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10 Things Millionaires Won't Tell You

76 points by ryanwaggoner 18y ago

deleted 18y ago
[deleted]
hbien 18y ago
I'm gonna throw a book recommendation out there: "The Millionaire Next Door".
nazgulnarsil 18y ago
it's impossible to be happy if you're always comparing yourself to others. there will always be someone smarter, better looking, richer, and with a bigger ____ than you :p True happiness is contentment, contentment comes from financial security. I laugh at those millionaires who, as the article said, are squeaking by on 400k a year. The biggest key to financial security isn't making more money. It's reducing your living expenses. If you're making 90k a year but socking away half of that, you're buying a year of retirement for every year you work. (assuming your investments only keep you even with inflation and dont make you any additional money). also: one of the best pieces of advice in the article is always have a mortgage. as soon as you finish paying off your first house it's time to make a down payment on a new one and rent it out to pay for the mortgage. assets>cash, plus it's tax advantaged.
- paul 18y ago
  Because real estate always goes up? The "houses are the greatest investment ever" myth is amazingly persistent.
  - dmv 18y ago
    Because mortgages remain a great leverage instrument. Find a bank who will lend you 4X your initial deposit with a low fixed (or not...) interest rate, without margin calls, in any other investment vehicles?
    - mattmaroon 18y ago
      If you find one that will loan it out below what I can get from a CD and somehow make the interest tax deductible, please call me.
  - nazgulnarsil 18y ago
    putting money into a house that maintains its value or even drops slightly is better than paying rent. rent money is gone forever. a mortgage is building equity that you can draw on. plus I don't get how people don't realize that renting out a house to pay its mortgage is basically free money. Someone else is building equity in a house for you and all you have to do is pay the down payment and manage tenants. My personal plan is to buy a house that has something that can be turned into a studio, live in the studio and rent out the main house. I have a feeling this type of situation doesn't go on the market too often for obvious reasons though.
    - dmv 18y ago
      Duplexes sell fairly frequently. For mine, the rent of each unit is greater than the mortgage... As a note, though, home ownership (esp. rental ownership) is more expensive than just the mortgage (and taxes, and utilities). Like any business, there is time and attention required. Like any other depreciating asset, there is also ongoing maintenance costs. And they are not smooth like the income stream. If your rent is $1000 and your monthly payment (mortgage + escrow) is $800, you may be netting $200/mo. Great! But then you have to scramble to find the $10k to replace the roof. Or it takes two months to replace the tenants (there goes 8 months' profits). In the long term, it should work out. Your mortgage + tax payments should increase slower than the monthly rent payment. But renting out a house is not free money.
      - nazgulnarsil 18y ago
        as close to free money as you can get without lucking out I would say. Of course it requires attention and time but it beats pissing money away on rent, especially in silicon valley where rents are more than twice as much as the national average.
    - kalid 18y ago
      I think you're overlooking the interest payments, which are gone forever as well. If you have a 300k mortgage at 6%, you are paying 18k year (1500 month) in interest alone. Yes, there are tax advantages but I think this is negated by property taxes, PMI insurance, etc. Your mortgage payments aren't buying equity in your house.
  - johnrob 18y ago
    I am also skeptical of the conventional wisdom of home ownership. I think a mortgage is simply a way to force yourself to save money. If people save with the same commitment as mortgage payments, even while paying rent, they should end up doing just fine.
    - mattmaroon 18y ago
      That's not even remotely true. The interest rate for a mortgage right now is a few % points below what the stock market has returned, on average, over the last 50 years. That's not even counting the tax deduction for the interest. A mortgage is basically borrowing money with which to make more money. Your mortgage payment on a place is generally not much more than your rent payment would be, and it's tax deductible and, over time, builds equity. You can't save with the same commitment while paying rent because you have to pay rent.
      - nostrademons 18y ago
        > Your mortgage payment on a place is generally not much more than your rent payment would be This is not true in most of the formerly booming real estate markets in the U.S. My coworker just bought a condo for $500K in Boston. At 6%, his interest payments are $30K/year, or $2500/month. My friends are renting a similar place for $2200/month. I've heard it's worse in California, eg. people paying $3500/month in mortgage payments for houses that rent for $2000 or so. The recent Businessweek article on Merced mentioned homes with $3400/month that the owners walked away from, then out-of-state speculators bought it at a foreclosure auction and are now renting it back to the original owners for $1200/month. > The interest rate for a mortgage right now is a few % points below what the stock market has returned, on average, over the last 50 years. First rule of finance: any truly risk-free profit opportunities will be arbitraged away as soon as large numbers of people become aware of them. That's exactly what happened in the 1990s. People suddenly realized that the stock market, on average, returned higher rates than a 30-year mortgage, so they took out mortgages and invested it in the stock market. As a result, the stock market quadrupled between 1995 and 2000. Then they pulled it out of the stock market and back into real estate between between 2001 and 2005. It's highly unlikely that stock market returns over the next 50 years will match those of the previous 50 years, even with the cratering of the real-estate market.
