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So you've completed CS007. And graduated Stanford. You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consen

by indescions_2017 9y ago

So you've completed CS007. And graduated Stanford. You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consensus advice investment management professionals would offer is to sock it away in a well-diversified set of Vanguard Funds. Which you keep adding to on a monthly basis allocated from your paycheck. As well as re-investing any dividends generated. Which will compound nicely over the next thirty years. Leaving you with a $1M nest egg that will provide stable yearly income during your golden years. As well as a decent inheritance left over for the next generation. But I have a really hard time giving this advice to a 22 year old. I certainly didn't heed it myself. Instead I used the cash and spent 100% of it on my own professional and personal development. So, naturally, since this is Stanford and Silicon Valley. I'd include a section on Risk. Taking it. Managing it. What are the rewards. As well as the costs. But with the emphasis the post-graduation 5-10 year window may represent a unique opportunity in your life to take it. And that there are programs such as StartX and YC available to assist should you decide to go all in.

edraferi 9y ago
Agree. In your 20s, your main competitive advantage is your ability to take risks. Plus your skill set is incomplete, so you’re likely to see much better returns from investing in yourself than the market.
- maxro 9y ago
  It's the good old debate on building human capital vs. financial capital.
- austenallred 9y ago
  Honestly if you’re a Stanford engineer those things aren’t mutually exclusive. You can take big risks and stash some cash. Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone).
  - SmellTheGlove 9y ago
    > Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone). Tangential question if you don't mind. I'm currently staring at an offer in the bay area, and the cost of living is mind boggling. Where did you live on that 120k, while still saving 2k a month and having a family? I'm not asking this sarcastically, I'm asking because I'm looking for a place with good schools, 3 bedrooms, and not $5K a month in rent in order to decide whether this is the right move. If that's possible without commuting 1.5-2 hrs each way, I'd really love to know!
    - tlarkworthy 9y ago
      I am a family of four living in a 1 bed. Sleep with ur wife in the living room, kids in a bedroom. I manage to live in the city in a nice (albiet too small) apartment with 15 min commute for 3.8k rent a month. You have to compromise somewhere. I am on more than 120k though.
      - joshuamorton 9y ago
        Where on earth are you paying that much for a 1br? There are 2br apartments that can be had (still in SF proper) for less than that!
        tlarkworthy 9y ago
        In mission Bay, next to a fancy playpark for my kids. With swimming pool etc. We get the life we want, just not in the sized house we want.
    - Mahn 9y ago
      As an European, reading things like these never ceases to amuse me, both the salaries that engineers earn and the crazy high cost of living to go with it. In Germany $120k is the salary of your average successful internet startup CEO and generally speaking an outrageous amount of money, in the Bay Area is about enough to get by, pay rent and save. The disconnect is astounding. And it's not like the quality of life in the Bay Area is ten times greater than in the top cities of Europe either, not to my knowledge anyway.
- leifaffles 9y ago
  This is true. It's also true that most people tell themselves that very thing to justify buying dumb shit.
  - thanksgiving 9y ago
    Absolutely. I'm poor. It takes all my will to stop myself from buying a huge desktop computer.
  - pault 9y ago
    There's a fine line between tool and toy and I often find myself on the wrong side.
  - polotics 9y ago
    your submissions so far: 1. Ask HN: What are the strongest arguments against Net Neutrality? 6 points by leifaffles 4 days ago | flag | past | web | 3 comments 2. Tim Ferris: “Silicon Valley also has an insidious infection... McCarthyism” (reddit.com) 10 points by leifaffles 8 days ago | flag | past | web | 1 comment 3. CloudFlare CEO Plots to Slow Service for Political Opponents (twitter.com) 5 points by leifaffles 9 days ago | flag | past | web | 1 comment
    - dang 9y ago
      We've banned that other account for trolling, but what you did here and https://news.ycombinator.com/item?id=15831807 https://news.ycombinator.com/item?id=15831807 also breaks the site rules in several ways. Please don't do that. If another comment is bad for HN you can flag it or, in egregious cases, email us at hn@ycombinator.com.
- hiram112 9y ago
  > Agree. In your 20s, your main competitive advantage is your ability to take risks. Disagree. In your 20's, your main competitive advantage is time and exponential growth.
  - logiclion 9y ago
    As a early/mid 20's college grad, thanks for this.
- kudokatz 9y ago
  > In your 20s, your main competitive advantage is your ability to take risks. Why is this some "special ability" of 20-somethings? I definitely prefer the approach of becoming financially independent and then having 50+ years to do what I want ... seems like having 50+ years to take risk after saving aggressively for 10-12 allows for even more risk/reward tradeoff by eliminating the worst consequences of failure without a safety net.
yeukhon 9y ago
