Millionaires Who Are Frugal When They Don't Have to Be • Hacker News Board

Re: Millionaires Who Are Frugal When They Don't Have to Be

#41

Post by crimsonalucard » Sat, Jun 06, 2015, 1:51 PM UTC

fsloth wrote: post #23

crimsonalucard wrote: post #16

Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy. Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.

What are you exactly saying? Isn't 'redeploying money back to economy' basically investing? I think what you first would want is an increase to minimum pay if you want to increase the flow of money in the areas where I think you want.

You can invest, or you can spend in a way that generates GDP. If you "invest" or put your money into the stock market, you are not deploying your money in a way that generates GDP.

Unless the stock is an IPO, you are essentially trading paper when you buy a stock. No GDP is generated on that transaction. In a sense you could be redeploying if the seller of the stock takes the money from the trade and redeploys it in a meaningful way.

I agree that rich people paying their workers more money is a meaningful way to redeploy their wealth.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#42

Post by beachstartup » Sat, Jun 06, 2015, 1:51 PM UTC

SlipperySlope wrote: post #17

beachstartup wrote: post #12

the people in this article have multiple or large houses, take expensive vacations, buy luxury goods... they don't sound overly frugal to me. wtf? am i taking crazy pills? my parents (in their 60s) have 2 lifetimes worth of savings and investments yet still do their own laundry, have a vegetable garden, mend their clothes.... but they drive nice cars, take expensive vacations, and buy tons of gadgets. they have a mas…

Its clear to me that the article's family are still living well below their means. Multiple homes make sense for those who are frugal enough to restrict vacations mostly to the second home, which if well-located can appreciate in value faster than inflation. Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate.

> Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate.

i'll repeat myself. the people in this article have both, like most successful people in general. it's not a mutually exclusive choice. this article is basically not making any kind of point whatsoever. what's the thesis of the article? that most successful people don't blow all their money on bullshit like some poor people do? wow, what a revelation.

these people drive cars and take vacations and buy cartier watches. truly 'frugal' people usually don't do any of this stuff. for example, you don't have to look far on HN to find cheapskates that make professional salaries yet shun cars, live in tiny apartments, shop at garage sales, don't vacation, and live on dry foodstuffs. in fact i was poking fun at them in a comment i made just yesterday. i called it the 'cheapskate olympics'. i think that kind of lifestyle is absurd if you can afford to live a bit better than that.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#43

Post by crimsonalucard » Sat, Jun 06, 2015, 1:55 PM UTC

SlipperySlope wrote: post #31

crimsonalucard wrote: post #16

Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy. Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.

The dynamics of capitalism put wealth into the control of its wisest custodians - frugality being defined as among the wise virtues in this context. For those who argue that democratic government is the wisest custodian, e.g. there is estate taxation and government redistribution and investment.

Are you saying rich people are wiser than poor people therefore they deserve to be rich?

Capitalism made Justin Bieber rich. This makes him a wise custodian of wealth. Not only is my previous statement wrong, but so is yours.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#44

Post by allendoerfer » Sat, Jun 06, 2015, 1:57 PM UTC

jasode wrote: post #15

The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that beca…

As long as your income is greater than your expenses (which include healthcare and retirement saving) you can absolutely buy a sports car if it makes you happy and it is not your life-goal to retire early.

I think it is nice if you can provide your children some security, but I do not think that your savings have to be at the highest level when you die.

I come from a country where college education is free and healthcare is not capped. I do have to worry about dental care beyond the basics, though.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#45

Post by crimsonalucard » Sat, Jun 06, 2015, 2:00 PM UTC

DanAndersen wrote: post #22

crimsonalucard wrote: post #16

Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy. Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.

In cases like those in the article, these savings aren't stowed away in gold bars under rich people's mattresses, they're mainly in investments that continue to yield dividends. Those investments are going to various companies that are actually doing something with that money, so it's still circulating through the economy. Is there something I'm missing? I admit I'm not as well-versed in economics as I'd like to be.

Unless it's an ipo an "investment" or exchange of stocks for money on a stock market is simply just a trade among shareholders that generates zero GDP. It does go back into the economy and thus circulates.

