10 ms·

> What you don't know is that when you have a pile of money, you turn into a dragon. The goal becomes to sit on the pile of money and make sure it doesn't get s

by neilv 3y ago

> What you don't know is that when you have a pile of money, you turn into a dragon. The goal becomes to sit on the pile of money and make sure it doesn't get smaller, and ideally grows on its own. Is this universal? If I had at least a several-million post-tax windfall, I think I'd buy a nice home and maybe a little beach house, put the rest in index funds, and spend my time being healthy, and building particular open source software and hardware. (Building things without résumé keywords being a consideration; it's almost unimaginable, now.)

hiAndrewQuinn 3y ago
I'd put it all in index funds, but I'm still fairly young and my dream has always been to be able to max out my kids' Roth IRAs from birth somehow. (I'm still working on the "how do you get a baby to have taxable income" angle.)
- gnicholas 3y ago
  The normal path is to establish a trust fund, into which you and your spouse contribute the maximum annual exclusion amount. By the time they're grown up, they've got a tidy sum. And when they get married, you and your spouse can give the maximum gift amount to each them and their spouse every year.
  - hiAndrewQuinn 3y ago
    You're a saint, thank you
    - gnicholas 3y ago
      Not a saint, just a former tax lawyer. There are more elaborate strategies that allow people to move larger sums, particularly if they have stock in pre-IPO companies. If you find yourself in need of that kind of advice, find a 'private client' lawyer to help you understand and navigate the complex rules.
com2kid 3y ago
How many million are we talking about? Because if you cash out for 4 million, 2 million of that is a decent new house in a major city, and not some water front property, but a cookie cutter above average new build. Now you have 2 million left, which, to be honest, if you are just living off of index fund earnings, isn't all that much. Figure 7% growth per year, and you need to set aside 3% of that to grow the fund, you are stuck with 80k a year left to live off of, in a major city, and this is all ignoring taxes. 10 million in the bank and you can start to "be secure". Though it all depends on what QoL you want in retirement. I know a guy who retired early and happily spends 70% of his time playing video games. He avoids bougie foods and goes on a couple of nice trips every year.
- neilv 3y ago
  > at least a several-million post-tax windfall, On the index funds, I'd probably outspend returns.
- arthur_sav 3y ago
  Why would anyone buy a house in a major city, especially for retirement. You can get something decent for half the price near nature.
  - renewiltord 3y ago
    Bad for environment. No friends around. Pluses and minuses so it’s not obvious.
    - arkey 3y ago
      How is that bad for environment?
    - Gyrantula2 3y ago
      The irony... I did this. I cashed out in my 20s, bought a $2m home in the middle of nowhere (that goes a long way out here), and live out my days in my workshop surrounded by singing birds, bees, wildlife, trees and gardens, with views across lakes and plains. And some cosmopolitan wants to tell me, as they cram another million people into gridlocked high-rises in their smoggy grey hellhole, that we in the country are bad for the environment? Or that the soulless crowds you have to navigate through every morning and evening are friendlier than the neighbours and strangers who wave and chat everywhere I go? If you're able, get out of the cities. Especially if you have children. You have no idea what you're missing.
gnicholas 3y ago
It massively depends on the person and stage of life. If you have kids whom you are planning to send to college, figure that's roughly $350k per kid. If your nest egg can take that hit and still spin off enough cash for you to comfortably live off of, then perhaps your plan would work. And if you don't have kids (or they're past college), then that definitely makes sense.
- jimbob45 3y ago
  $87.5K per year per kid? Has college become that expensive since I went?
  - gnicholas 3y ago
    Sadly, yes. The school I went to was about $35k/yr back in the early aughts, and is now over $81k. It is not located in an expensive area, and this includes a meal plan. If your kid is in Boston or NYC, figure they're going to spend thousands more on food and going out. Not everyone does, but if daddy's a retired multimillionaire, they'll probably want to...sigh.
locallost 3y ago
And then you spend your time checking the stock market, which is exactly what this person is talking about.
- neilv 3y ago
  No, index funds are boring, there's very little to tinker with, and I'd have so much money it doesn't matter whether the market is down for years at a time.
  - benjaminwootton 3y ago
    It’s true but it’s still depressing if the market has a bad week and you know that you are down by 6 figures. It bounces back in the end but it’s a source of background stress.
    - iancmceachern 3y ago
      Just listen to a couple hours or Warren buffet and Charlie Munger, it'll cure that and then you can focus on your golf game.
      - neilv 3y ago
        Wouldn't those guys inspire some people to spend huge amounts of time researching, stock-picking companies you can understand with moats and good management teams, trying to buy when blood in the water, oddly favor junk food, etc.? Jack Bogle would have you park it in a balance of broad index funds, and generally don't touch it, nor even think about it: https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy#Maintain_discipline https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...
