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

#111

Post by mcguire » Sat, Jun 06, 2015, 5:15 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…

The net long-term return on the stock market is (something like) 3%, after taxes, inflation, and commissions. (Hah! Reddit is good for something! The link: http://www.crestmontresearch.com/docs/Stock-Matrix-Taxpayer-...) I like to flatter myself as a reasonably smart investor, I have some investments that have produced some very good returns (the trick is identifying those that have long-term prospects vs. those that are played-out in a short time), and I would love to know how to get consistent 12% returns, even before taxes and inflation.

Frugality is a fine key to success, success being defined by Charles Dickens.[1] And keep in mind, before making a time-value-of-money argument, that time spent being productive, like researching investments, actually needs to be productive; it's not hard to go below the minimum wage if you aren't tossing around large amounts of money.

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

#112

Post by crimsonalucard » Sat, Jun 06, 2015, 5:18 PM UTC

dylanjermiah wrote: post #52

crimsonalucard wrote: post #43

Earlier quoted context omitted.

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.

People who have earned great amounts of wealth do not get it by stealing it, they provide a product or service in which others choose to purchase. The more people which the product or service provides value to the more wealth the person will make. Like him or not, Justin Bieber has proved valuable to quite a large sub set of the population.

I never accused rich people of being thieves. I didn't say Justin Bieber stole his wealth.

Justin Bieber is not a wise custodian of wealth. Wealth is not magically redirected away from stupid people towards smart people is all I'm saying. Many smart people are not rich, just like how many people who are rich are also stupid.

The loaded term "wise custodians" as if rich people are benevolent caretakers of the world's wealth due to their infinite wisdom is what I'm attacking here.

I would say, if placed under equal circumstances, the intelligence and benevolence of rich people is more or less the same as all people in general. We should be in agreement on that.

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

#113

Post by beachstartup » Sat, Jun 06, 2015, 5:18 PM UTC

reagency wrote: post #85

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…

You can spend your money on high marginal value things like lifting people out of poverty, or on paying someone to create pollution and junk.

you have this exactly backwards, because you're ignorant of how poor people actually live in this world and rely on your dogmatic beliefs to guide your interpretation of reality. people being lifted out of poverty do not make high marginal value goods. they make things that create pollution and junk.

i invite you to take a look at a factory in the developing world (the people who are being lifted out of poverty) and see what they produce. i assure you it's not "high marginal value" goods like swiss watches, fixed gear bicycles, and midcentury modern furniture.

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

#114

Post by crimsonalucard » Sat, Jun 06, 2015, 5:21 PM UTC

adventured wrote: post #68

crimsonalucard wrote: post #55

Earlier quoted context omitted.

Yes. This is true. I mean wealth in terms of wealth ownership. Compounding interest from loans, dividends, or stock investments causes the amount of wealth "owned" by rich people to grow unnaturally.

There's nothing unnatural about yielding a return on an investment. The greatest contributor to wealth inequality in the last 40 years is the Federal Reserve debasing the currency that the middle class depends on (and since ~1970, they've been doing it at a very rapid clip). If your wages go up 2% per year, and inflation averages 3% per year, over 30 years your standard of living is going to get nuked. The super rich…

In the natural state of things, one does work and in doing work one gains roughly equal wealth in exchange for an equal amount of work.

Yielding compounding returns on investments with little risk is gaining wealth for no work. That is unnatural.

What is more unnatural is when an obscenely rich person earns a million a year as a return on investments. A million dollars in wealth in one year is usually not equivalent to the output of one man. Multiple people must work together to generate that amount of GDP. So how does a rich man procure the wealth equivalent to the work of multitudes of people without contributing any work himself? He must do so in a way that is unnatural.

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

#115

Post by crimsonalucard » Sat, Jun 06, 2015, 5:27 PM UTC

SlipperySlope wrote: post #51

crimsonalucard wrote: post #43

Earlier quoted context omitted.

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.

