Personal finance is NOT about getting rich. It's about building a nest egg for retirement. The whole premise of this article is bunk.
Personal finance experts don’t get wealthy by following their own advice
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Re: Personal finance experts don’t get wealthy by following their own advice
#102Earlier quoted context omitted.
In the overall distribution of risk-aversion, bogleheads are more comfortable with risk than far too many savers. I’ve seen too many of my parents’ generation squander decades of investment returns because of the idea that stocks are risky.
Not just parents generation, our generation. I don’t play the stock market, I’m not skilled enough for it, but I do have a stocks/share ISA, but I’m also not against spending money to make it. Many people I know will happily continue to pay interest on an item, but have savings which is less than the interest on credit. They have a 20% credit card vs a 0.5% interest savings. And little things like that can help in th…
Buying a mutual fund is precisely not "playing the stock market"
Re: Personal finance experts don’t get wealthy by following their own advice
#103Earlier quoted context omitted.
> max out 401k plan works What are the advantages of 401k instead of say dumping it into half-VOO half-crypto and making millions one way or another?
The variance in potential outcomes of holding VOO is much, much lower than the variance of holding crypto. Buying VOO buys a share of the profits of the work of many millions of people. It also speculates that other people will continue to want to buy those profits. Buying a token only speculates that more people will want to buy that particular token. It's much harder to project that people will continue to want it.
Oh yes. So that's why half-half.
Re: Personal finance experts don’t get wealthy by following their own advice
#104Tldr, you’ll only get rich by starting a business. Great advice for the tiny population of people who have the skills, the means, the discipline, and the time. That person he describes with $50k annual income, little or no savings, and significant credit card debt sure as hell isn’t starting a successful business, especially since they most likely have children and are working hard hours. He’s dismissive of being “le…
This may be true, but to be fair... 50 years ago, 70 years ago, an enormous series of treatments we now have, did not exist. And even disease treatment options, even knowing how some diseases worked? Nope. So medical care was less costly, because, there was literally less to be done. And people died at home more often too, as a result. So naturally medical care was less costly. And housing, the average family did not…
The US has per capita healthcare spending that is multiple times that of their peers in the western world.
Re: Personal finance experts don’t get wealthy by following their own advice
#105Earlier quoted context omitted.
In the overall distribution of risk-aversion, bogleheads are more comfortable with risk than far too many savers. I’ve seen too many of my parents’ generation squander decades of investment returns because of the idea that stocks are risky.
I mean once you reach a certain age you really can’t afford to just hold on to your investments for a few decades because of a financial downturn. That retirement money is also most people’s emergency medical fund which can and does hit people in their 40s.
I’m not saying to put 100% of every liquid dollar you have into the market, but in your 40s, I think it should be the majority of your investment funds.
Boglehead advice agrees, with an explicit principle of “Never bear too much or too little risk”, suggesting 30-40% bonds in your 40s and the rest in stocks.
I think more people underperform from being too risk-averse than under-perform from having too much equity exposure and having an unfortunate overlap of a large expense and a downturn in the market.
Re: Personal finance experts don’t get wealthy by following their own advice
#106Earlier quoted context omitted.
The middle class has also shrunk, right? Those advances are adjustments in quality of living driven by efficiencies in manufacturing, etc. This would be more on the resource scarcity side and less on the rich/income side. I would exclude food as an indicator since that is heavily subsidized. Healthcare has also increased substantially as a percentage of income.
The global middle class has grown but the USA middle class has shrunk due to some rebalancing/equalization with other countries.
Yeah, that rebalancing and equalizing was what I was mostly the effect I was wondering about or getting at.
Re: Personal finance experts don’t get wealthy by following their own advice
#107If by wealthy having 90th percentile investments 10 years before normal retirement age then these plans are well equipped to make you wealthy. Get rich slow totally works.
Re: Personal finance experts don’t get wealthy by following their own advice
#108A great way to get wealthy is have wealthy parents
Re: Personal finance experts don’t get wealthy by following their own advice
#109Earlier quoted context omitted.
In the overall distribution of risk-aversion, bogleheads are more comfortable with risk than far too many savers. I’ve seen too many of my parents’ generation squander decades of investment returns because of the idea that stocks are risky.
Not just parents generation, our generation. I don’t play the stock market, I’m not skilled enough for it, but I do have a stocks/share ISA, but I’m also not against spending money to make it. Many people I know will happily continue to pay interest on an item, but have savings which is less than the interest on credit. They have a 20% credit card vs a 0.5% interest savings. And little things like that can help in th…
You don't have to be skilled. Just simple indexing will beat most of thepros anyway. Most active managers lag the market anyway.
Re: Personal finance experts don’t get wealthy by following their own advice
#110I'd just like to point out the irony of the bolded, all caps statement in this article, "You’ll NEVER get rich by working for someone else", the recent HN frontpage article about how Tim Cook got a $750 million payout working for Apple, and that the title of this post is "All Personal Finance Experts Are Liars".
It’s totally false even ignoring extreme outliers like Tim Cook. The reason there are so many angel investors in the Bay Area is because of the feedback loop of ipos giving regular employees 1-5M pretty often (and 5-50M+ less often). It’s also part of the reason a pretty unremarkable and small home on the peninsula costs $3M.
I wouldn't call a top engineer at a top company a "regular employee". Anyone with $1M+/yr in stock from their company is also a fringe outlier. Top talent at medium-sized companies are not making that, and regular rank-and-file at FAANG is not making that. I think the "NEVER" in the article is really a "statistically never". Yes, you can be pedantic (welcome to HN) and point out a few outliers, but it's still "never," in the sense of I'll Never hit the lottery.