        iancmceachern 3y ago
        Yes, once. And then they would tell you to leave it alone, and not think about it, at all, for 30 years.
jojobas 3y ago
That's what I think I'd be doing. Maybe we're both wrong and the more we get the more we want.
andreareina 3y ago
I am objectively in a comfortable position and cashflow is still something that occupies my mind.
lokjhfvvv 3y ago
I did this / am doing this. It is indeed nice. However, depending on where you want to live and of course how you want to live, “several million post-tax” after buying 2 homes doesn’t necessarily cut it. I think this is what leads to the “dragon” mindset described. Maths: - 7MM post tax (let’s say) - Less 2MM for 2 houses (rates being what they are you’ll likely not mortgage both properties, or even one; if you do your monthly burn is so much higher it comes out in the wash). - 4% because you read about FIRE - 200k pre-tax (you tax burden should be low, maybe 15%) - 170k post tax for your family. If you live anywhere higher than average COL you might find yourself feeling a bit like a large reptile at times.
- adam_arthur 3y ago
  Can get 8% plus easy in yield on a diversified set of relatively safe REITs and corporate bonds nowadays. Absolutely would not recommend putting funds in large cap indices if you're planning to retire off portfolio cashflow. You get close to 4.5% cashflow (interest plus imputed income) on 20y treasury bonds alone, for example. Why take pricing risk to your income when you can get it directly in dividends/distributions that are very secure?
  - lokjhfvvv 3y ago
    You’d never put your whole nut into treasuries unless you wanted to get killed by inflation. You’re looking at a 50 year retirement if you’re in your 30s. “4%” (Trinity study style I mean) is the pop culture number that accommodates down markets and inflation over 50 years, to a first approximation.
    - adam_arthur 3y ago
      Definitely not, though I was just demonstrating the kind of cashflow you can get from a (default) risk free bond. The days of buying an index and selling 4%/year being your best strategy are past. At least until/when yields decline again. If you're strategic and barbell your portfolio somewhat, you can generate around 10% with moderate risk (and this is 10% distributions/dividends, not including any capital gains). The best outcome for retirees is to build a solid income portfolio and then hope that inflation really does subside and valuation multiples compress again, which would leave you with significant capital gains while portfolio income is preserved. If inflation resurges or remains moderately high, capital gains will be more limited.
uticus 3y ago
> Is this universal? You tell me, we live in the same world. Humans universally have serious issues with greed, selfishness, and all manner of other ugly things. We are not basically good, we are basically evil. A twisted man has a sort of twisted Midas touch, so that even if he has natural abilities in managing wealth things become tainted. He may even realize he's a dragon (speaking as a fellow twisted man). C.S. Lewis had some things to say about people who suddenly realize they are dragons in "The Voyage of the Dawn Treader." The problem isn't wealth, it is our hearts.
- IggleSniggle 3y ago
  > The problem isn't wealth, it is our hearts. That sounds like the dragon, seeking to deflect blame away from the treasure hoard it is protecting, if only for itself.
neilk 3y ago
Like any engineer, I know more than a few instant-millionaires. The ones who were capable of being happy before money continue to be capable of being happy. They had sources of self-worth outside of money, social connections outside the office or hanging with their startup bros, and interests that are intrinsically satisfying even if they are not profitable. You don't need all of the above, but you do need at least one. The ones who don't have any of the above will go to dark places.
- mdekkers 3y ago
  Almost all of my problems can be immediately solved with large amounts of money. Those that cannot will certainly be made more bearable by the simple fact that I have a lot less to worry about, and that I will have more mental and emotional resources available to deal with them. Money will _absolutely_ buy happiness. Whoever tells you otherwise is fooling you.
  - csdvrx 3y ago
    The same thing was said by other famous philosophers, such as A. Grande who publicly declared: "whoever said money can't solve your problems, must not have had enough money to solve them". Yet there seem to be many other things playing a role in happiness. Besides the famous ones like love, I can cite Ikegai, Wanderlust, Ubuntu, Hygge, Wabi-Sabi (...), and it may be foolish to concentrate on just one of them.
    - sseagull 3y ago
      Money doesn't bring happiness, but lack of money can bring hardship and lack of happiness. Money can alleviate hardship and stress, but happiness is more than absence of sadness, hardship, or stress.
      - csdvrx 3y ago
        > Money can alleviate hardship and stress, but happiness is more than absence of sadness, hardship, or stress. Indeed: happiness seems to require a certain degree of introspection to realize other things, such as social status or Ikegai, are needed too - hence the (also) famous corollary "Ain't got enough money to pay me respect; Ain't no budget when I'm on the set; If I like it, then that's what I get, yeah" My favorite philosopher indeed!
deleted 3y ago
[deleted]

by neilv 3y ago

hiAndrewQuinn 3y ago

I'd put it all in index funds, but I'm still fairly young and my dream has always been to be able to max out my kids' Roth IRAs from birth somehow. (I'm still working on the "how do you get a baby to have taxable income" angle.)