My take is different and I don’t think there is one way to live either. I take my dad’s words: spend the money and time well, and enjoy your life. So save enough every month and get a good meal either alone or treat your family to a good brunch/dinner. Plan a trip at least once a year. Go to movies or do something healthy you have never done before. Buy new clothes. Whatever But have a budget. Spebd 100% is IMO a bad advice. When you need the money you have none. I also do not recommend invest in stock market unless you are buying one of those low-price stocks that will go up crazy. Instead I would save up enough money, buy a house. Owning a land or an apartment will do you far better in the long run. Buy some gold when you have spare. Also invest in your life insurance; Usually you pay about 20-30 years then you get money just like social security (and some you can cash all with a big bonus). I have been through tough time. If it weren’t for the medical leave $$ my employer provides through insurance, I would be forced to sell my house at age 26 right now in NYC. Think in the long term: professional developmebt is great but do not let career be the only thing be your long term prospect. Putting 100% without saving is a big risk you really want to avoid. Sometimes I have the urge to tell people why I think they should stop coding after work. But hey, if that makes them happy (I get it might be a hobby) great. But please do not fall into “this is norm”. I went to a lot of conferences and hackathons; great but don’t really satisify me as much as enjoy an outdoor view. Going to a new city for a talk is good for as long as you really have the chance to experience that city. Otherwise I’d wait for video to come out (and I feel bad so nany conferences do not organize publish conference videos). In the end, what is good for saving a million dollar when you are sick and tired all the time?
- vog 9y ago
  > But have a budget. Spend 100% is IMO a bad advice Fully agree with this and everything above. However, ... > I also do not recommend invest in stock market > Instead I would save up enough money, buy a house. Owning a land or an apartment will do you far better in the long run. Buy some gold when you have spare. Isn't this advice contradictory? The goal is to reduce risk, isn't it? Then buying a house is very risky. If it is old, reparation costs are impossible to predict. If it is new, you have to watch over a building site which can easily blow its initial budget, both in time and money. Same for buying gold. Nowadays the gold price is almost decoupled from its material value. This is mostly circle speculating with how other people will perceive the value of gold in the future. Of course buying individual stocks is much more risky than either houses or gold, but that's what index funds are for, aren't they?
jliptzin 9y ago
Yes, exactly. I don't think a new grad should be taking their $10k savings and putting it into a vanguard. They're at a unique point in their lives where they can take a risk and start a company. It'll probably fail, but even if it does, there's lessons that usually come with that that's way more valuable than the $10k lost. Also, even if it's not a smash success, there's plenty of businesses you could start that might bring in a nice side income for many years while you go do other things such as get a real job. That's also much more valuable than 5% / year off of a vanguard.
- hiram112 9y ago
  Completey disagree. If you're a new grad, the most beneficial thing is to get your feet wet - both technically and professionally in a company with a wide range of issues, while making a decent salary and investing it. You could learn the ropes while starting your own company or at some huge conglomerate. The difference is that you're probably not able to put away much cash while doing your own thing. Anyway, the $10K investment at 23 is kind of a red herring. The true question I've had to ask myself the last decade, is whether it's better to take more risky start-up jobs for equity or stick with safer enterprise jobs at a good salary, but with less chance to start something myself and possibly hit the jackpot. So in my late 30s, I haven't had much start-up experience, and uncool Java and Spring are my bread and butter. But after a decade of making over six figures annually, investing most of it, living frugally, and letting exponential growth do its thing, by the time I'm 40, I'll be well placed financially to take the same risks as any 25 year old. But I'll have plenty of capital (via exponential growth) and experience. And probably better odds of creating something that at least breaks even and pays the bills.
  - rock_hard 9y ago
    There is many paths to the same place! Don’t be so narrow minded in thinking yours is the only one or the better one...everybody needs different things in life! I went straight into startups after school...and boy was it though! Even when we made money we would invest it straight back into the business...I lived mostly poor all my twenties...no car, vacations, apartment (I lived at the office most of those years), etc. What I gained was invaluable expierence and network...way beyond what you can learn in a very well defined (and confined) role at a established company. Now at age 37 I work as a lead at on of the big 3, responsible for billions of dollars. Pulling in a high 6 figures annual compensation and also well on my way to be able to retire at 40. And I just started saving money 2-3 years ago for the first time in my life. I have a family, own a house, go surfing in summer and snowboarding in the winter...I picked all this up in the last 6 years...I guess you could say my life plan was more of a exponential one...where the first 10 years didn’t seem to lead anywhere worth going...I always believed that doing good work would eventually pay off...and eventually it did and the grind payed off and the exponential curve started. I be honest, I needed it that way...the linear approach to life has never been my thing...but that’s just me...people should be true to themselves when it comes to life planning!
deleted 9y ago
[deleted]
3pt14159 9y ago