Capitalism does not entail that the wealthy deserve what they have, only that if they are not wise with respect to their wealth they will lose it. With regard to Mr. Bieber, or celebrities/sports stars in general - there are many foolish ways for them to lose their wealth and only a degree of frugality, i.e. living within their means, will preserve it.

Sure and I agree with your first sentence and second sentence, but I don't think you're understanding what I'm trying to communicate.

The loaded term "wise custodians" as if rich people are benevolent caretakers of the world's wealth due to their infinite wisdom is what I'm attacking here. It just simply isn't true. Justin Bieber is full proof of that. The guy is not wise, he's not a benevolent custodian either.

Wealth is not magically redirected towards smart caring people. You are not a "wise custodian" because you are rich. You will always have stupid people who are rich and smart people who are not rich.

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

#116

Post by jpmattia » Sat, Jun 06, 2015, 5:27 PM UTC

dsugarman wrote: post #94

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…

From everything I've heard, the cutoff is around $25MM to really not have to ever worry about money

It really depends on your personal burn rate.

In truth, I'm a bit amazed by many of the HN comments. The materialistic stuff (ferrari bmw etc) has powerful symbolism to many. However, if you look at the article, it is mainly about those nearing retirement years.

Materialistic wealth loses a lot of appeal to those who are older and wealthier, many who realize that such things require care and feeding, and really end up owning you rather than the other way around. PG has a terrific essay about materalistic icons losing much of their appeal once you realize that you could easily purchase them; Not being able to have them is part of their mystique really.

The wealth of financial independence (defined as having enough to supply your burn for the rest of your life) enables you to do with your time as you please. Some great questions arise after achieving that kind of wealth, like "What do I want to do with my life?" It turns out that having-a-purpose is of great importance, and that might well appear to younger journalists like continuing to behave middle class.

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

#117

Post by ryanwaggoner » Sat, Jun 06, 2015, 5:57 PM UTC

blumkvist wrote: post #100

adrianN wrote: post #32

Earlier quoted context omitted.

I think it really depends on the kind of life you want whether one million is enough to live off. There is this guy, "Mr Money Mustache", that preaches a "frugal" lifestyle as a means of retiring very early with less than a million in the bank. On his blog he talks extensively about this. In particular, he provides some evidence that it's safe to spend 3-4% of your assets every year, indefinitely, if you invest in in…

That looks like some blog pushing info products and ebooks...

Yeah, it's not. In fact, I don't see anything for sale at all. Are you looking at the wrong site?

http://www.mrmoneymustache.com

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

#118

Post by ryanwaggoner » Sat, Jun 06, 2015, 6:00 PM UTC

khuey wrote: post #99

greedo wrote: post #75

Earlier quoted context omitted.

Correspondingly, would you feel insecure if you had 1,000,001 in the bank and spent $30k on a car? The ratios are the same, and most people spend a far higher ratio on their cars.

The difference may be that you need a car, and that you can easily cut the cost of one from 300k to 30k, but you can't easily cut the cost of one from 30k to 3k.

Totally false if you replace $3k with $6k or so. Most people are driving around a huge pile of want, not need.

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

#119

Post by walshemj » Sat, Jun 06, 2015, 6:44 PM UTC

crimsonalucard wrote: post #107

walshemj wrote: post #62

Earlier quoted context omitted.

mm tried to run a business with out access to capital. Your being very naïve.

Good for you. How does you running a business without access to capital make me naive? Doesn't that make you niave?

I have had to chair share holder meetings to discus difficult financing decisions.

I have also been made redundant the hard way when a company went bust ie they hand been paying the social security so I could claim unemployment.

Are you still a student as your attitudes certainly indicate you might not have had to deal with the real world.

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

#120

Post by blumkvist » Sat, Jun 06, 2015, 7:03 PM UTC

ryanwaggoner wrote: post #117

blumkvist wrote: post #100

Earlier quoted context omitted.

That looks like some blog pushing info products and ebooks...

Yeah, it's not. In fact, I don't see anything for sale at all. Are you looking at the wrong site? http://www.mrmoneymustache.com

That email newsletter doe.