  - mattmaroon 18y ago
    He said mortgages were a good investment, not houses. In terms of EV they're pretty high up the list, especially compared to the alternatives (buying the house outright or renting). Nothing always goes up, but over time real estate does pretty well. Plus the tax deduction on the interest rate, and the fact that the APR is lower than what you could get with the money if invested well in other stuff make mortgages so well-worth it that even people who could buy outright almost always take them.
  - nazgulnarsil 18y ago
    and viewing houses as just another investment is amazingly persistent and is the attitude that got us into our present problem in the first place. a mortgage is building equity in a physical asset, stocks are gambling to try to get 10% returns in paper money.
    - deleted 18y ago
      [deleted]
    - byrneseyeview 18y ago
      How are stocks 'gambling'? Buying a stock is buying a fraction of a business. Is all business ownership gambling? A business is just a group formed to do something too complex for individuals -- are the constituent individuals also a gamble?
- Eliezer 18y ago
  there will always be someone smarter, better looking, richer, and with a bigger ____ than you Oh, come on, nazgulnarsil, where's your spirit? You can do it! Bart: You make me sick, Homer. You're the one who told me I could do anything if I just put my mind to it! Homer: Well, now that you're a little bit older, I can tell you that's a crock! No matter how good you are at something, there's always about a million people better than you. Bart: Gotcha. Can't win, don't try.
  - nazgulnarsil 18y ago
    my extreme pragmatism depresses most people. I always hear hope for the best but plan for the worst and I think it is unnecessarily pessimistic. Hope for the best, plan for the averages, have a backup plan for the worst. But the bottom line is that we're already incredibly wealthy by historical standards. I am in the bottom quintile by income in the U.S. (poor college student) and yet i enjoy a standard of living that is probably in the top 1% of all humans who've ever lived. P.S. assuming you are Mr. Yudkowsky your posts at overcoming bias singlehandedly turned me from an empiricist into a rationalist.
- dkokelley 18y ago
  plus it's tax advantaged I've never really liked that reasoning. Let's assume that someone is in the 30% tax bracket (paying 30% on all qualified income). Let's say this person makes $100,000/yr. They pay $30,000/yr in taxes. Let's say they also have a $100,000 mortgage at 5% APY. They're paying $5,000/yr in interest. That interest is deducted from their income of $100,000 leaving $95,000 taxable income. Assuming they didn't move down a bracket, they're paying $28,500/yr instead of $30,000/yr, saving them $1500/yr in taxes. Remember though that they're paying $5,000 in interest. It doesn't make financial sense in that respect. They are paying $3500 more per year than if they paid off their mortgage. It's seems like a way for people to live in nicer houses (or have more of them) and get a "deal" or "discount" on taxes, though in the end they are paying more. This doesn't take into account housing prices, cash flow issues, or alternative investments. The rational I've seen in people who could pay off their houses but decide not to is either: A: I can use this as leverage and sell later when the price is higher, making me money (risky, if the market drops) B: I can use the money that I could use to pay off my mortgage to invest in other things (also risky, given the nature of any investments) or C: It's a tax deduction (which from my math doesn't make sense. Maybe someone can show me a situation where the math works out better by keeping the mortgage)
  - mattmaroon 18y ago
    I'll show you the situation. If your mortgage is at 6% (I think mine is just below that) and you're in the 30% bracket (I am around there) you're effectively saving 1.8% in deductions (30% of the 6%) and therefore paying 4.2% interest right? A C.D. now pays over 5.25%. So to clarify the math, you borrow $200k, pay $12k in interest, but get to deduct it and therefore save $3.6k, thus really paying $8.4k in interest (or 4.2% of the $200k). Therefore if you mortgage the house (as opposed to buying it outright) and buy into a CD at 5.25% you're effectively gaining 1.05% interest for free. You're making about $2k a year. Also you're increasing your credit score, which saves you a lot of money in the long run. In your above scenario the guy was saving 30% of 5% (1.5%, or 1500) which would put him at 3.5%. He'd be borderline retarded to pay for the house outright. Much more intelligent (especially for someone my age, who has a good 30 years to worry about retirement, thus reducing the volatility) is to put that $200k into the market, which will probably average somewhere between 7-10% in that time. Suddenly that $200k mortgage turns into a shit ton of money in my retirement account. Also, there's the fact that the mortgage costs only slightly more than renting a similar place (if homes as nice as mine were available for rent, which they generally aren't here) yet in 30 years I have a free and clear home I can sell. In summation, mortgages FTW. That's why very wealthy people who could afford not to still damn near always get them.
- deleted 18y ago
  [deleted]
IsaacSchlueter 18y ago
You may think I'm rich, but I don't. How very very true that is. I have friends that make less than half what I do. Once upon a time, I would have thought that my current income would mean I'd "made it". But somehow, here I am, still occasionally concerned about being overdrawn, still trying to be frugal, still feeling like I don't make enough to do all the things I want to do. By world standards, I was fantastically wealthy when I was peddling vacuums. Some things are more a function of the human condition than anything else. People in San Diego complain about the weather.