The advice I give to people on here is generally upvoted, except when it comes to investing. If you're in the top 1% or 0.1% intellectually and you're active in the tech community as a software developer or other highly technical skill you are very well situated to beat the market. Pick any decade where this wasn't true. In the 90s it was buying web domains or investing in personal computer companies. In the 2000s it was investing in platforms and social networks or even just building a company in the mobile space. In the 10s it was cryptocurrencies and AI. All of these things were obvious and even if you didn't get in at the very ground floor (buying sex.com or 50 bitcoins for a dollar) you still make hyper, hyper gains. 100000% returns? Totally possible. Now go on and take all that knowledge you hard fought for at MIT, Stanford, Harvard, or Waterloo (or even on your own!) and use it too... Invest in low fee ETFs. Great plan guys.
- badestrand 9y ago
  > The advice I give to people on here is generally upvoted, except when it comes to investing Maybe it is because your advice only goes to 0.0X% of all people, as you state yourself?
  - hoschicz 9y ago
    Many of the people studying Stanford are the 1 % of people.
- jeffwass 9y ago
  You have great advice with the benefit of hindsight. So what's your suggestion for the "obvious" investment today?
  - Spooky23 9y ago
    Look at sectors that benefit from the political environment. Things like pharmaceuticals with ok pipelines, good companies in shitty sectors (say a company like Costco in retail), health insurers and companies like McDonald's that do well when the rest of the world does not. Think about smaller players who benefit from net neutrality going away. You should have a running list of good companies and invest as you see corrections or downturns.
Spooky23 9y ago
I took the advice the class is recommending. Now I'm about to turn 40, and now in the timeframe where I have the network to exploit and experience to get into customers, I'm sitting on a nice nest egg. If I decide to roll the dice, I get to keep more pie than an impoverished college grad. My 22 year old self would have been failing fast into the heart of the dot-bomb implosion and probably stuck in some less than optimal grind for a few years.
- Chris2048 9y ago
  I found your post a little hard to understand. Are you saying "save money because your older self can do more with it than your younger self"?
  - jogjayr 9y ago
    Save money now so you can afford to take career risks later.
    - dandr01d 9y ago
      How do you take risks when you’re married with kids?
      - stefano 9y ago
        By having a nest egg that can keep you and your family going for a few years.
      - semi-extrinsic 9y ago
        Settle down and have kids early, play the long game instead. Seriously. Have kids when you're ~25 (closer to the optimal age for having kids), then by the time you're ~45 they'll have moved out and you'll have the time and the financial freedom to take risks, do what you want, sail around the world etc. We've done this. And let me tell you, working 40 hours a week when your 8-month baby lets you sleep on average 2 hours per night is a lot fucking harder than the 70-hour tech-scene work week. So given the choice, I'll take the former when I'm young and fit for it, and the latter when I'm older and wiser.
mcguire 9y ago
Honestly, I suspect the consensus would be to use there $10,000 to start a savings account where you keep 6 months of living expenses for those times when your opportunities blow up in your face. That's risk management, and I'd have no trouble tattoing it on a 22 year old's forehead in reverse. Further, I'd have no problems telling someone with a 6-figure income to max out their 401k and then invest more in index funds. Take it from a 50 year old, it's easy to come out if that 10 year window with nothing but painful experiences.
kharms 9y ago
I agree with the gist of your post but your consensus advice is a bit off: >And graduated Stanford. You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consensus advice investment management professionals would offer is to sock it away in a well-diversified set of Vanguard Funds. Your first $10k is your emergency fund. From what I've read, the consensus is: don't invest it, instead keep it in an FDIC insured savings account + cash. If you need it, it'll probably be because you've been unemployed for a while. You are most likely to be unemployed during an economic downturn. The cash choice insulates against natural disasters. If you do invest it, try a target date fund that's matures in the near future. For today, 2020 would be a good choice.
- shostack 9y ago
  I agree with everything except the target date fund. They have shown to perform horribly.
heedlessly3 9y ago
You're better off saving and trying to get a job at Facebook, Amazon, Google, Microsoft, etc.. http://danluu.com/startup-tradeoffs/ http://danluu.com/startup-tradeoffs/
komali2 9y ago
I struggle with this week to week as I fight between strictly managing my finances and funding my YOLO 26 year old "holy shit I can't believe I'm making this much money" swagger. I'm having a really hard time justifying saving above the bare minimum - despite my experience as a recruiter, I still can't convince myself that there will ever be a time I'm not hireable, unless all jobs have vanished (apocalypse, general AI), in which case my "nest egg" is useless anyway. It's just a logical reach to justify my excessive spending I'm sure, but I've really got myself convinced here :P
- amag 9y ago
  But there's another reason to save: early retirement. It may not seem interesting to you now (I know it didn't for me at 26, I was programming and was getting paid for it!) but when you're 40 it's far more appealing. Unfortunately I didn't make a ton of money at 26 or I would've beaten myself with a stick for not saving more for the future.
  - komali2 9y ago
    But I can easily "retire" early right now, just not in the USA. In two years I'd need to supplement with some little contract jobs maybe, but that needn't be full time. I hear you though, I'm definitely trying to learn from my elders, regardless of anything I'll always at least be putting money into a savings account (that I refuse to touch but in the direst emergency). I just can't shake the feeling that this generation is the last one that will get to benefit from our 401ks, if we get to at all.
rnprince 9y ago
