Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Money and wealth

swombat.com

Post reply on HN
Print view View original

11–20 of 193 posts

Re: Money and wealth

#11

Post by Robin_Message »

benjaminwootton wrote: post #2

I like how you defined heath, education, and intelligence as the raw materials, but they don't directly give you the return that will make you wealthy. You need to apply those skills in some way to make income generating assets, and that is the tricky part. For most people, including Robert Kiyosaki, income producing assets basically means buying and renting out property. I disagree with doing that on so many levels…

You are right; I've worked out the "accumulating savings" part reasonably well, but the "building wealth" is still eluding me.

Stock market index funds seemed to be a good answer in the past. By owning them, you share in the economic growth and income of your country (or another country or set of countries) as a whole. Although, the spectre of Japanese-style stagflation for most of the West makes this less appealing at the moment (although even with the flat growth of the past 13 years, there are still dividend returns.)

Property is popular because everyone has to live somewhere, the old "buy land, they don't make it any more" proverb, and the funemplyoment nature of buying, improving, renting, and selling property.

Re: Money and wealth

#12

Post by swombat »

agscala wrote: post #6
benjaminwootton wrote: post #2

I like how you defined heath, education, and intelligence as the raw materials, but they don't directly give you the return that will make you wealthy. You need to apply those skills in some way to make income generating assets, and that is the tricky part. For most people, including Robert Kiyosaki, income producing assets basically means buying and renting out property. I disagree with doing that on so many levels…

What do you suggest is better than rental real-estate as a income-producing asset to invest in? Entrepreneurship is great and all but the risk is frighteningly high

The risk is not so high, actually, imho: http://swombat.com/2012/6/18/entrepreneurship-safest-career

Re: Money and wealth

#13

Post by spookylukey »

No place for comments on the post, so I'll reply here.

I think the definition of wealth that is quoted at the top, and the one I normally use, is different from the one you are using (at least at some points).

As far as I understand the definition, (material) wealth refers to the physical things that you can own or enjoy that are good and useful. So that includes cars, houses, clothes etc. But not things are purely money generating things (like stocks and shares). A house is a good and useful thing in its own right because you can live in it. Stocks and shares, and money itself, are not (apart from the sheer pleasure of seeing a large number on your bank account).

You might also include 'things' that are not quite in the same category as physical possessions, but are things that can be enjoyed - like holidays and gym membership.

In that sense, money and wealth are almost opposites - you have to give up money to get wealth. At the extremes:

You can have millions in the bank and have no wealth - if you refuse to spend it, you'll die of starvation in cold, broken down house; and you can also have no money but plenty of wealth if, for example, you are the owner of a large, entirely self-sufficient farm, with servants etc. who are all paid via the produce of the land and live in buildings you own. Neither are very likely in our economy.

It seems you are mixing into that definition of wealth the ability to get money/wealth. I'd agree that is a form of wealth (in that you would say that person is in an enviable position), but, like money, it is more "potential material wealth" and not really physical/material wealth itself. And the ability to be happy with little material wealth is the best form of wealth, but, by definition, not a part of material wealth itself.

Re: Money and wealth

#14

Post by aymeric »

Any suggestions as to what could be an income generating assets?

I can think of shares with dividends, bonds, rental properties, businesses, ... Anything else?

Re: Money and wealth

#15

Post by swombat »

msrpotus wrote: post #3

This makes sense but then what are some useful ways to use cash to build wealth if not buying stocks and other investments? I'm a young guy with plenty of money in the bank (in the tens of thousands; obviously not enough to retire but I could quit my job and do nothing for a while) and basically no debt. I find and I'm sure I'm not alone here with this feeling that, while I could spend a lot more money, I'm perfectly…

Ideal situation for growing your money, imho: using your expertise, try and figure out some kind of investment that looks very risky to people who don't have your expertise, but isn't risky to you because you know the market better than most people. Invest in that, managing the risk sensibly, and you should be able to grow your money.

If you don't have any such areas of expertise, then the best thing you can do with your money is use it to learn - gain one or more or many of these areas of expertise.

Re: Money and wealth

#16

Post by tjr »

probablyfiction wrote: post #4

Robert Kiyosaki's claims are pretty hard to verify. Rich Dad, Poor Dad is not a good source for financial information. Edit: Forbes link ( http://www.forbes.com/sites/helaineolen/2012/10/10/rich-dad-... )

It's some fishy stuff. But reading that book was also the first time that I realized I could have income besides a paycheck from a job; I remember the book fondly, even if its specific advice (if you can call it "specific") is questionable.

Re: Money and wealth

#17

Post by aymeric »

probablyfiction wrote: post #4

Robert Kiyosaki's claims are pretty hard to verify. Rich Dad, Poor Dad is not a good source for financial information. Edit: Forbes link ( http://www.forbes.com/sites/helaineolen/2012/10/10/rich-dad-... )

It doesn't matter. The concepts he teaches is what matters.

Re: Money and wealth

#18

Post by gizmo »

msrpotus wrote: post #3

This makes sense but then what are some useful ways to use cash to build wealth if not buying stocks and other investments? I'm a young guy with plenty of money in the bank (in the tens of thousands; obviously not enough to retire but I could quit my job and do nothing for a while) and basically no debt. I find and I'm sure I'm not alone here with this feeling that, while I could spend a lot more money, I'm perfectly…

Until you've figured out what to do with it, just buy shares VTI. Vanguard Total Stock Market. Or get the admiral version if you're in the US. Essentially it's a tiny fraction of ownership of all publicly traded companies. As long as the economy doesn't go completely down the drain it's a very good place for your money. It's not the optimal place for your money, of course, but compared to sticking your money in a checking or savings account it's a no-brainer.

Figuring out what to do with your money isn't easy. So until you've got a good plan, go with a sensible default. That's VTI. Every day you procrastinate on this you're simply burning money.

Re: Money and wealth

#19

Post by danielharan »

msrpotus wrote: post #3

This makes sense but then what are some useful ways to use cash to build wealth if not buying stocks and other investments? I'm a young guy with plenty of money in the bank (in the tens of thousands; obviously not enough to retire but I could quit my job and do nothing for a while) and basically no debt. I find and I'm sure I'm not alone here with this feeling that, while I could spend a lot more money, I'm perfectly…

It really depends on your goals and other resources.

Build your network: -Spend some of the cash inviting people out to lunch. -Go to conferences, if possible giving talks

Get skills: -Formal education -Workshops -Autodidacting, take time off work

Buy assets: -real estate -index funds -angel investing -bootstrapping

There are also intangible assets. e.g. Some people give to charity to get into the right networks.

Being able to afford time off work to build an open-source project, having the money to pay people to do some of the work (graphic design, documentation): you can build a high-value consultancy this way.

Post reply on HN