People between the 70th and 90th percentiles feel squeezed by a lot of expenses that cost less for those lower on the scale, due to price discrimination, progressive taxation, subsidies, etc. College tuition is a good example. It's high enough to take a big chunk of the income of a 70-90th percentile earner, but it doesn't hurt as much to someone higher (spare change!) or lower (financial aid) on the income scale.
Why So Many Rich People Don’t Feel Very Rich
101–110 of 190 posts
Re: Why So Many Rich People Don’t Feel Very Rich
#102Because they don't know what it means to be poor?
I disagree with this. While I'm not saying I was ever "poor" (as I never felt poor), I started out working for $5.15/hour, and sleeping on a friend's couch while I tried to find an apartment I could afford. Then I moved into a boston apartment that was $1000/month for three of us. It was falling over, and I ate homemade burritos every single day because beans and tortillas were cheap. Now I own a big house, drive nic…
if I'm doing new counter tops I should probably
This is the mindset that makes high income people feel poor. You can get a vary nice gas stove installed wihtout looking out of place for ~10k or you can spend ~100k and get the same thing but shiny.
Re: Why So Many Rich People Don’t Feel Very Rich
#103Earlier quoted context omitted.
The cool thing about this approach is how nicely it works with compound interest. Live like a college kid for the 5 years after you leave college, and I defy you not to put $10k per year into the market. Fresh out of school with my $32k salary, I'd regularly find month-old paychecks lying around undeposited because I simply didn't need the money to support my cheap apartment, used car, and 10lb sack of potatoes. With…
Boy I'd be happy with 10%/year or 5%/year right now. I think you're still living in 1998. Eventually it's making more on its own than you're putting in. This actually takes a long time.
In 1998, a reasonable expectation was 50% per year, though you'd usually beat that if you invested in anything starting with a lower-case 'e'. Naturally, it all went away if you left it in, but that's beside the point.
Today, it's still not unrealistic to expect that money you put in today will make on average 5-10% per year over the next 40 years. If you're investing your money for a shorter period than that, it's not really retirement savings but speculation, which can be fun but is its own thing.
Regardless, I don't think I'd discourage people from saving in their 20s because you don't think the market is going to continue doing its thing. It'll be back, and the few hundred K that you can set aside in your 20s will do some amazing things over the course of your life if you invest it in index funds rather than granite countertops.
Re: Why So Many Rich People Don’t Feel Very Rich
#104Earlier quoted context omitted.
I disagree with this. While I'm not saying I was ever "poor" (as I never felt poor), I started out working for $5.15/hour, and sleeping on a friend's couch while I tried to find an apartment I could afford. Then I moved into a boston apartment that was $1000/month for three of us. It was falling over, and I ate homemade burritos every single day because beans and tortillas were cheap. Now I own a big house, drive nic…
if I'm doing new counter tops I should probably This is the mindset that makes high income people feel poor. You can get a vary nice gas stove installed wihtout looking out of place for ~10k or you can spend ~100k and get the same thing but shiny.
10k is a lot of spending money. I'm trying to build up some savings/retirement money, so finding a "spare" 10k+ isn't easy.
Re: Why So Many Rich People Don’t Feel Very Rich
#105This article wonders why the rich are getting richer and the answer is compound interest. Having $1 million in the bank will reliably generate between $25k and $50k per year. Having $2 million in the bank will reliably generate between $50k and $100k per year. Having $3 million in the bank will reliably generate between $100k and $150k per year. So someone with $3 million in savings and still working their 200k job w…
You're glossing over a lot there.
* No, there aren't zero-risk places you can earn 5%. * If you make 2.5%/yr on interest and spend it instead of adding it to the principal, your wealth is actually declining (average inflation 2000-2009 was 2.56%). And your 3-millionaire will actually get their 4th million in about 10 years (15% cap gains tax), at which time inflation will have done it's work nicely, wiping out most/all of the gain.
That said, you're absolutely right that the rich get richer because of savings and investment. Millions in savings can be invested in a lot of different ways that can outpace inflation (though nowadays, there's a bit more risk in the old standbys like the stock market and real estate).
