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"70 percent of people who come into sudden money are broke within a few years, according to the National Endowment for Financial Education." Now do we get to a

"70 percent of people who come into sudden money are broke within a few years, according to the National Endowment for Financial Education." Now do we get to argue over the source? Does it somehow not fit your world view that managing wealth is real work?

maxerickson 9y ago
It takes discipline to not just piss away a million dollars (the sorts of windfalls that claim includes), it doesn't take enormous effort to set it up in low risk assets that yield income. As a cousin comment points out, it is even possible to buy management services.
- IanDrake 9y ago
  But now I have 25 million and I've heard: - Dump it into the SP500 - Dump it into CDs - Give it to a money manager and hope for the best. If it doesn't work out at least you can blame him/her. Who's advise to take? It's really starting to astonish me the financial ingnorance on HN which must be attributed to younger folks who had no skin in the game in 2000 or 2007 and think investing is easy.
  - aninhumer 9y ago
    Yes, because as long as you don't spend too much any of these things will work. The market trends upwards over a long enough period, so as long as you're disciplined enough to handle the downturns, you'll continue to make money while doing no work.
  - IanDrake 9y ago
    @aninhumer, I can't reply to your thread, but I feel like people just don't get what I'm saying. Perhaps you could live off 25 million with a drawdown of 1%. That's 250K. So you live like that's your salary. But then the market tanks and 1% of your portfolio is now 120K. That's a big haircut. Do you take 2% now? You've got a 250K lifestyle but you said you'd only take 1%. You've now watched 13 million dollars vanish. Do you stay in the market and hope it goes back up or cut your losses? People here seem to suffer from historical bias because they know the market recovers, but when it happens to you the future will be totally uncertain. Mo money, mo problems. Totally true.
deleted 9y ago
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aninhumer 9y ago
People who come into sudden money will tend to lose it because they lack experience managing that much money and spend it too fast, not because they didn't do "real work" to preserve it. Maintaining wealth requires understanding and discipline, but the amount of "work" required is minimal. Essentially, all you have to do is not spend too much, which is fairly easy when "too much" means "any more than 10x the average salary".

maxerickson 9y ago

It takes discipline to not just piss away a million dollars (the sorts of windfalls that claim includes), it doesn't take enormous effort to set it up in low risk assets that yield income. As a cousin comment points out, it is even possible to buy management services.

IanDrake 9y ago
But now I have 25 million and I've heard: - Dump it into the SP500 - Dump it into CDs - Give it to a money manager and hope for the best. If it doesn't work out at least you can blame him/her. Who's advise to take? It's really starting to astonish me the financial ingnorance on HN which must be attributed to younger folks who had no skin in the game in 2000 or 2007 and think investing is easy.
- aninhumer 9y ago
  Yes, because as long as you don't spend too much any of these things will work. The market trends upwards over a long enough period, so as long as you're disciplined enough to handle the downturns, you'll continue to make money while doing no work.
- IanDrake 9y ago
  @aninhumer, I can't reply to your thread, but I feel like people just don't get what I'm saying. Perhaps you could live off 25 million with a drawdown of 1%. That's 250K. So you live like that's your salary. But then the market tanks and 1% of your portfolio is now 120K. That's a big haircut. Do you take 2% now? You've got a 250K lifestyle but you said you'd only take 1%. You've now watched 13 million dollars vanish. Do you stay in the market and hope it goes back up or cut your losses? People here seem to suffer from historical bias because they know the market recovers, but when it happens to you the future will be totally uncertain. Mo money, mo problems. Totally true.

deleted 9y ago

[deleted]

aninhumer 9y ago

People who come into sudden money will tend to lose it because they lack experience managing that much money and spend it too fast, not because they didn't do "real work" to preserve it. Maintaining wealth requires understanding and discipline, but the amount of "work" required is minimal. Essentially, all you have to do is not spend too much, which is fairly easy when "too much" means "any more than 10x the average salary".