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How I got wealthy without working too hard

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Re: How I got wealthy without working too hard

#291

Post by mNovak »

moonchrome wrote: post #256
PragmaticPulp wrote: post #68

Earlier quoted context omitted.

> What ? I've never heard of a scenario where you get less money after tax as a contractor vs employee It’s called self-employment tax: https://smartasset.com/taxes/self-employment-tax It’s not actually a separate tax. Normally your employer pays these taxes but you don’t see it. When you are a contractor you are self-employed, so as an employer of yourself you have to pay these taxes like any other employer. Some pe…

>It’s one of those tax tricks that works as long as nobody ever looks to closely at your tax returns, but if you’re caught you have to pay it back plus penalties. How is that a tax trick ? Pretty much anyone owning a company pays himself a tax minimum and extracts the rest through profits, etc.

You're required to pay a "reasonable salary". So if you pay yourself minimum wage, but collect $100+k in profit, you may get funny looks from the IRS.

Rule of thumb I've heard is 50% wages 50% profit, up until $100k wages, beyond which you can really start milking the profit.

Re: How I got wealthy without working too hard

#292

Post by handrous »

lowercased wrote: post #282
handrous wrote: post #241

Earlier quoted context omitted.

The subsidies don't help with copays, deductibles, and co-insurance, right? Those can run into the five figures even on a "silver" plan, in a bad year. If someone on the plan gets cancer, congrats, now every year is a bad year.

that's partially true, but... 'retiring' on $100k year is still potentially disastrous if you have a major health issue.

Sure, yeah. My point is mainly that expenses for early retirement in the US have the potential to vary a lot compared to... well, basically any other OECD state, really, mostly due to healthcare. This makes the lower bound for a reasonably-safe early retirement quite a bit higher, such that merely generating enough safe-withdrawal income to live on in a good year isn't enough, even if the markets do exactly as well as you're counting on and that income's steady.

Re: How I got wealthy without working too hard

#293

Post by saltcured »

jandrewrogers wrote: post #287
PaulDavisThe1st wrote: post #274

Earlier quoted context omitted.

If you're planning to live on your investments' income generation, and nothing else, putting them all (and arguably any ) in the stock market could be catastrophic. One minor downturn for that last just a few months, and you have zero income. IMO, "US$1M nest egg, live on proceeds" requires guaranteed income, and more or less excludes speculative investment. I appreciate that others opinions on this may vary.

Under what set of assumptions does a "minor downturn" lead to zero income? I've lived through multiple major crashes that lasted a lot longer than a few months and it had no catastrophic impact on my (theoretical) ability to safely generate an income from public equities. I am having a hard time coming up with a realistic scenario where a responsible person would become insolvent investing in public equities with an…

I suspect the difference in outlook is in defining "income". Earlier, a goal of "living off the gains" was states, implying to me either dividends or profitable sale of securities when you rebalance a portfolio.

The fiscally conservative mindset is that in a downturn, dividends shrink. At the same time, being forced to sell securities to cover living expenses means "losing" money from your nest egg, not living off of gains. Someone with this view would be balancing their portfolio to have enough cash and/or bonds to support them through some unknown future, and only expect to sell stocks when the market is doing well, to realize gains. Then, one needs to consider the rate of return of such a safe portfolio...

Re: How I got wealthy without working too hard

#294

Post by raydev »

nostrademons wrote: post #196
jlos wrote: post #184

Earlier quoted context omitted.

Good luck retiring in most major Canadian cities if you don't already own real estate there.

Article said "don't live in a major city". Besides, my understanding is that prices are still reasonable in smaller cities like Quebec City, Kingston, Halifax, Edmonton, Calgary, Winnipeg, etc.

As someone who just sold a house in Halifax last year, and with friends who weren't as lucky to have bought a home in the 2000s, I think you can safely remove that city from your list.

We moved to a town a couple hours away from Toronto, and the prices were shockingly comparable to Halifax, while Halifax household incomes are lower.

Re: How I got wealthy without working too hard

#295

Post by NDizzle »

bambax wrote: post #187
PragmaticPulp wrote: post #129

Earlier quoted context omitted.

> Why do you think that? All the numbers work out. Even in your hypothetical scenario, investing 100k for 7 years, especially in the last 7 years, would easily bring you 1M total investments. My point was that to show that the only way to get this to work out was to make everything work out perfectly, from getting the authors highest quoted day rate of $1000/day on every single day of every single contract from the s…

What are those expensive hobbies and luxuries? My hobbies cost about zero (making music, doing the occasional woodworking, reading, walking). Travel can be expensive but it can also be quite cheap and is very dispensable. Luxuries outside of travel (expensive hotels), I don't even know what they are. I'm sure it's not hard to spend as much money as you want on many different things; but you make it sound as if it was…

WOODWORKING costs $0?!?!?! What???

How much have you spent on tools? Do you smoke a pipe and whittle on the front porch or something? You don't visit Rockler and buy tons of gear? Where do you get your wood, as that's not free either...

Re: How I got wealthy without working too hard

#296

Post by PaulDavisThe1st »

jandrewrogers wrote: post #287
PaulDavisThe1st wrote: post #274

Earlier quoted context omitted.