- vaksel 18y ago
  all things are relative. You can be the smartest person in your state, but not the country. You can be the smartest person in the country, but not the world. Same thing with wealth, you may be a millionaire but there are MILLIONS other people who are richer than you.
  - Eliezer 18y ago
    So if you're the smartest person in the world, does everything stop being relative? Or do you start worrying about alternative Everett branches?
    - litewulf 18y ago
      Well, smartness is a bit more complex. I may be better at skill A, but my friend is way good at B. Thus, he is "smarter".
      - whatusername 18y ago
        And thus the problem with IQ tests... Wealth isn't like that though. If I have X Peso's (Or Dollars, etc) and you have X + Y then you are richer (for any positive value of Y). The only 2 limits to comparison that I can see is: * Liquidity - (ie - Bill Gates can't sell all his MSFT stock without the price crashing significantly) * Historical Data - How do BillyG/Buffet/Slim compare to Rockefellar and King Soloman?
ambition 18y ago
This is really about how to get upper-middle class wealth. The psychology of these millionaires is very different from the mentality of big startup founders -- sure, half run businesses, but these are lifestyle-type companies with no ability to scale.
- JoelSutherland 18y ago
  http://en.wikipedia.org/wiki/Upper_middle_class#Income http://en.wikipedia.org/wiki/Upper_middle_class#Income 10 Million households have $1 million+. There are an estimated 111,162,259 households in the US... This is upper class wealth...just not completely elite levels of wealth. I think the point of the article is that people with upper class levels of wealth tend to have upper-middle class lifestyles.
  - ambition 18y ago
    This is really an argument of semantics of "upper-middle-class" vs. "upper-class." Maybe there's standard definition I don't know about. My personal definition is that upper class is "don't need to work ever again." You're right that upper middle class people have the same lifestyles as upper class. The difference isn't in material goods, it's in freedom.
    - JoelSutherland 18y ago
      But not having to work again is tied directly to consumption along with income. The interesting component of the article was that the average income of somebody with $1 million of net worth was approaching $400,000. This implies a poor savings rate and not very much savings at all. If freedom is the goal, it seems the key component is a modest lifestyle.
  - gaius 18y ago
    Upper class is second-generation. To be truly upper class you'd have had to have gone to an elite boarding school, for example, and bonded socially with the rest of the upper class. Self-made people can never be more than upper-middle regardless of how much cash they have.
yan 18y ago
When people start affording more with larger incomes, their assets turn into overhead that must be managed. It's a cliche, but the TCO of most things is more than their face value. On the other hand of that, there is an amount of dollars one can earn to build a framework and make their money be self-supporting. I.e. the returns on investment covers taxes and expenses and actually has non-negative growth. While I agree that contentment is /a/ key to happiness, it won't exactly motivate you to strive for things completely out of reach. Just the chase of your goals can result in happiness.
Hexstream 18y ago
I hate those obnoxious ads that spin your CPU to 100% for no reason at all :/
- vaksel 18y ago
  install Ad Block Plus
gabrielleydon 18y ago
I think the most important point was: "You don't get rich by being nice." This is seldom said but often true.
- unalone 18y ago
  Really? I think that's the one I hear most often.
pg 18y ago
A lot of this is wrong. For example, no one rich would "leverage their home equity to finance purchases." And though rich people often have assistants, they're not drawn from a special guild of "concierges" with connections for getting restaurant reservations. Nor would anyone rich rent handbags or Ferraris. The parts that aren't false read like a description of someone who made money from e.g. developing shopping malls. People who get rich from technology are less likely to be B students, less likely to try to cheat the IRS by routing their personal expenses through their companies, and more likely to be "nice guys."
- iuguy 18y ago
  Hmmm... I wouldn't say I'm rich, but my accountant is creative when it comes to tax, and rightly so. I completely agree on the handbags thing, Ferraris are a different matter - if you have a means of moving that cost from being a taxable depreciating asset to a tax writeoff then go for the latter. I know an entrepeneur who leases high end sports cars through his companies as a means of reducing tax liability. YMMV though (pun intended, sorry)
- iamelgringo 18y ago
  If you've ever spent time in Newport, RI, and seen what the old money in this country drives... it's Honda's and Toyota's. You don't see so many Bentley's, Ferrari's or Bugatti's.
  - brentr 18y ago
    I lived in Providence, and this is partially true. Yes, there are many old money that drive cars like this, but if you spend time out in Newport during the summer, you do see many six figure cars.
  - josefresco 18y ago
    Money on the east coast is less concerned with flashy cars. Your more likely to see their money invested quietly in their homes and families. West coast/the South is all about your image, I saw more 6 figure cars in the poorest sections of Miami than I've seen in the richest places in New England.
known 18y ago
With cash in hand, we 1. Spend 2. Save 3. Survive 4. Invest We are rich if we are investing cash!