Edit: there's a correction on this in the child comments. The math on this is misleading. $10k invested for 30 years to become $1M implies an interest rate of 16.6%. Even as a nominal interest rate in the US, that would be an extremely lucky result to consistently achieve. My advice to you would be to start a hedge fund immediately with whatever secret knowledge you have, and then all money concerns will become irrelevant. :-) A good choice for a real ('real' meaning non-nominal) interest rate in these types of projections is 7%, which would make $10k equal to $76k in 30 years. Because you used a real interest rate, the $76k is $76k in today's dollars, not in 2047 dollars. The conclusion is that you will need to invest a bit more than $10k today to retire in 30 years. I like to use this type of calculation to frame my short-term purchase decisions. Would I like to spend $20 on this thing I don't need? Yes. Would I like to spend today's equivalent of $300 on it 40 years from now? No thank you.
- Twisol 9y ago
  The parent also mentioned adding to the funds on a monthly basis. Does that make the math match up more properly?
  - rnprince 9y ago
    Yes, it does. I missed that. :-)
jldugger 9y ago
As university Devops engineer working with students, I have had a number of opportunities to advice the young in the ways of adulting. One thing that's painfully obvious is that the 'your 20s are your best time to take on risks' crowd is missing is like, women and fertility. Women in the US are generally more risk adverse, so they're more likely to heed the usual 'save now!' spiel. They're also facing a conflict with career risk vs family risk in ways men do not encounter at all. Worse, talking with friends and colleagues about it can threaten your career tracking if you are perceived as a short timer. I've seen too many managers, on HN no less, say they avoid hiring women who might become pregnant. And as far as I can tell, health insurance is allocated two words in the lecture series: "health" and "insurance". That's it! I will grant you that the ACA is under incredible threats at the moment, but employer based health insurance isn't going anywhere, and at the very least, HDHP / HSA plans vs. PPOs vs HMOs is a thing. Considering how expensive pregnancy, birth, maternity leave, child care can be, health insurance and savings is a crucial topic not even mentioned in the 'couples finances' section. The other thing I should mention is student loan debt. 92 percent of those surveyed in the Stanford course say they have no student loans. This seems high -- even the net price of Stanford is $17k / year. Most undergraduates are going to be paying like 4.45 percent interest, which is way better than the 6.8 they used to charge. Despite required financial counseling, most people with loans don't really know how repayment works, and haven't looked at how much their payments will be post graduation.
- aaavl2821 9y ago
  Those are really good points. Plus if you are not a US citizen the whole equation completely changes My girlfriend is from an immigrant family and left undergrad + grad school with almost half a million in debt without having worked full time in her life, and is completely overwhelmed and underequipped to deal with this. Given how many great engineers and entrepreneurs are immigrants / from immigrant families, financial education programs for undergrads should focus a lot more on these issues
  - kamaal 9y ago
    I guess this should go without saying. Never take a loan you can't afford to pay back? Immigrant or other wise.
spike021 9y ago
Funnily enough (to me), I'm in a bit of a situation similar to this, financially anyway (I lack the Stanford side, but whatever). If I were to put, say as you mentioned, $10K in cash into something like a set of Vanguard Funds, what percentage of my monthly income should be added? I have money socked away right now from working internships, and from the past year as a full time engineer, but haven't invested it in much other than partially into my 401k. I'd love to do something with it and I know it's doing nothing sitting in the bank in a regular account.
Chris2048 9y ago
The thing about personal development - it's hard to confiscate or take away. It can't be seized, overtaxed, or barred from leaving the country. It can have value that isn't defined by just one nations' standards of governance. It's not liable to inflation (AFAIK people aren't getting smarter). This makes it relatively less risky and more valuable.
shostack 9y ago
Might be good to have another section on 'Inflation.' That $1M nest egg will need to be ~$3M in 38 years (when a 22yr old might be looking to retire at 60) in order to have the same purchasing power as $1M today (which isn't much in many markets). Certainly not enough to provide a decent inheritance for the next generation.
- crgt 9y ago
  hahahahha. It’s a strange world when 300k+ of current purchasing power is not considered a decent inheritance. What baseline are you using? I would have loved an inheritance like that..
  - shostack 9y ago
    I'm not quite sure where you're getting the $300k from, or what assumptions you're making around retirement spending, but my point was that there likely wouldn't be much of an inheritance to give if one assumed retiring on $1m even in today's dollars. Assuming ~20 years of retirement, that's $50k/yr. Many people's medical expenses would eat that up quickly as they get older, and that's not even getting into other living expenses, whether they have their overpriced home paid off, etc.
    - czbond 9y ago
      I am projecting we mostly will live to 100 or 110. That might mean some people have 30-40 years of retirement, and many will be unprepared.
npsimons 9y ago
> You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consensus advice investment management professionals would offer is to sock it away in a well-diversified set of Vanguard Funds. Put half of it in a Roth IRA with Vanguard. You can still do a lot of risk taking and self development on $5k, and the compounding from being in the Roth IRA that early really will make a big difference.

