5 ms·

If you could go ahead and just outline that program in point form as a reply to this that'd be great

skookumchuck 9y ago
There are lots of ways, but the simplest is to take 10% of your income and invest it in an S&P 500 index fund. Also take maximum advantage of any 401k plan your employer offers.
- BeetleB 9y ago
  For most tech people, 10% of your income in an index fund is not going to get you out of the middle class. Most tech people are not in SV.
  - seymour333 9y ago
    Pretty much this. I can't afford to commit that level of income to investments, and even if I could, the impact on my financial standing would not be significant (probably? I have no idea what kind of % return you get on an index fund)
    - dv_dt 9y ago
      Rule of thumb is often an average 10% growth for index fund return (e.g. S&P 500) - this would be over many decades. If you can't put in 10%, at least put in up to what an employer matches - unless you are very low income, it's worth it and once it's sequestered from your day to day budget you won't feel the difference of 1-5%.
  - conanbatt 9y ago
    10% after tax + 401k max should be more than enough for a cushy retirement. If you dont have 401k-like benefits, 15-20% will get you there.
    - TheCoelacanth 9y ago
      Oh, great so someone just needs to save $18k per year plus an extra ten percent of their income. That will be easy to accomplish for a typical person making the median wage of approximately $30k per year.
      - conanbatt 9y ago
        Median household wage in the U.S is 58k. 20% savings rate is hard to get but achievable.
        TheCoelacanth 9y ago
        That's the median household income which often includes multiple workers and non-wage income. Median wage is about 30k according to the Social Security Administration[1] and they should know since they are supposed to get the wages for every single worker in the country reported to them. [1] https://www.ssa.gov/oact/cola/central.html https://www.ssa.gov/oact/cola/central.html
        conanbatt 9y ago
        Can a person earning 30k save 20%? I think its possible, and that would almost guarantee a safe retirement. Thats not even counting social security, which is very significant at that wage level.
        TheCoelacanth 9y ago
        You said max a 401k plus 10%. For someone making 30k that's 18.5k + 3k = 21.5k which is virtually impossible for someone making 30k.
  - skookumchuck 9y ago
    Write a simple computer program to calculate your return over time. Assume 7% average real return of the S&P 500. See for yourself.
    - BeetleB 9y ago
      I did: >http://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-invest/ http://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-in... I'm not saying saving 10% is bad. It may be good enough to retire depending on when you start out. But it won't take you out of the middle class. For most developers in my city, 10% means saving $7-10K a year.
      - skookumchuck 9y ago
        It'll make you a millionaire easy. But really, this is just a basic strategy, sort of like the "Dealer's Strategy" in blackjack. As you become a more sophisticated investor, you can invest in things that pay off better. To become a more sophisticated investor, you'll need to start reading books (uh-oh!) on investing, accounting, and business.
        BeetleB 9y ago
        >It'll make you a millionaire easy. That wasn't in dispute. The issue in contention is moving out of the middle class. Having $1.3 million in retirement when you're 65 puts you squarely in the middle class, if you go by the 4% withdrawal rate.
- tamrix 9y ago
  Hahahaha your funny kid.
binarysolo 9y ago
Scott Adam's advice (reposted by Matt Cutts) is pretty popular: https://www.mattcutts.com/blog/scott-adams-financial-advice/ https://www.mattcutts.com/blog/scott-adams-financial-advice/
- skookumchuck 9y ago
  I'd add: * buy a car you can pay cash for, not one you have to make payments on
  - seymour333 9y ago
    Fully agree with this. I got rid of any major debt almost a decade ago and it's the only way I keep myself afloat. No car loans, not furniture or electronics that I can't pay cash for, and I keep a credit card only for functional aspects (online purchases, credit rating etc)
    - skookumchuck 9y ago
      > furniture ... electronics It turns out that your local thrift store is a great place for both of those cheap. I bought a very nice sound system for about $40 including speakers, one that a couple decades ago would have cost a couple grand. You can get real nice flat panel TVs from the pawn shop for next to nothing, too, as well as computer equipment.

