6 ms·

Don't spend all your money on toys... The few hundred dollars you've spent already, had you invested it in your business, or even put it into savings, could be

Don't spend all your money on toys... The few hundred dollars you've spent already, had you invested it in your business, or even put it into savings, could be worth tens of thousands or even millions a few decades from now.

csomar 16y ago
That's something I learnt while working and it really helped me a lot (and will in my professional life). However, I don't have my own computer (shared one, except this netbook); so I need a better setup for my development. I try to prioritize the items I need. An external hard-drive comes first, because I should have a backup strategy. The monitor is more important, because I need better display... Certainly, I'll offer myself an Android as a gift and that also should serve and help me in business (read emails in the go, check statics, HN on mobile instead of computer...)
- heresy 16y ago
  If you can learn the power of compound interest at your age, you're going to retire very comfortably.
  - csomar 16y ago
    I read some of the Wikipedia article about it. However, the bank won't give you 20% yearly, yet barely enough to cover the inflation. Nor the stock market and real estate do, so I wonder how compound interest would help and in any way?
    - nlco 16y ago
      It would manifest itself if you invest in your own company.
    - heresy 16y ago
      Sorry, let me clarify. Let's say you started investing/saving at the age of 18 up until 65, and lets say the amount you put in per month over that period of time was $800 per month - this is pretty low, given how much your income should increase over time. At a conservative rate of return of 5%, at age 65, it would be worth around $1.8 million, $1.35 million of that being the compound 5%, and only roughly $450,000 being what you put in. Essentially, the earlier you start saving, the bigger your runway, and the more comfortable you'll be later in life, without having to compromise on your lifestyle right there and then. The later you start, the more you have to put in each month to get the same outcome at the end. Something I wish my parents had taught me :) Of course, if you start your own business, and are successful enough, the numbers look way, way, better. This is essentially just your fallback position.
      - carbocation 16y ago
        5% is not a particularly conservative rate of return.
        zackattack 16y ago
        Hasnt the stock market historically grown at a 10% annual rate
        mschaecher 16y ago
        Factor inflation and taxes.
        carbocation 16y ago
        Yes, I agree (~8% over the very long run I think). But it's not timescale invariant. Look at what it's done over the past 10 years, for example (-1%). I'm not trying to say that the stock market doesn't grow over time. I'm just trying to say that if the mean annual growth is truly 8%, it has a really high variance. Thus, there are some things that I wouldn't count on (say, the ability to arbitrage from a 3%-interest loan into straight profit, for example) which I might try to do if the return was consistently 5%. I suppose that for me, when I think conservative, I think consistent.
        chipsy 16y ago
        The 8% claim is misleading and possibly harmful. Nobody wants returns to be that "lumpy" - down for 10 years! Who could stand it? All investments have a certain lifespan on them - with things like bonds and T-bills, interest payments and maturity are fixed and contractually obligated, while with equities it's up to company performance. To really do well, you have to think like a trader and run all investments over a specific timeframe with predetermined exit signals for profit, loss, or trend changes. It may look as if Warren Buffett lets money sit in the market. But he is actually running trades over decades of time. He has to - he literally has too much money to make useful(percentage-wise) profit in smaller time frames.
    - deleted 16y ago
      [deleted]
messel 16y ago
By buying some technical toys and net access now, he can invest in himself and potentially make much more than interest from secure investments or real estate. Either way he's learning faster.
po 16y ago
Don't spend all of your money on toys… Great advice, but be sure to spend some of it on toys! Also, pick toys which have utility, make you work out, teach you something, and are different than the past toys you've bought. Try to learn from play too.

csomar 16y ago

That's something I learnt while working and it really helped me a lot (and will in my professional life). However, I don't have my own computer (shared one, except this netbook); so I need a better setup for my development. I try to prioritize the items I need. An external hard-drive comes first, because I should have a backup strategy. The monitor is more important, because I need better display... Certainly, I'll offer myself an Android as a gift and that also should serve and help me in business (read emails in the go, check statics, HN on mobile instead of computer...)

heresy 16y ago
If you can learn the power of compound interest at your age, you're going to retire very comfortably.
- csomar 16y ago
  I read some of the Wikipedia article about it. However, the bank won't give you 20% yearly, yet barely enough to cover the inflation. Nor the stock market and real estate do, so I wonder how compound interest would help and in any way?
  - nlco 16y ago
    It would manifest itself if you invest in your own company.
  - heresy 16y ago
    Sorry, let me clarify. Let's say you started investing/saving at the age of 18 up until 65, and lets say the amount you put in per month over that period of time was $800 per month - this is pretty low, given how much your income should increase over time. At a conservative rate of return of 5%, at age 65, it would be worth around $1.8 million, $1.35 million of that being the compound 5%, and only roughly $450,000 being what you put in. Essentially, the earlier you start saving, the bigger your runway, and the more comfortable you'll be later in life, without having to compromise on your lifestyle right there and then. The later you start, the more you have to put in each month to get the same outcome at the end. Something I wish my parents had taught me :) Of course, if you start your own business, and are successful enough, the numbers look way, way, better. This is essentially just your fallback position.
    - carbocation 16y ago
      5% is not a particularly conservative rate of return.
      - zackattack 16y ago
        Hasnt the stock market historically grown at a 10% annual rate
        mschaecher 16y ago
        Factor inflation and taxes.
        carbocation 16y ago
        Yes, I agree (~8% over the very long run I think). But it's not timescale invariant. Look at what it's done over the past 10 years, for example (-1%). I'm not trying to say that the stock market doesn't grow over time. I'm just trying to say that if the mean annual growth is truly 8%, it has a really high variance. Thus, there are some things that I wouldn't count on (say, the ability to arbitrage from a 3%-interest loan into straight profit, for example) which I might try to do if the return was consistently 5%. I suppose that for me, when I think conservative, I think consistent.
        chipsy 16y ago
        The 8% claim is misleading and possibly harmful. Nobody wants returns to be that "lumpy" - down for 10 years! Who could stand it? All investments have a certain lifespan on them - with things like bonds and T-bills, interest payments and maturity are fixed and contractually obligated, while with equities it's up to company performance. To really do well, you have to think like a trader and run all investments over a specific timeframe with predetermined exit signals for profit, loss, or trend changes. It may look as if Warren Buffett lets money sit in the market. But he is actually running trades over decades of time. He has to - he literally has too much money to make useful(percentage-wise) profit in smaller time frames.
  - deleted 16y ago
    [deleted]

messel 16y ago

By buying some technical toys and net access now, he can invest in himself and potentially make much more than interest from secure investments or real estate. Either way he's learning faster.

po 16y ago

Don't spend all of your money on toys… Great advice, but be sure to spend some of it on toys! Also, pick toys which have utility, make you work out, teach you something, and are different than the past toys you've bought. Try to learn from play too.