edraferi 9y ago

Agree. In your 20s, your main competitive advantage is your ability to take risks. Plus your skill set is incomplete, so you’re likely to see much better returns from investing in yourself than the market.

maxro 9y ago
It's the good old debate on building human capital vs. financial capital.
austenallred 9y ago
Honestly if you’re a Stanford engineer those things aren’t mutually exclusive. You can take big risks and stash some cash. Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone).
- SmellTheGlove 9y ago
  > Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone). Tangential question if you don't mind. I'm currently staring at an offer in the bay area, and the cost of living is mind boggling. Where did you live on that 120k, while still saving 2k a month and having a family? I'm not asking this sarcastically, I'm asking because I'm looking for a place with good schools, 3 bedrooms, and not $5K a month in rent in order to decide whether this is the right move. If that's possible without commuting 1.5-2 hrs each way, I'd really love to know!
  - tlarkworthy 9y ago
    I am a family of four living in a 1 bed. Sleep with ur wife in the living room, kids in a bedroom. I manage to live in the city in a nice (albiet too small) apartment with 15 min commute for 3.8k rent a month. You have to compromise somewhere. I am on more than 120k though.
    - joshuamorton 9y ago
      Where on earth are you paying that much for a 1br? There are 2br apartments that can be had (still in SF proper) for less than that!
      - tlarkworthy 9y ago
        In mission Bay, next to a fancy playpark for my kids. With swimming pool etc. We get the life we want, just not in the sized house we want.
  - Mahn 9y ago
    As an European, reading things like these never ceases to amuse me, both the salaries that engineers earn and the crazy high cost of living to go with it. In Germany $120k is the salary of your average successful internet startup CEO and generally speaking an outrageous amount of money, in the Bay Area is about enough to get by, pay rent and save. The disconnect is astounding. And it's not like the quality of life in the Bay Area is ten times greater than in the top cities of Europe either, not to my knowledge anyway.
leifaffles 9y ago
This is true. It's also true that most people tell themselves that very thing to justify buying dumb shit.
- thanksgiving 9y ago
  Absolutely. I'm poor. It takes all my will to stop myself from buying a huge desktop computer.
- pault 9y ago
  There's a fine line between tool and toy and I often find myself on the wrong side.
- polotics 9y ago
  your submissions so far: 1. Ask HN: What are the strongest arguments against Net Neutrality? 6 points by leifaffles 4 days ago | flag | past | web | 3 comments 2. Tim Ferris: “Silicon Valley also has an insidious infection... McCarthyism” (reddit.com) 10 points by leifaffles 8 days ago | flag | past | web | 1 comment 3. CloudFlare CEO Plots to Slow Service for Political Opponents (twitter.com) 5 points by leifaffles 9 days ago | flag | past | web | 1 comment
  - dang 9y ago
    We've banned that other account for trolling, but what you did here and https://news.ycombinator.com/item?id=15831807 https://news.ycombinator.com/item?id=15831807 also breaks the site rules in several ways. Please don't do that. If another comment is bad for HN you can flag it or, in egregious cases, email us at hn@ycombinator.com.
hiram112 9y ago
> Agree. In your 20s, your main competitive advantage is your ability to take risks. Disagree. In your 20's, your main competitive advantage is time and exponential growth.
- logiclion 9y ago
  As a early/mid 20's college grad, thanks for this.
kudokatz 9y ago
> In your 20s, your main competitive advantage is your ability to take risks. Why is this some "special ability" of 20-somethings? I definitely prefer the approach of becoming financially independent and then having 50+ years to do what I want ... seems like having 50+ years to take risk after saving aggressively for 10-12 allows for even more risk/reward tradeoff by eliminating the worst consequences of failure without a safety net.

