gold today

#174

Post by epgui » Sun, Apr 17, 2022, 9:13 PM UTC

markdestouches wrote: post #169

epgui wrote: post #33

Earlier quoted context omitted.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

Well, if you are not a professional investor, you'd better stick to savings accounts or invest in a index but not in individual assets. Investing as a non-professional is akin to doing surgery on you own body while not being a surgeon.

I think a particularly determined and curious non-professional can reasonably expect to be successful at stock picking, but yes, for the vast majority of folks, I agree.

Re: The money I saved as a child would buy one picogram of gold today

#175

Post by sacrosancty » Sun, Apr 17, 2022, 9:13 PM UTC

PheonixPharts wrote: post #167

Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

> even though the utility function doesn't make a ton of sense. What if it never makes sense? One thing I didn't realize until embarrassingly too late in life is that savings should only function as a buffer for emergencies. Anything else is just burning your money since there haven't been savings accounts that consistently beat inflation even in the US. I was fed these same myths as a kid, and earnestly believed tha…

> that anyone who has built themselves serious amounts of wealth typically does so by making high risk/high reward choices.

You have the logic backward. If it was "typically, anyone who made high risk/high reward choices has built themselves serious amounts of wealth", it would be good advice, but what if most of those people failed terribly? An example is pursuing a career as an artist/sportsman which are common high risk/high reward aspirations of children which most people fail at.

I also had that same late lesson in saving being useless. Luckily, I learnt it by buying a house which appreciated fast and showed what a disaster savings would have been.

Re: The money I saved as a child would buy one picogram of gold today

#176

Post by MarkusWandel » Sun, Apr 17, 2022, 9:15 PM UTC

ip26 wrote: post #168

MarkusWandel wrote: post #131

The point missed in most save/invest vs. spend arguments is this: If you've been raised to be a saver, you are well trained at living cheaper/less frivolously. Note that this presupposes that you make enough money to live reasonably and save; I'm not talking about the extreme poverty cases where immediately spending the rare windfall actually makes sense. By cheaper, I mean one car instead of two, simpler vacations,…

It's protective against downside, but can constrain your upside. I was raised a saver, and it's been very hard to hire out simple tasks & let go of trifles, which in turn constrains how much time & energy you have to focus on increasing your earnings. As a low earner, it's better to focus on efficiency & DIY, but as a high earner it's irrational to spend an hour getting bent out of shape over a few dollars.

Absolutely agree, which is why, for example, I don't do my own car repairs any more. But you can still have a less fancy car and keep it longer. And I don't want to focus on increasing my earnings. I'd much rather be fixing something around the house.

Re: The money I saved as a child would buy one picogram of gold today

#177

Post by endless1234 » Sun, Apr 17, 2022, 9:16 PM UTC

PheonixPharts wrote: post #167

Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

> even though the utility function doesn't make a ton of sense. What if it never makes sense? One thing I didn't realize until embarrassingly too late in life is that savings should only function as a buffer for emergencies. Anything else is just burning your money since there haven't been savings accounts that consistently beat inflation even in the US. I was fed these same myths as a kid, and earnestly believed tha…

I don't think people really mean savings accounts when talking about saving money consistently instead of spending it as an adult. Same goes for compound interest. Regardless, even just putting it in a savings account surely is not "burning your money" if the alternative, spending it directly, brings little utility.

Re: The money I saved as a child would buy one picogram of gold today

#178

Post by Consultant32452 » Sun, Apr 17, 2022, 9:17 PM UTC

Certhas wrote: post #8

t43562 wrote: post #3

I remember my dad encouraging me to save my dollars and not spend them on choc-99 double ice-creams ($2.13). These were soft whip ice-creams with 2 cadbury's flake chocolates stuck in the side and they seemed like the closest thing to heaven on earth to me. What my dad said seemed logical though and I saved. When I was 16 I had a holiday job that earned me many ice-cream-worths but I kept it - didn't buy a bicycle or…

As a childhood lesson you don't need crazy inflation for this to hold true though. Anything that takes more than a few of months to save up to just doesn't make sense as a kid. Your disposable income goes up by factors of ten every few years. You have 2$ to spend at 5, 20$ at 10, 200$ at 15. Then it slows down but you might still get to 2000$ at 25. Saving as a kid really never seemed worth it to me.

