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I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll

I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.

FooBarBizBazz 4y ago
Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory. Granted, this threshold is less than $10M, but it isn't orders of magnitude less All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money. Well, you do have two other options. One is to commute in 2hr or more every day. Which a lot of service workers have to do. The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?). These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s. What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.
- AYBABTME 4y ago
  You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.
- stackbutterflow 4y ago
  You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.
  - FooBarBizBazz 4y ago
    Fair. Anybody with $42M has it made, anywhere.
- cromd 4y ago
  If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.
  - FooBarBizBazz 4y ago
    8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k. Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound. So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income. Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.
    - dannyw 4y ago
      9% is the long term annual return of the stock market over the past century.
      - michaelt 4y ago
        Sure, but if you retired in 1997 to live off the interest on an investment in the S&P 500, by 2008 you'd have made an annual return of... 0%. If you used cromd's figures of $5M in funds and lifestyle expenses of $400k/year you'd have spent ~80% of the principal (although you'd probably have reigned in your spending unless you were mad) A boat doesn't just need to survive the harbour's average water level - it needs to survive low tide and high tide.
      - Ferrotin 4y ago
        4% is the historical number you could take out for expenses in the worst case scenario. IMO it’s not pricing in modern existential threats, such as a war that crosses the ocean, or existing regulatory differences that make it more difficult for larger firms.
- sunjester 4y ago
  financial security is subjective.
- alar44 4y ago
  - deleted 4y ago
    [deleted]
- namecheapTA 4y ago
  I used to work in car sales in the bay area. Basically every car salesman and every mechanic at a franchise car dealership owns a home. Maybe they drive 30-75 minutes to work, but they are 25-35 and own a home in California. The older ones own a home within 15 minutes of their job.
  - adamsmith143 4y ago
    That they bought themselves? What's the cheapest home available within an Hour of SF, 500k or more? Do you really think a car salesman barely pushing 100k a year can swing that? Or are you implying that car salesman in the Bay are making top 1% salaries?
    - namecheapTA 4y ago
      I wasn't talking about car salesman that work in SF proper. Yes, 1 hour from there is basically still pretty expensive. But if you can work anywhere 30 minutes outside SF, and then live another 45 further, you own a home. And yes any decent car salesperson is making $100k. I made on average $250k but I was a bit better than top 1%, and I know a few that made more. I suppose you could say I only socialize with high performers. Sure every car dealer also has a few people that struggle to pay their apartment rent. The industry is setup for an good salesperson to support a family. If you can outperform average by 2x, which is possible if you're really on it, you can make 2x+ that amount. Same applies to mechanics that are good at their craft.
adamsmith143 4y ago
Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.

I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.

FooBarBizBazz 4y ago

Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory. Granted, this threshold is less than $10M, but it isn't orders of magnitude less All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money. Well, you do have two other options. One is to commute in 2hr or more every day. Which a lot of service workers have to do. The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?). These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s. What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.

AYBABTME 4y ago
You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.
stackbutterflow 4y ago
You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.
- FooBarBizBazz 4y ago
  Fair. Anybody with $42M has it made, anywhere.
cromd 4y ago
If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.
- FooBarBizBazz 4y ago
  8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k. Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound. So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income. Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.
  - dannyw 4y ago
    9% is the long term annual return of the stock market over the past century.
    - michaelt 4y ago
      Sure, but if you retired in 1997 to live off the interest on an investment in the S&P 500, by 2008 you'd have made an annual return of... 0%. If you used cromd's figures of $5M in funds and lifestyle expenses of $400k/year you'd have spent ~80% of the principal (although you'd probably have reigned in your spending unless you were mad) A boat doesn't just need to survive the harbour's average water level - it needs to survive low tide and high tide.
    - Ferrotin 4y ago
      4% is the historical number you could take out for expenses in the worst case scenario. IMO it’s not pricing in modern existential threats, such as a war that crosses the ocean, or existing regulatory differences that make it more difficult for larger firms.
sunjester 4y ago
financial security is subjective.
alar44 4y ago
- deleted 4y ago
  [deleted]
namecheapTA 4y ago
I used to work in car sales in the bay area. Basically every car salesman and every mechanic at a franchise car dealership owns a home. Maybe they drive 30-75 minutes to work, but they are 25-35 and own a home in California. The older ones own a home within 15 minutes of their job.
- adamsmith143 4y ago
  That they bought themselves? What's the cheapest home available within an Hour of SF, 500k or more? Do you really think a car salesman barely pushing 100k a year can swing that? Or are you implying that car salesman in the Bay are making top 1% salaries?
  - namecheapTA 4y ago
    I wasn't talking about car salesman that work in SF proper. Yes, 1 hour from there is basically still pretty expensive. But if you can work anywhere 30 minutes outside SF, and then live another 45 further, you own a home. And yes any decent car salesperson is making $100k. I made on average $250k but I was a bit better than top 1%, and I know a few that made more. I suppose you could say I only socialize with high performers. Sure every car dealer also has a few people that struggle to pay their apartment rent. The industry is setup for an good salesperson to support a family. If you can outperform average by 2x, which is possible if you're really on it, you can make 2x+ that amount. Same applies to mechanics that are good at their craft.

adamsmith143 4y ago

Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.