76 points by ryanwaggoner 18y ago

deleted 18y ago

[deleted]

hbien 18y ago

I'm gonna throw a book recommendation out there: "The Millionaire Next Door".

nazgulnarsil 18y ago

it's impossible to be happy if you're always comparing yourself to others. there will always be someone smarter, better looking, richer, and with a bigger ____ than you :p True happiness is contentment, contentment comes from financial security. I laugh at those millionaires who, as the article said, are squeaking by on 400k a year. The biggest key to financial security isn't making more money. It's reducing your living expenses. If you're making 90k a year but socking away half of that, you're buying a year of retirement for every year you work. (assuming your investments only keep you even with inflation and dont make you any additional money). also: one of the best pieces of advice in the article is always have a mortgage. as soon as you finish paying off your first house it's time to make a down payment on a new one and rent it out to pay for the mortgage. assets>cash, plus it's tax advantaged.

paul 18y ago
Because real estate always goes up? The "houses are the greatest investment ever" myth is amazingly persistent.
- dmv 18y ago
  Because mortgages remain a great leverage instrument. Find a bank who will lend you 4X your initial deposit with a low fixed (or not...) interest rate, without margin calls, in any other investment vehicles?
  - mattmaroon 18y ago
    If you find one that will loan it out below what I can get from a CD and somehow make the interest tax deductible, please call me.
- nazgulnarsil 18y ago
  putting money into a house that maintains its value or even drops slightly is better than paying rent. rent money is gone forever. a mortgage is building equity that you can draw on. plus I don't get how people don't realize that renting out a house to pay its mortgage is basically free money. Someone else is building equity in a house for you and all you have to do is pay the down payment and manage tenants. My personal plan is to buy a house that has something that can be turned into a studio, live in the studio and rent out the main house. I have a feeling this type of situation doesn't go on the market too often for obvious reasons though.
  - dmv 18y ago
    Duplexes sell fairly frequently. For mine, the rent of each unit is greater than the mortgage... As a note, though, home ownership (esp. rental ownership) is more expensive than just the mortgage (and taxes, and utilities). Like any business, there is time and attention required. Like any other depreciating asset, there is also ongoing maintenance costs. And they are not smooth like the income stream. If your rent is $1000 and your monthly payment (mortgage + escrow) is $800, you may be netting $200/mo. Great! But then you have to scramble to find the $10k to replace the roof. Or it takes two months to replace the tenants (there goes 8 months' profits). In the long term, it should work out. Your mortgage + tax payments should increase slower than the monthly rent payment. But renting out a house is not free money.
    - nazgulnarsil 18y ago
      as close to free money as you can get without lucking out I would say. Of course it requires attention and time but it beats pissing money away on rent, especially in silicon valley where rents are more than twice as much as the national average.
  - kalid 18y ago
    I think you're overlooking the interest payments, which are gone forever as well. If you have a 300k mortgage at 6%, you are paying 18k year (1500 month) in interest alone. Yes, there are tax advantages but I think this is negated by property taxes, PMI insurance, etc. Your mortgage payments aren't buying equity in your house.
- johnrob 18y ago
  I am also skeptical of the conventional wisdom of home ownership. I think a mortgage is simply a way to force yourself to save money. If people save with the same commitment as mortgage payments, even while paying rent, they should end up doing just fine.
  - mattmaroon 18y ago
    That's not even remotely true. The interest rate for a mortgage right now is a few % points below what the stock market has returned, on average, over the last 50 years. That's not even counting the tax deduction for the interest. A mortgage is basically borrowing money with which to make more money. Your mortgage payment on a place is generally not much more than your rent payment would be, and it's tax deductible and, over time, builds equity. You can't save with the same commitment while paying rent because you have to pay rent.
    - nostrademons 18y ago
      > Your mortgage payment on a place is generally not much more than your rent payment would be This is not true in most of the formerly booming real estate markets in the U.S. My coworker just bought a condo for $500K in Boston. At 6%, his interest payments are $30K/year, or $2500/month. My friends are renting a similar place for $2200/month. I've heard it's worse in California, eg. people paying $3500/month in mortgage payments for houses that rent for $2000 or so. The recent Businessweek article on Merced mentioned homes with $3400/month that the owners walked away from, then out-of-state speculators bought it at a foreclosure auction and are now renting it back to the original owners for $1200/month. > The interest rate for a mortgage right now is a few % points below what the stock market has returned, on average, over the last 50 years. First rule of finance: any truly risk-free profit opportunities will be arbitraged away as soon as large numbers of people become aware of them. That's exactly what happened in the 1990s. People suddenly realized that the stock market, on average, returned higher rates than a 30-year mortgage, so they took out mortgages and invested it in the stock market. As a result, the stock market quadrupled between 1995 and 2000. Then they pulled it out of the stock market and back into real estate between between 2001 and 2005. It's highly unlikely that stock market returns over the next 50 years will match those of the previous 50 years, even with the cratering of the real-estate market.