Time preference is a big component in life success. There's not a lot of practical ways to discuss this with a small child, so "save up for the bigger/better toy" is what you get. If you have better ways to teach this lesson to your kids, I highly recommend doing it.

Re: The money I saved as a child would buy one picogram of gold today

#179

Post by mc4ndr3 » Sun, Apr 17, 2022, 9:17 PM UTC

epgui wrote: post #33

Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

Banks can fail. Stocks can fail. Currencies can fail. I'm not saying it makes sense on the whole to bury your worth in cash. But there is an amount of paranoia that confuses things.

The interest in my savings account is laughable. It's marginally better than keeping in a mattress.

The mattress doesn't charge bullshit fees. The mattress doesn't arrest you for being the wrong color.

Re: The money I saved as a child would buy one picogram of gold today

#180

Post by anonporridge » Sun, Apr 17, 2022, 9:23 PM UTC

UncleMeat wrote: post #166

anonporridge wrote: post #108

Earlier quoted context omitted.

Bitcoin is an unbelievably stable platform with an uptime of 99.98% with only 13 years to draw from. It's been sticking with it's algorithmically defined inflation rate with perfect predictability, unlike any other currency or scarce asset like gold, which depends heavily on incentives to mine and accessible reserves. Don't mistake the volatility of the USD price of bitcoin (which is based on the erratic, unpredictab…

The mathematical certainty of the issuance of BTC won't really mean much if nobody wants to trade it for goods. BTC's volatility is not just volatility w.r.t. USD.

The value of anything as a medium of exchange and store of value always depends entirely on whether or not a critical mass of people want to use it as such. Once you establish that a thing satisfies all the properties of money, or close enough, then the only question is network effect. Even if minor theoretical improvements could be made, it has to be 10-100x better to overcome runaway network effect.

Sea shells and bags of salt were drastically better money than mentally keeping track of favors owed in a small tribe, because we could expand our exchange of favors beyond dunbar's number to cooperate with people we don't intimately know. Gold was much better than sea shells and salt because it's globally scarce and durable. Paper backed by gold was much better than raw gold, namely because it is drastically easier to trade, transport, and fractionalized.

The technical nature of bitcoin isn't special and it can be trivially forked, modified, and a new network started for near zero cost. That's exactly what coins like litecoin and dogecoin did. Copy paste bitcoin code, change the name and some constants, and boom, new money. What makes bitcoin special, and why there can only be one dominant cryptocurrency long term, is network effect. I don't care about litecoin and dogecoin, because barely anyone uses them relative bitcoin. Barely anyone is developing and building on them as a foundational layer. The only reason anyone cares about dogecoin these days is because one eccentric billionaire has a hard on for it, and that's way too small of a bus number to store a significant amount of my wealth in.

The same holds true for any network protocol. I can copy paste libraries for TCP and make modifications that I think will make it far superior to the current form and release it to the world! And nobody except hobbyists will use it because standard TCP has an unassailable network effect. You have to have an extraordinarily compelling reason to change, and even then it will take decades (see IPv4 to v6 transition for example).

The thing about bitcoin, is that it is the first truly digital money. Fiat currencies like the USD have been trying for decades to pretend to be digital, and they'll probably try harder to use blockchains to make it better, but ultimately it's still fundamentally stuck with an analog foundation defended by guns and tight cliques of trusted human gangs, which makes it globally weak relative to bitcoin. That's why bitcoin has a 10-100x advantage over dollars long term. It's natively digital, open, and permissionless from day one.