Re: Why So Many Rich People Don’t Feel Very Rich
#106The reality of this phenomenon is that people who have done everything "perfectly" in their life and academic career feel a bit cheated when their income tops out in between 100k and 200k. They might be senior engineers or doctors or lawyers but they've hit this brick wall as far as income, sometimes in their 30s and yet there are all these people out there that make more than 10x or even 100x their annual income. No…
Major league athlete, regular on a TV show or star in movies, former press secretary/lobbyist, best-selling author, multi-hit-album singer/band, music mogul/producer, real-estate agent in an expensive area. I bet there are 100s of jobs where the top salaries are over two million. There are very few who can get them, though.
Most of those that you mentioned are very high risk fields, where you don't get a salary - you may hit it big for a few years, but very few athletes/artists/actors/etc have consistent long-term multi-million dollar years. Many are essentially entrepreneurs.
Re: Why So Many Rich People Don’t Feel Very Rich
#107Reminds me of the Chicago professor who was complaining about repealing the tax breaks for "rich" people[1] (his household income was in the 250k range). As a bunch of commentators pointed out he felt like he was just scraping by because he was attempting to live the life of someone earning 350k+ not the life of someone earning 150k+. A growing trend is how quickly the income of those at the top is increasing relativ…
Minimum wage for a year is approximately $10k. Ten thousand times that is $100MM. Hedge Fund salaries are not of that order - topping out at $10MM. I agree that Hedge Fund bonuses can be large, but as far as the fixed salary component goes, the person on minimum wage in your example is misinformed.
Re: Why So Many Rich People Don’t Feel Very Rich
#108Every time I read an article like this, I think of all the people I know who are well off, yet appear to be miserable. Then I want to share with them this old wisdom from "The Ethics of the Fathers": "Who is wise? One who learns from every man." "Who is strong? One who overpowers his inclinations." "Who is honorable? One who honors his fellows." "Who is rich? One who is satisfied with his lot."
This reminds me of an HN comment from a few months ago. It was something like... "Need more money can usually be replaced with need less stuff" Edit: I found the comment: 'I bet that 9 times out of 10, "I need more money" should really be rephrased as "I need less stuff"'. http://news.ycombinator.com/item?id=2025234
I definitely get this viewpoint- but I would like to add that per gp comment, you should be satisfied with your lot. Which for some people may mean spending money on some things. I've noticed on HN and other sites a fascination with acquiring wealth. I understand why, but in the end you acquire wealth for the utility you can gain from using it.
Obviously, this doesn't need to mean spending 5k on the biggest TV, and doesn't mean outstretching yourself on a huge mortgage for a McMansion. But, if you save a little less and tactically spend on things that will make you happier I think that is definitely worth it. This isn't a huge defense of "stuff," but I think it's also okay to lose some wealth to gain happiness. I personally like spending money on travel/experiences. There was a lifehacker article about that yielding increased happiness.
Link: http://lifehacker.com/5608980/spend-on-experiences-instead-o...
Re: Why So Many Rich People Don’t Feel Very Rich
#109The reality of this phenomenon is that people who have done everything "perfectly" in their life and academic career feel a bit cheated when their income tops out in between 100k and 200k. They might be senior engineers or doctors or lawyers but they've hit this brick wall as far as income, sometimes in their 30s and yet there are all these people out there that make more than 10x or even 100x their annual income. No…
> and yet there are all these people out there that make more than 10x or even 100x their annual income Where by "all these people" we mean an extremely small fraction of the population. If I think about things honestly, I'm paid more than almost everyone I interact with regularly. Many of these people aren't lazy or stupid or dropout or what-have-you. They also went to good schools and got good grades and are excell…
The average person can probably name more movie stars than high school classmates. It's really easy to hit a number that 'primitive-monkey-brain' starts treating as 'many'. Reasoned reflection will reveal how silly that is, but we get to deal with primitive monkey brains with Dunbar numbers full of incredibly rich people, and things like math are very low on the method resolution chain.
Re: Why So Many Rich People Don’t Feel Very Rich
#110The reality of this phenomenon is that people who have done everything "perfectly" in their life and academic career feel a bit cheated when their income tops out in between 100k and 200k. They might be senior engineers or doctors or lawyers but they've hit this brick wall as far as income, sometimes in their 30s and yet there are all these people out there that make more than 10x or even 100x their annual income. No…
200k isn't that hard. Just go into management. You don't even need to be that high in a big company (even located in a low income region) to pass 200k.
Anyone care to explain the down vote here? I worked at a large company in the midwest (very low pay compared to more populated areas) and a manager of managers (of workers, i.e. just 1 step above team manager) was making $240k/yr. That was 10 years ago. I doubt compensation has gone down.