- mattmaroon 18y ago
  He said mortgages were a good investment, not houses. In terms of EV they're pretty high up the list, especially compared to the alternatives (buying the house outright or renting). Nothing always goes up, but over time real estate does pretty well. Plus the tax deduction on the interest rate, and the fact that the APR is lower than what you could get with the money if invested well in other stuff make mortgages so well-worth it that even people who could buy outright almost always take them.
- nazgulnarsil 18y ago
  and viewing houses as just another investment is amazingly persistent and is the attitude that got us into our present problem in the first place. a mortgage is building equity in a physical asset, stocks are gambling to try to get 10% returns in paper money.
  - deleted 18y ago
    [deleted]
  - byrneseyeview 18y ago
    How are stocks 'gambling'? Buying a stock is buying a fraction of a business. Is all business ownership gambling? A business is just a group formed to do something too complex for individuals -- are the constituent individuals also a gamble?
Eliezer 18y ago
there will always be someone smarter, better looking, richer, and with a bigger ____ than you Oh, come on, nazgulnarsil, where's your spirit? You can do it! Bart: You make me sick, Homer. You're the one who told me I could do anything if I just put my mind to it! Homer: Well, now that you're a little bit older, I can tell you that's a crock! No matter how good you are at something, there's always about a million people better than you. Bart: Gotcha. Can't win, don't try.
- nazgulnarsil 18y ago
  my extreme pragmatism depresses most people. I always hear hope for the best but plan for the worst and I think it is unnecessarily pessimistic. Hope for the best, plan for the averages, have a backup plan for the worst. But the bottom line is that we're already incredibly wealthy by historical standards. I am in the bottom quintile by income in the U.S. (poor college student) and yet i enjoy a standard of living that is probably in the top 1% of all humans who've ever lived. P.S. assuming you are Mr. Yudkowsky your posts at overcoming bias singlehandedly turned me from an empiricist into a rationalist.
dkokelley 18y ago
plus it's tax advantaged I've never really liked that reasoning. Let's assume that someone is in the 30% tax bracket (paying 30% on all qualified income). Let's say this person makes $100,000/yr. They pay $30,000/yr in taxes. Let's say they also have a $100,000 mortgage at 5% APY. They're paying $5,000/yr in interest. That interest is deducted from their income of $100,000 leaving $95,000 taxable income. Assuming they didn't move down a bracket, they're paying $28,500/yr instead of $30,000/yr, saving them $1500/yr in taxes. Remember though that they're paying $5,000 in interest. It doesn't make financial sense in that respect. They are paying $3500 more per year than if they paid off their mortgage. It's seems like a way for people to live in nicer houses (or have more of them) and get a "deal" or "discount" on taxes, though in the end they are paying more. This doesn't take into account housing prices, cash flow issues, or alternative investments. The rational I've seen in people who could pay off their houses but decide not to is either: A: I can use this as leverage and sell later when the price is higher, making me money (risky, if the market drops) B: I can use the money that I could use to pay off my mortgage to invest in other things (also risky, given the nature of any investments) or C: It's a tax deduction (which from my math doesn't make sense. Maybe someone can show me a situation where the math works out better by keeping the mortgage)
- mattmaroon 18y ago
  I'll show you the situation. If your mortgage is at 6% (I think mine is just below that) and you're in the 30% bracket (I am around there) you're effectively saving 1.8% in deductions (30% of the 6%) and therefore paying 4.2% interest right? A C.D. now pays over 5.25%. So to clarify the math, you borrow $200k, pay $12k in interest, but get to deduct it and therefore save $3.6k, thus really paying $8.4k in interest (or 4.2% of the $200k). Therefore if you mortgage the house (as opposed to buying it outright) and buy into a CD at 5.25% you're effectively gaining 1.05% interest for free. You're making about $2k a year. Also you're increasing your credit score, which saves you a lot of money in the long run. In your above scenario the guy was saving 30% of 5% (1.5%, or 1500) which would put him at 3.5%. He'd be borderline retarded to pay for the house outright. Much more intelligent (especially for someone my age, who has a good 30 years to worry about retirement, thus reducing the volatility) is to put that $200k into the market, which will probably average somewhere between 7-10% in that time. Suddenly that $200k mortgage turns into a shit ton of money in my retirement account. Also, there's the fact that the mortgage costs only slightly more than renting a similar place (if homes as nice as mine were available for rent, which they generally aren't here) yet in 30 years I have a free and clear home I can sell. In summation, mortgages FTW. That's why very wealthy people who could afford not to still damn near always get them.
deleted 18y ago
[deleted]