yeukhon 9y ago

My take is different and I don’t think there is one way to live either. I take my dad’s words: spend the money and time well, and enjoy your life. So save enough every month and get a good meal either alone or treat your family to a good brunch/dinner. Plan a trip at least once a year. Go to movies or do something healthy you have never done before. Buy new clothes. Whatever But have a budget. Spebd 100% is IMO a bad advice. When you need the money you have none. I also do not recommend invest in stock market unless you are buying one of those low-price stocks that will go up crazy. Instead I would save up enough money, buy a house. Owning a land or an apartment will do you far better in the long run. Buy some gold when you have spare. Also invest in your life insurance; Usually you pay about 20-30 years then you get money just like social security (and some you can cash all with a big bonus). I have been through tough time. If it weren’t for the medical leave $$ my employer provides through insurance, I would be forced to sell my house at age 26 right now in NYC. Think in the long term: professional developmebt is great but do not let career be the only thing be your long term prospect. Putting 100% without saving is a big risk you really want to avoid. Sometimes I have the urge to tell people why I think they should stop coding after work. But hey, if that makes them happy (I get it might be a hobby) great. But please do not fall into “this is norm”. I went to a lot of conferences and hackathons; great but don’t really satisify me as much as enjoy an outdoor view. Going to a new city for a talk is good for as long as you really have the chance to experience that city. Otherwise I’d wait for video to come out (and I feel bad so nany conferences do not organize publish conference videos). In the end, what is good for saving a million dollar when you are sick and tired all the time?

vog 9y ago
> But have a budget. Spend 100% is IMO a bad advice Fully agree with this and everything above. However, ... > I also do not recommend invest in stock market > Instead I would save up enough money, buy a house. Owning a land or an apartment will do you far better in the long run. Buy some gold when you have spare. Isn't this advice contradictory? The goal is to reduce risk, isn't it? Then buying a house is very risky. If it is old, reparation costs are impossible to predict. If it is new, you have to watch over a building site which can easily blow its initial budget, both in time and money. Same for buying gold. Nowadays the gold price is almost decoupled from its material value. This is mostly circle speculating with how other people will perceive the value of gold in the future. Of course buying individual stocks is much more risky than either houses or gold, but that's what index funds are for, aren't they?

jliptzin 9y ago

Yes, exactly. I don't think a new grad should be taking their $10k savings and putting it into a vanguard. They're at a unique point in their lives where they can take a risk and start a company. It'll probably fail, but even if it does, there's lessons that usually come with that that's way more valuable than the $10k lost. Also, even if it's not a smash success, there's plenty of businesses you could start that might bring in a nice side income for many years while you go do other things such as get a real job. That's also much more valuable than 5% / year off of a vanguard.

hiram112 9y ago
Completey disagree. If you're a new grad, the most beneficial thing is to get your feet wet - both technically and professionally in a company with a wide range of issues, while making a decent salary and investing it. You could learn the ropes while starting your own company or at some huge conglomerate. The difference is that you're probably not able to put away much cash while doing your own thing. Anyway, the $10K investment at 23 is kind of a red herring. The true question I've had to ask myself the last decade, is whether it's better to take more risky start-up jobs for equity or stick with safer enterprise jobs at a good salary, but with less chance to start something myself and possibly hit the jackpot. So in my late 30s, I haven't had much start-up experience, and uncool Java and Spring are my bread and butter. But after a decade of making over six figures annually, investing most of it, living frugally, and letting exponential growth do its thing, by the time I'm 40, I'll be well placed financially to take the same risks as any 25 year old. But I'll have plenty of capital (via exponential growth) and experience. And probably better odds of creating something that at least breaks even and pays the bills.
- rock_hard 9y ago
  There is many paths to the same place! Don’t be so narrow minded in thinking yours is the only one or the better one...everybody needs different things in life! I went straight into startups after school...and boy was it though! Even when we made money we would invest it straight back into the business...I lived mostly poor all my twenties...no car, vacations, apartment (I lived at the office most of those years), etc. What I gained was invaluable expierence and network...way beyond what you can learn in a very well defined (and confined) role at a established company. Now at age 37 I work as a lead at on of the big 3, responsible for billions of dollars. Pulling in a high 6 figures annual compensation and also well on my way to be able to retire at 40. And I just started saving money 2-3 years ago for the first time in my life. I have a family, own a house, go surfing in summer and snowboarding in the winter...I picked all this up in the last 6 years...I guess you could say my life plan was more of a exponential one...where the first 10 years didn’t seem to lead anywhere worth going...I always believed that doing good work would eventually pay off...and eventually it did and the grind payed off and the exponential curve started. I be honest, I needed it that way...the linear approach to life has never been my thing...but that’s just me...people should be true to themselves when it comes to life planning!

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3pt14159 9y ago

The advice I give to people on here is generally upvoted, except when it comes to investing. If you're in the top 1% or 0.1% intellectually and you're active in the tech community as a software developer or other highly technical skill you are very well situated to beat the market. Pick any decade where this wasn't true. In the 90s it was buying web domains or investing in personal computer companies. In the 2000s it was investing in platforms and social networks or even just building a company in the mobile space. In the 10s it was cryptocurrencies and AI. All of these things were obvious and even if you didn't get in at the very ground floor (buying sex.com or 50 bitcoins for a dollar) you still make hyper, hyper gains. 100000% returns? Totally possible. Now go on and take all that knowledge you hard fought for at MIT, Stanford, Harvard, or Waterloo (or even on your own!) and use it too... Invest in low fee ETFs. Great plan guys.

