Who pays when startup employees keep their equity?

The car comment is people see 0% interest loans for a car and think they are not paying interest. However, if you have cash for the car out of pocket you can pay a lower purchase price. Because it's money saved you don't pay taxes on your 'earnings'. Which means it can be a very high ROI investment vs. that loan. Not that you should be buying a car but sometime over 10 years a new / used car is reasonable.

Also, I am basically assuming your going to get raises over time. So your initial 100k salary might be 150k in 10 years. Thus ~35k savings in your first year + 4% net interest (inducing things like that car loan) and cost dollar averaging etc and 4% more savings next year = 500k at the end.

As to housing prices, they might go up or stall. But, because your not in the market you can time things to buy when the market dips. Further, rent control means renting is divorced from increasing housing price changes so you gain a lot of the upside with fixed payments even if prices increase without the downside. Further, if prices fall you can rent somewhere else.

The truth is people are rarely going to do this, but people are also rarely going to hit big money from a startup.

> The car comment is people see 0% interest loans for a car and think they are not paying interest. However, if you have cash for the car out of pocket you can pay a lower purchase price.

This is all hypothetical and a really bad plan for increasing your overall wealth. Car manufacturers are the ones who subsidize the loans. If you see a 0% loan, it's not the dealer who's giving you that, so it's entirely likely that paying in cash will save you nothing. Those 0% loans are also for new cars (I've never seen them for used cars) and if you need to save a few dollars, buying used will do far more for you anyway.

> Thus ~35k savings in your first year + 4% net interest (inducing things like that car loan)

You can't just assert 4% interest and hand-wave it away with "things like that car loan". That's double the interest you'd get on the best 5-year CDs. So somewhere you need to account for that extra 2% interest and how it's going to compound for 10 years. You aren't buying a car every year even if that somehow would double your effective interest. Also, if you buy a car outright, it's presumably coming out of that 35k anyway. So no, your numbers still do not work.

> As to housing prices, they might go up or stall. But, because your not in the market you can time things to buy when the market dips.

Good luck with that. Timing the market is a really bad bet. There's no guarantee that the market will dip during the next 10 years. It could maintain growth for 15 years, or plateau after 5, or crash in 1 year (while you're still saving) but rebound and keep growing for another two decades after that. There's also no guarantee that it won't dip 20% as soon as you decide you're buying at the bottom.

> Further, rent control means renting is divorced from increasing housing price changes so you gain a lot of the upside with fixed payments even if prices increase without the downside. Further, if prices fall you can rent somewhere else.

Lots of places don't have rent control. Also, rent control might help your rent stay "low" (it's definitely not actually low in the bay) but it won't make buying more attainable. Again, if you want to rent because you think it's a better strategy than buying, go ahead. But renting while you try to save a half million in cash to buy a house seems like a really bad strategy. Saving aggressively is generally a good idea. If your goal is homeownership, though, saving to buy in cash has not looked like a good strategy since the government started incentivizing mortgage loans.

Nothing says you need to buy in exactly 10 years. If your in a rent controlled apartment you get to ratchet down if things get cheaper or stay out. Get a great offer somewhere else, move without the overhead of selling at a huge loss. It's effectivly a hedge.

As to ROI the car thing saves you around 6% meaning you need less than 4% from everything else to average out. Other options including dividend stocks are very likely to provide 4+% over 10 years ex Coca Cola. Is that 100% well no, but you can also make well over 4%. 450k or 650k is not a major issue vs. being yet another person who pasts on HN 10 years in startups and nothing to show for it.

Much like risking buying a house for the market to drop 40% in 10 years.

I think the core problem causing disagreement here is that you are not consistent or clear with what your goal is. Do you want flexibility? Low risk? Then rent. Do you want to own a home? Then buy. But decide what you want and then figure out how best to get there. You're starting with the assertion that the goal should be 500k in the bank but then abandoning that goal at some arbitrary point in the future when you'll suddenly dump that into a house. What do you actually want? Half a million in the bank as a safety cushion? Then you should not put that into a house at any time. Do you want a house? Then you probably shouldn't wait until you've saved an arbitrary half million dollars.

I don't know where you're getting the 6% number for buying a car in cash. That's definitely not going to happen. You could get a car loan at a better rate than that from a bank and pay the dealer in cash. Bankrate.com is showing me a rate below 3% for financing a new car over 5 years.

Your belief that you can do better than 4% in the market is exactly why it does not make sense to save and buy a house in cash. If you have 500k in cash and have the option to dump it into a house or dump it into the stock market, and you believe the stock market will perform significantly better than real estate, then you are wasting money by dumping it into the house. If you believe you can get, say, 6% in the stock market, then taking out a mortgage at 4% lets you earn 2% extra each year.

You're right that you cannot buy a house with $0 in the bank, pretty much regardless of what you make. No one is likely to give you a mortgage with $0 down, and if they do, it's going to be a bad deal for you.

Back on topic, we did go down an odd path specifically about the house. My initial point really boils down to what you want to do with the money. It could be very life-changing to save $500k in ten years and retire somewhere cheap. If you're just going to buy a house, it's really not that life-changing, both because you can do that without 500k in cash, and because owning a house is really not that different day-to-day from renting.

I'm not clear what you mean when you say "10% is not even close to cutting it". If your retirement goals depend on a >10% return, you're likely to be disappointed. The S&P 500 has only been ~5%/year for the past 10 years, and that's before accounting for inflation. It wasn't doing so hot before that, either, with ~4%/year over the last 20.