Dividends is wealth generated by laborers and taken by shareholder owners. Sitting on stocks and eating up dividends while contributing no work of your own does not cause money to circulate through the economy in a good way. What it does is it causes your own wealth to grow unfairly, further increasing wealth inequality.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#46

Post by aptwebapps » Sat, Jun 06, 2015, 2:01 PM UTC

siscia wrote: post #35

jasode wrote: post #15

The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that beca…

Cannot read the article, however, we should be careful about the definition of "millionaires". If we define "millionaires" as the individual with 1M of worth asset you are definitely right. If we define "millionaires" as High-Net-Worth individual (HNWi), the people who have at least 1M in investable finance without counting the primary residence it start to get more interesting. However, if we define "millionaires" a…

I believe your first option is the conventional one so while the others might be interesting they aren't what the article is talking about.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#47

Post by allendoerfer » Sat, Jun 06, 2015, 2:02 PM UTC

jasode wrote: post #37

gizmo wrote: post #27

Earlier quoted context omitted.

It's laughable to suggest splurging on a 300k Ferrari is irresponsible at $10M < assets < $100M.

Everyone's appetite for risk is different. If I had $10,000,001.00 in the bank, I personally would not feel secure enough to spend $300k on a car (and also pay all the expensive maintenance that it entails.) Since the car is 3% of my available funds, I'd be constantly hyper paranoid about a stray rock being kicked up by the truck in front of me. If I had $100 million, the $300k car would feel a little more "disposabl…

I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#48

Post by grmarcil » Sat, Jun 06, 2015, 2:02 PM UTC

comrade1 wrote: post #28

Nrsolis wrote: post #5

Earlier quoted context omitted.

As a person who travels regularly for work I can say you have quite a romantic view of business travel. The reality is that I usually see (in this order) an airport, a taxi, a conference room, a hotel dining room and/or bar, a hotel room, a taxi, an airport. The idea that there is much downtime on a business trip is a fantasy of those who don't travel for work.

I'm in Vienna right now for work and going to the symphony tonight. I was in Barcelona two weeks ago and had some fabulous meals. Was in Sardinia las week on vacation but stayed at a colleagues beach home. We paid 1/2 off for our car with a company perq and are having the company cover about 50k in expenses on a home were in the midst of purchasing. You should take advantage of your opportunities more.

I'm curious - what industry are you in? I've never heard of a company providing perks for car and house purchasing.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#49

Post by SlipperySlope » Sat, Jun 06, 2015, 2:03 PM UTC

briandear wrote: post #38

SlipperySlope wrote: post #10

Its important to have a spouse who has a similar desire for sensible frugality. The level of income is less important than simply living below your means for your whole life. With prudent financial planning, compound interest and the passage of time achieves the level of wealth described in the article. Indeed car purchases are a good indicator. An omission of the article is that often frugal persons are generous to…

Compound interest? Where? The interest rates are such that inflation would destroy whatever gain you have. Nearly all savings accounts are paying an annual yield of less than 1%! That means WITH compounding, you're looking at a 1% or lower gain. Inflation is typically between 1-4%, with 2% being the benchmark in terms of financial planning, though admittedly in April, we had slightly negative inflation, but that tren…

Sorry I was not clear. * Compound interest in this context is ROI after inflation. * Savings in this context is defined as investment, e.g. saving the earnings of one spouse to make the down payment on a rented duplex. * Frugality in this context is defined as delayed or avoided gratification to spare discretionary funds for investment.

Relative frugality (not being a spendthrift) is a necessary requirement for holding wealth. It is a key - not the only one - to gaining it.

Re: Millionaires Who Are Frugal When They Don't Have to Be

#50

Post by 11thEarlOfMar » Sat, Jun 06, 2015, 2:05 PM UTC

The Millionaire bar is lowered each year at the rate of inflation. So to see how I'm really doing vs. my generation, I factor in inflation since my birth date, and that is the number I need to achieve 'Millionaire' status.

It's somewhat arbitrary, but for me, that's about $6,000,000 in 2015 dollars....