badestrand 9y ago
> The advice I give to people on here is generally upvoted, except when it comes to investing Maybe it is because your advice only goes to 0.0X% of all people, as you state yourself?
- hoschicz 9y ago
  Many of the people studying Stanford are the 1 % of people.
jeffwass 9y ago
You have great advice with the benefit of hindsight. So what's your suggestion for the "obvious" investment today?
- Spooky23 9y ago
  Look at sectors that benefit from the political environment. Things like pharmaceuticals with ok pipelines, good companies in shitty sectors (say a company like Costco in retail), health insurers and companies like McDonald's that do well when the rest of the world does not. Think about smaller players who benefit from net neutrality going away. You should have a running list of good companies and invest as you see corrections or downturns.

Spooky23 9y ago

I took the advice the class is recommending. Now I'm about to turn 40, and now in the timeframe where I have the network to exploit and experience to get into customers, I'm sitting on a nice nest egg. If I decide to roll the dice, I get to keep more pie than an impoverished college grad. My 22 year old self would have been failing fast into the heart of the dot-bomb implosion and probably stuck in some less than optimal grind for a few years.

Chris2048 9y ago
I found your post a little hard to understand. Are you saying "save money because your older self can do more with it than your younger self"?
- jogjayr 9y ago
  Save money now so you can afford to take career risks later.
  - dandr01d 9y ago
    How do you take risks when you’re married with kids?
    - stefano 9y ago
      By having a nest egg that can keep you and your family going for a few years.
    - semi-extrinsic 9y ago
      Settle down and have kids early, play the long game instead. Seriously. Have kids when you're ~25 (closer to the optimal age for having kids), then by the time you're ~45 they'll have moved out and you'll have the time and the financial freedom to take risks, do what you want, sail around the world etc. We've done this. And let me tell you, working 40 hours a week when your 8-month baby lets you sleep on average 2 hours per night is a lot fucking harder than the 70-hour tech-scene work week. So given the choice, I'll take the former when I'm young and fit for it, and the latter when I'm older and wiser.

mcguire 9y ago

Honestly, I suspect the consensus would be to use there $10,000 to start a savings account where you keep 6 months of living expenses for those times when your opportunities blow up in your face. That's risk management, and I'd have no trouble tattoing it on a 22 year old's forehead in reverse. Further, I'd have no problems telling someone with a 6-figure income to max out their 401k and then invest more in index funds. Take it from a 50 year old, it's easy to come out if that 10 year window with nothing but painful experiences.

kharms 9y ago

I agree with the gist of your post but your consensus advice is a bit off: >And graduated Stanford. You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consensus advice investment management professionals would offer is to sock it away in a well-diversified set of Vanguard Funds. Your first $10k is your emergency fund. From what I've read, the consensus is: don't invest it, instead keep it in an FDIC insured savings account + cash. If you need it, it'll probably be because you've been unemployed for a while. You are most likely to be unemployed during an economic downturn. The cash choice insulates against natural disasters. If you do invest it, try a target date fund that's matures in the near future. For today, 2020 would be a good choice.

shostack 9y ago
I agree with everything except the target date fund. They have shown to perform horribly.

heedlessly3 9y ago

You're better off saving and trying to get a job at Facebook, Amazon, Google, Microsoft, etc.. http://danluu.com/startup-tradeoffs/ http://danluu.com/startup-tradeoffs/

komali2 9y ago

I struggle with this week to week as I fight between strictly managing my finances and funding my YOLO 26 year old "holy shit I can't believe I'm making this much money" swagger. I'm having a really hard time justifying saving above the bare minimum - despite my experience as a recruiter, I still can't convince myself that there will ever be a time I'm not hireable, unless all jobs have vanished (apocalypse, general AI), in which case my "nest egg" is useless anyway. It's just a logical reach to justify my excessive spending I'm sure, but I've really got myself convinced here :P

amag 9y ago
But there's another reason to save: early retirement. It may not seem interesting to you now (I know it didn't for me at 26, I was programming and was getting paid for it!) but when you're 40 it's far more appealing. Unfortunately I didn't make a ton of money at 26 or I would've beaten myself with a stick for not saving more for the future.
- komali2 9y ago
  But I can easily "retire" early right now, just not in the USA. In two years I'd need to supplement with some little contract jobs maybe, but that needn't be full time. I hear you though, I'm definitely trying to learn from my elders, regardless of anything I'll always at least be putting money into a savings account (that I refuse to touch but in the direst emergency). I just can't shake the feeling that this generation is the last one that will get to benefit from our 401ks, if we get to at all.

rnprince 9y ago

Edit: there's a correction on this in the child comments. The math on this is misleading. $10k invested for 30 years to become $1M implies an interest rate of 16.6%. Even as a nominal interest rate in the US, that would be an extremely lucky result to consistently achieve. My advice to you would be to start a hedge fund immediately with whatever secret knowledge you have, and then all money concerns will become irrelevant. :-) A good choice for a real ('real' meaning non-nominal) interest rate in these types of projections is 7%, which would make $10k equal to $76k in 30 years. Because you used a real interest rate, the $76k is $76k in today's dollars, not in 2047 dollars. The conclusion is that you will need to invest a bit more than $10k today to retire in 30 years. I like to use this type of calculation to frame my short-term purchase decisions. Would I like to spend $20 on this thing I don't need? Yes. Would I like to spend today's equivalent of $300 on it 40 years from now? No thank you.

