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Live below your means and put as much as possible into index funds and maybe a few stocks you think will outperform. You'll be set before you know it at that in

Live below your means and put as much as possible into index funds and maybe a few stocks you think will outperform. You'll be set before you know it at that income level.

mockingbirdy 8y ago
Can you do a real calculation? I can save up 2k€/month because I want to work part-time (1-2 weeks a month) and will only make 6.5k€/month pre-tax (3.5k€ after taxes). Unfortunately we have heavy taxing here in Germany (42% income tax). I need to invest a million to make 70k€/year pre-tax (premise: 7% ROI). This doesn't sound remotely possible - saving up 25-30k€/year is not going to cut it for significant gains in the markets. I can increase my income by working full-time, but if I know that I have to do it for many years I get demotivated. - - - Maybe it's a mistake that I'm located in Germany, the taxing makes it impossible for me to save up enough money although I'm in the top 10-20% of incomes. Due to progressive taxing, going from 100k€ to 120k€/year increases my net income from 55k€ (this is nearly half of the 100k) to 64k€. It feels like that's a bit too much because people making a million also pay 42% income tax (most of them pay 25% because capital gains are taxed differently). Having money is rewarded more than working, so I'm getting demotivated a bit by knowing that most of the money I make will be eaten by progressive taxes, anyways. edit: There's a way to pay around 20-25% of taxes - having a family where one person works with two kids (two working parents is not encouraged, however - very subtle nudging). It's like we've ingrained our values into our tax system. For me as a 20y/o, this doesn't help and I'm not gonna marry somebody to save some taxes.
- varjag 8y ago
  Stock gains are taxed with capital gain tax, which is typically a lot lower than income tax. Here in Norway CGT is at 28%, an unattainably low figure for income tax on professional salary. You can also tax deduct losses.
  - mockingbirdy 8y ago
    I understand that the government tries to incentivize people to invest, but it's also very clear who profits most from such regulations. In a market where there's a lot of capital which already chases yields (ECB already keeps the interest low). It's always Keynes vs. Friedman (and a mix of both), but I don't like this de-regulated state. We already have big problems with inequality. What do you think about this?
    - varjag 8y ago
      I fail to see a solution to this that won't throw the baby out with the bathwater. Increasing CGT will kill off small business scene effectively, as it's very often one-two small owners with very modest compensation via the dividend.

Live below your means and put as much as possible into index funds and maybe a few stocks you think will outperform. You'll be set before you know it at that income level.

mockingbirdy 8y ago

Can you do a real calculation? I can save up 2k€/month because I want to work part-time (1-2 weeks a month) and will only make 6.5k€/month pre-tax (3.5k€ after taxes). Unfortunately we have heavy taxing here in Germany (42% income tax). I need to invest a million to make 70k€/year pre-tax (premise: 7% ROI). This doesn't sound remotely possible - saving up 25-30k€/year is not going to cut it for significant gains in the markets. I can increase my income by working full-time, but if I know that I have to do it for many years I get demotivated. - - - Maybe it's a mistake that I'm located in Germany, the taxing makes it impossible for me to save up enough money although I'm in the top 10-20% of incomes. Due to progressive taxing, going from 100k€ to 120k€/year increases my net income from 55k€ (this is nearly half of the 100k) to 64k€. It feels like that's a bit too much because people making a million also pay 42% income tax (most of them pay 25% because capital gains are taxed differently). Having money is rewarded more than working, so I'm getting demotivated a bit by knowing that most of the money I make will be eaten by progressive taxes, anyways. edit: There's a way to pay around 20-25% of taxes - having a family where one person works with two kids (two working parents is not encouraged, however - very subtle nudging). It's like we've ingrained our values into our tax system. For me as a 20y/o, this doesn't help and I'm not gonna marry somebody to save some taxes.

varjag 8y ago
Stock gains are taxed with capital gain tax, which is typically a lot lower than income tax. Here in Norway CGT is at 28%, an unattainably low figure for income tax on professional salary. You can also tax deduct losses.
- mockingbirdy 8y ago
  I understand that the government tries to incentivize people to invest, but it's also very clear who profits most from such regulations. In a market where there's a lot of capital which already chases yields (ECB already keeps the interest low). It's always Keynes vs. Friedman (and a mix of both), but I don't like this de-regulated state. We already have big problems with inequality. What do you think about this?
  - varjag 8y ago
    I fail to see a solution to this that won't throw the baby out with the bathwater. Increasing CGT will kill off small business scene effectively, as it's very often one-two small owners with very modest compensation via the dividend.