If you're planning to live on your investments' income generation, and nothing else, putting them all (and arguably any ) in the stock market could be catastrophic. One minor downturn for that last just a few months, and you have zero income. IMO, "US$1M nest egg, live on proceeds" requires guaranteed income, and more or less excludes speculative investment. I appreciate that others opinions on this may vary.

Under what set of assumptions does a "minor downturn" lead to zero income? I've lived through multiple major crashes that lasted a lot longer than a few months and it had no catastrophic impact on my (theoretical) ability to safely generate an income from public equities. I am having a hard time coming up with a realistic scenario where a responsible person would become insolvent investing in public equities with an…

> There is no such thing as guaranteed income no matter how much money you have.

state bonds (free of federal tax) backed by an insurance policy are pretty close to guaranteeed income. At least that's where I put my first (and only) half-million (for a while).

> And in practice, most people doing this have a hedge of some type against a protracted downturn -- the cost of the hedge is already baked into the 4% expected return.

All true if your goal is to generate a 4% return over the long haul. Not so easy if your goal is to generate a reliable 4% income stream. The 4% return, reinvested, will be smoothed out over time, and if things are planned well, achieving that over the long haul should be fine. Pulling 4% out of the investment every year, on the other hand, is much harder to cover with hedging.

Remember, the goal in this case is not to generate a 4% average return over the lifetime of the investor. It's too generate an annual income of 4% of the investment value, without ever depleting the investment value. These are not the same goals.

Re: How I got wealthy without working too hard

#297

Post by dbrueck »

ornornor wrote: post #283
dbrueck wrote: post #269

Earlier quoted context omitted.

Couple of areas to consider: - emerging tech - it was lucrative being a mobile app developer when iOS first released its native app SDKs because everybody wanted an app but companies generally didn't have the skills for it internally yet. - niche/specialized tech - deep knowledge and expertise with things companies often stumble on. For a long term, being an RDBMS expert a "DBA" gave you the ability to print money. -…

> - dregs tech - it's no longer the new shiny thing, but there's still a lot of demand to keep systems running. So a COBOL master or an enterprise Java guy (especially someone with the ability to come in and fix large systems without taking them offline). I’ve read and heard this over and over. So much so that I actually looked into it before committing to learning COBOL. I have never found any actual evidence of thi…

Haha, yes, I definitely wouldn't recommend anyone make life choices based on what some random person posted on HN! :)

I have first-hand knowledge that these jobs do exist (and can pay anywhere from well to obscenely well), but I have absolutely no idea how many of them there are.

Regardless, the idea is that a good consulting/contractor opportunity can be carved out at various points along the tech age spectrum, and that the demand probably follows a bell curve.

Re: How I got wealthy without working too hard

#298

Post by LegitShady »

moolcool wrote: post #229
LegitShady wrote: post #212

Earlier quoted context omitted.

Prices in all of these cities have gone up. Halifax average sale went from $330k to $370k from 2019 to 2020. People see if they don't buy in now, they may never be able to buy in, and are buying in, driving prices up further, causing more people to panic buy, etc. It also leads speculators to buy houses because they see property giving incredible returns. Pay in many of these cities, or employment opportunities that…

Halifax is still livable/affordable as a remote dev-- far more affordable than places like NYC or SF. On remote engineer salary the increases in cost of living aren't so much the killer as the insane income tax is.

halifax is still livable if you get money from someplace that isn't halifax, but what does that say to the future of halifax? Who will provide all the services when they can't afford to live there on halifax incomes? What's the healthcare availability in NS compared to other provinces - Halifax healthcare was in crisis even before COVID.

Just in October they announced that the child healthcare system was at capacity and they might have to start diverting patients to other provinces. How does that work for people who aren't on remote engineer salary, and how does that bode for the future of halifax?

Re: How I got wealthy without working too hard

#299

Post by lemax »

nano81 wrote: post #216
lemax wrote: post #200

Earlier quoted context omitted.

Canada allows citizens a step up in capital gains basis upon moving back to Canada Could you elaborate on this or provide a source? Curious because I'm in the US in tech with a canadian citizenship.

https://kpu.pressbooks.pub/cdntax/chapter/__unknown__-10/

Oh, I see. this wouldn't apply to a US/Canada citizen, since the US taxes worldwide income.

Re: How I got wealthy without working too hard

#300

Post by ghaff »

PaulDavisThe1st wrote: post #257
lkbm wrote: post #237

Earlier quoted context omitted.

TL;DR: $40k/year in exchange for working full time = not wealthy. $40k/year without having to work = wealthy. I consider $40k/year pretty good, and definitely enough for me to live comfortably on here in Austin TX (Source: I've lived here for 13 years now, and I'm only just now getting close to spending+taxes [retirement+charity excluded] exceeding $40k as I've started spending more liberally.) I've got friends here…

I agree with everything you wrote here except this: > However, having enough money in savings that you get $40k/year without having to work is something else entirely. A 65-year-old with that nest egg is borderline-wealthy. A 40-year-old with that level of savings is solidly wealthy. Why the difference? The 65 year old is going to be able to actually draw down some of the nest egg much sooner than the 40 year old. Th…

I think the statement makes the most sense if you assume the 40 year old could choose to retire but doesn't. If they do retire, there's at least a greater level of risk to get to 65 with sufficient principal to continue paying out $40K/year. (Alternatively, the market is such that the principal is higher by the time they're 65.)
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