Twisol 9y ago
The parent also mentioned adding to the funds on a monthly basis. Does that make the math match up more properly?
- rnprince 9y ago
  Yes, it does. I missed that. :-)

jldugger 9y ago

As university Devops engineer working with students, I have had a number of opportunities to advice the young in the ways of adulting. One thing that's painfully obvious is that the 'your 20s are your best time to take on risks' crowd is missing is like, women and fertility. Women in the US are generally more risk adverse, so they're more likely to heed the usual 'save now!' spiel. They're also facing a conflict with career risk vs family risk in ways men do not encounter at all. Worse, talking with friends and colleagues about it can threaten your career tracking if you are perceived as a short timer. I've seen too many managers, on HN no less, say they avoid hiring women who might become pregnant. And as far as I can tell, health insurance is allocated two words in the lecture series: "health" and "insurance". That's it! I will grant you that the ACA is under incredible threats at the moment, but employer based health insurance isn't going anywhere, and at the very least, HDHP / HSA plans vs. PPOs vs HMOs is a thing. Considering how expensive pregnancy, birth, maternity leave, child care can be, health insurance and savings is a crucial topic not even mentioned in the 'couples finances' section. The other thing I should mention is student loan debt. 92 percent of those surveyed in the Stanford course say they have no student loans. This seems high -- even the net price of Stanford is $17k / year. Most undergraduates are going to be paying like 4.45 percent interest, which is way better than the 6.8 they used to charge. Despite required financial counseling, most people with loans don't really know how repayment works, and haven't looked at how much their payments will be post graduation.

aaavl2821 9y ago
Those are really good points. Plus if you are not a US citizen the whole equation completely changes My girlfriend is from an immigrant family and left undergrad + grad school with almost half a million in debt without having worked full time in her life, and is completely overwhelmed and underequipped to deal with this. Given how many great engineers and entrepreneurs are immigrants / from immigrant families, financial education programs for undergrads should focus a lot more on these issues
- kamaal 9y ago
  I guess this should go without saying. Never take a loan you can't afford to pay back? Immigrant or other wise.

spike021 9y ago

Funnily enough (to me), I'm in a bit of a situation similar to this, financially anyway (I lack the Stanford side, but whatever). If I were to put, say as you mentioned, $10K in cash into something like a set of Vanguard Funds, what percentage of my monthly income should be added? I have money socked away right now from working internships, and from the past year as a full time engineer, but haven't invested it in much other than partially into my 401k. I'd love to do something with it and I know it's doing nothing sitting in the bank in a regular account.

Chris2048 9y ago

The thing about personal development - it's hard to confiscate or take away. It can't be seized, overtaxed, or barred from leaving the country. It can have value that isn't defined by just one nations' standards of governance. It's not liable to inflation (AFAIK people aren't getting smarter). This makes it relatively less risky and more valuable.

shostack 9y ago

Might be good to have another section on 'Inflation.' That $1M nest egg will need to be ~$3M in 38 years (when a 22yr old might be looking to retire at 60) in order to have the same purchasing power as $1M today (which isn't much in many markets). Certainly not enough to provide a decent inheritance for the next generation.

crgt 9y ago
hahahahha. It’s a strange world when 300k+ of current purchasing power is not considered a decent inheritance. What baseline are you using? I would have loved an inheritance like that..
- shostack 9y ago
  I'm not quite sure where you're getting the $300k from, or what assumptions you're making around retirement spending, but my point was that there likely wouldn't be much of an inheritance to give if one assumed retiring on $1m even in today's dollars. Assuming ~20 years of retirement, that's $50k/yr. Many people's medical expenses would eat that up quickly as they get older, and that's not even getting into other living expenses, whether they have their overpriced home paid off, etc.
  - czbond 9y ago
    I am projecting we mostly will live to 100 or 110. That might mean some people have 30-40 years of retirement, and many will be unprepared.

npsimons 9y ago

> You've even managed to save around $10K in cash from various summer jobs and gifts from relatives. The consensus advice investment management professionals would offer is to sock it away in a well-diversified set of Vanguard Funds. Put half of it in a Roth IRA with Vanguard. You can still do a lot of risk taking and self development on $5k, and the compounding from being in the Roth IRA that early really will make a big difference.