IsaacSchlueter 18y ago

You may think I'm rich, but I don't. How very very true that is. I have friends that make less than half what I do. Once upon a time, I would have thought that my current income would mean I'd "made it". But somehow, here I am, still occasionally concerned about being overdrawn, still trying to be frugal, still feeling like I don't make enough to do all the things I want to do. By world standards, I was fantastically wealthy when I was peddling vacuums. Some things are more a function of the human condition than anything else. People in San Diego complain about the weather.

vaksel 18y ago
all things are relative. You can be the smartest person in your state, but not the country. You can be the smartest person in the country, but not the world. Same thing with wealth, you may be a millionaire but there are MILLIONS other people who are richer than you.
- Eliezer 18y ago
  So if you're the smartest person in the world, does everything stop being relative? Or do you start worrying about alternative Everett branches?
  - litewulf 18y ago
    Well, smartness is a bit more complex. I may be better at skill A, but my friend is way good at B. Thus, he is "smarter".
    - whatusername 18y ago
      And thus the problem with IQ tests... Wealth isn't like that though. If I have X Peso's (Or Dollars, etc) and you have X + Y then you are richer (for any positive value of Y). The only 2 limits to comparison that I can see is: * Liquidity - (ie - Bill Gates can't sell all his MSFT stock without the price crashing significantly) * Historical Data - How do BillyG/Buffet/Slim compare to Rockefellar and King Soloman?

ambition 18y ago

This is really about how to get upper-middle class wealth. The psychology of these millionaires is very different from the mentality of big startup founders -- sure, half run businesses, but these are lifestyle-type companies with no ability to scale.