There are lots of ways, but the simplest is to take 10% of your income and invest it in an S&P 500 index fund. Also take maximum advantage of any 401k plan your employer offers.

BeetleB 9y ago
For most tech people, 10% of your income in an index fund is not going to get you out of the middle class. Most tech people are not in SV.
- seymour333 9y ago
  Pretty much this. I can't afford to commit that level of income to investments, and even if I could, the impact on my financial standing would not be significant (probably? I have no idea what kind of % return you get on an index fund)
  - dv_dt 9y ago
    Rule of thumb is often an average 10% growth for index fund return (e.g. S&P 500) - this would be over many decades. If you can't put in 10%, at least put in up to what an employer matches - unless you are very low income, it's worth it and once it's sequestered from your day to day budget you won't feel the difference of 1-5%.
- conanbatt 9y ago
  10% after tax + 401k max should be more than enough for a cushy retirement. If you dont have 401k-like benefits, 15-20% will get you there.
  - TheCoelacanth 9y ago
    Oh, great so someone just needs to save $18k per year plus an extra ten percent of their income. That will be easy to accomplish for a typical person making the median wage of approximately $30k per year.
    - conanbatt 9y ago
      Median household wage in the U.S is 58k. 20% savings rate is hard to get but achievable.
      - TheCoelacanth 9y ago
        That's the median household income which often includes multiple workers and non-wage income. Median wage is about 30k according to the Social Security Administration[1] and they should know since they are supposed to get the wages for every single worker in the country reported to them. [1] https://www.ssa.gov/oact/cola/central.html https://www.ssa.gov/oact/cola/central.html
        conanbatt 9y ago
        Can a person earning 30k save 20%? I think its possible, and that would almost guarantee a safe retirement. Thats not even counting social security, which is very significant at that wage level.
        TheCoelacanth 9y ago
        You said max a 401k plus 10%. For someone making 30k that's 18.5k + 3k = 21.5k which is virtually impossible for someone making 30k.
- skookumchuck 9y ago
  Write a simple computer program to calculate your return over time. Assume 7% average real return of the S&P 500. See for yourself.
  - BeetleB 9y ago
    I did: >http://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-invest/ http://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-in... I'm not saying saving 10% is bad. It may be good enough to retire depending on when you start out. But it won't take you out of the middle class. For most developers in my city, 10% means saving $7-10K a year.
    - skookumchuck 9y ago
      It'll make you a millionaire easy. But really, this is just a basic strategy, sort of like the "Dealer's Strategy" in blackjack. As you become a more sophisticated investor, you can invest in things that pay off better. To become a more sophisticated investor, you'll need to start reading books (uh-oh!) on investing, accounting, and business.
      - BeetleB 9y ago
        >It'll make you a millionaire easy. That wasn't in dispute. The issue in contention is moving out of the middle class. Having $1.3 million in retirement when you're 65 puts you squarely in the middle class, if you go by the 4% withdrawal rate.
tamrix 9y ago
Hahahaha your funny kid.

binarysolo 9y ago

Scott Adam's advice (reposted by Matt Cutts) is pretty popular: https://www.mattcutts.com/blog/scott-adams-financial-advice/ https://www.mattcutts.com/blog/scott-adams-financial-advice/

skookumchuck 9y ago
I'd add: * buy a car you can pay cash for, not one you have to make payments on
- seymour333 9y ago
  Fully agree with this. I got rid of any major debt almost a decade ago and it's the only way I keep myself afloat. No car loans, not furniture or electronics that I can't pay cash for, and I keep a credit card only for functional aspects (online purchases, credit rating etc)
  - skookumchuck 9y ago
    > furniture ... electronics It turns out that your local thrift store is a great place for both of those cheap. I bought a very nice sound system for about $40 including speakers, one that a couple decades ago would have cost a couple grand. You can get real nice flat panel TVs from the pawn shop for next to nothing, too, as well as computer equipment.