JoelSutherland 18y ago
http://en.wikipedia.org/wiki/Upper_middle_class#Income http://en.wikipedia.org/wiki/Upper_middle_class#Income 10 Million households have $1 million+. There are an estimated 111,162,259 households in the US... This is upper class wealth...just not completely elite levels of wealth. I think the point of the article is that people with upper class levels of wealth tend to have upper-middle class lifestyles.
- ambition 18y ago
  This is really an argument of semantics of "upper-middle-class" vs. "upper-class." Maybe there's standard definition I don't know about. My personal definition is that upper class is "don't need to work ever again." You're right that upper middle class people have the same lifestyles as upper class. The difference isn't in material goods, it's in freedom.
  - JoelSutherland 18y ago
    But not having to work again is tied directly to consumption along with income. The interesting component of the article was that the average income of somebody with $1 million of net worth was approaching $400,000. This implies a poor savings rate and not very much savings at all. If freedom is the goal, it seems the key component is a modest lifestyle.
- gaius 18y ago
  Upper class is second-generation. To be truly upper class you'd have had to have gone to an elite boarding school, for example, and bonded socially with the rest of the upper class. Self-made people can never be more than upper-middle regardless of how much cash they have.

yan 18y ago

When people start affording more with larger incomes, their assets turn into overhead that must be managed. It's a cliche, but the TCO of most things is more than their face value. On the other hand of that, there is an amount of dollars one can earn to build a framework and make their money be self-supporting. I.e. the returns on investment covers taxes and expenses and actually has non-negative growth. While I agree that contentment is /a/ key to happiness, it won't exactly motivate you to strive for things completely out of reach. Just the chase of your goals can result in happiness.

Hexstream 18y ago

I hate those obnoxious ads that spin your CPU to 100% for no reason at all :/

vaksel 18y ago
install Ad Block Plus

gabrielleydon 18y ago

I think the most important point was: "You don't get rich by being nice." This is seldom said but often true.

unalone 18y ago
Really? I think that's the one I hear most often.

pg 18y ago

A lot of this is wrong. For example, no one rich would "leverage their home equity to finance purchases." And though rich people often have assistants, they're not drawn from a special guild of "concierges" with connections for getting restaurant reservations. Nor would anyone rich rent handbags or Ferraris. The parts that aren't false read like a description of someone who made money from e.g. developing shopping malls. People who get rich from technology are less likely to be B students, less likely to try to cheat the IRS by routing their personal expenses through their companies, and more likely to be "nice guys."

iuguy 18y ago
Hmmm... I wouldn't say I'm rich, but my accountant is creative when it comes to tax, and rightly so. I completely agree on the handbags thing, Ferraris are a different matter - if you have a means of moving that cost from being a taxable depreciating asset to a tax writeoff then go for the latter. I know an entrepeneur who leases high end sports cars through his companies as a means of reducing tax liability. YMMV though (pun intended, sorry)
iamelgringo 18y ago
If you've ever spent time in Newport, RI, and seen what the old money in this country drives... it's Honda's and Toyota's. You don't see so many Bentley's, Ferrari's or Bugatti's.
- brentr 18y ago
  I lived in Providence, and this is partially true. Yes, there are many old money that drive cars like this, but if you spend time out in Newport during the summer, you do see many six figure cars.
- josefresco 18y ago
  Money on the east coast is less concerned with flashy cars. Your more likely to see their money invested quietly in their homes and families. West coast/the South is all about your image, I saw more 6 figure cars in the poorest sections of Miami than I've seen in the richest places in New England.

known 18y ago

With cash in hand, we 1. Spend 2. Save 3. Survive 4. Invest We are rich if we are investing cash!