gnicholas 3y ago
The normal path is to establish a trust fund, into which you and your spouse contribute the maximum annual exclusion amount. By the time they're grown up, they've got a tidy sum. And when they get married, you and your spouse can give the maximum gift amount to each them and their spouse every year.
- hiAndrewQuinn 3y ago
  You're a saint, thank you
  - gnicholas 3y ago
    Not a saint, just a former tax lawyer. There are more elaborate strategies that allow people to move larger sums, particularly if they have stock in pre-IPO companies. If you find yourself in need of that kind of advice, find a 'private client' lawyer to help you understand and navigate the complex rules.

com2kid 3y ago

How many million are we talking about? Because if you cash out for 4 million, 2 million of that is a decent new house in a major city, and not some water front property, but a cookie cutter above average new build. Now you have 2 million left, which, to be honest, if you are just living off of index fund earnings, isn't all that much. Figure 7% growth per year, and you need to set aside 3% of that to grow the fund, you are stuck with 80k a year left to live off of, in a major city, and this is all ignoring taxes. 10 million in the bank and you can start to "be secure". Though it all depends on what QoL you want in retirement. I know a guy who retired early and happily spends 70% of his time playing video games. He avoids bougie foods and goes on a couple of nice trips every year.

neilv 3y ago
> at least a several-million post-tax windfall, On the index funds, I'd probably outspend returns.
arthur_sav 3y ago
Why would anyone buy a house in a major city, especially for retirement. You can get something decent for half the price near nature.
- renewiltord 3y ago
  Bad for environment. No friends around. Pluses and minuses so it’s not obvious.
  - arkey 3y ago
    How is that bad for environment?
  - Gyrantula2 3y ago
    The irony... I did this. I cashed out in my 20s, bought a $2m home in the middle of nowhere (that goes a long way out here), and live out my days in my workshop surrounded by singing birds, bees, wildlife, trees and gardens, with views across lakes and plains. And some cosmopolitan wants to tell me, as they cram another million people into gridlocked high-rises in their smoggy grey hellhole, that we in the country are bad for the environment? Or that the soulless crowds you have to navigate through every morning and evening are friendlier than the neighbours and strangers who wave and chat everywhere I go? If you're able, get out of the cities. Especially if you have children. You have no idea what you're missing.

gnicholas 3y ago

It massively depends on the person and stage of life. If you have kids whom you are planning to send to college, figure that's roughly $350k per kid. If your nest egg can take that hit and still spin off enough cash for you to comfortably live off of, then perhaps your plan would work. And if you don't have kids (or they're past college), then that definitely makes sense.

jimbob45 3y ago
$87.5K per year per kid? Has college become that expensive since I went?
- gnicholas 3y ago
  Sadly, yes. The school I went to was about $35k/yr back in the early aughts, and is now over $81k. It is not located in an expensive area, and this includes a meal plan. If your kid is in Boston or NYC, figure they're going to spend thousands more on food and going out. Not everyone does, but if daddy's a retired multimillionaire, they'll probably want to...sigh.

locallost 3y ago

And then you spend your time checking the stock market, which is exactly what this person is talking about.

neilv 3y ago
No, index funds are boring, there's very little to tinker with, and I'd have so much money it doesn't matter whether the market is down for years at a time.
- benjaminwootton 3y ago
  It’s true but it’s still depressing if the market has a bad week and you know that you are down by 6 figures. It bounces back in the end but it’s a source of background stress.
  - iancmceachern 3y ago
    Just listen to a couple hours or Warren buffet and Charlie Munger, it'll cure that and then you can focus on your golf game.
    - neilv 3y ago
      Wouldn't those guys inspire some people to spend huge amounts of time researching, stock-picking companies you can understand with moats and good management teams, trying to buy when blood in the water, oddly favor junk food, etc.? Jack Bogle would have you park it in a balance of broad index funds, and generally don't touch it, nor even think about it: https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy#Maintain_discipline https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...
      - iancmceachern 3y ago
        Yes, once. And then they would tell you to leave it alone, and not think about it, at all, for 30 years.

jojobas 3y ago

That's what I think I'd be doing. Maybe we're both wrong and the more we get the more we want.

andreareina 3y ago

I am objectively in a comfortable position and cashflow is still something that occupies my mind.

lokjhfvvv 3y ago

I did this / am doing this. It is indeed nice. However, depending on where you want to live and of course how you want to live, “several million post-tax” after buying 2 homes doesn’t necessarily cut it. I think this is what leads to the “dragon” mindset described. Maths: - 7MM post tax (let’s say) - Less 2MM for 2 houses (rates being what they are you’ll likely not mortgage both properties, or even one; if you do your monthly burn is so much higher it comes out in the wash). - 4% because you read about FIRE - 200k pre-tax (you tax burden should be low, maybe 15%) - 170k post tax for your family. If you live anywhere higher than average COL you might find yourself feeling a bit like a large reptile at times.

adam_arthur 3y ago
Can get 8% plus easy in yield on a diversified set of relatively safe REITs and corporate bonds nowadays. Absolutely would not recommend putting funds in large cap indices if you're planning to retire off portfolio cashflow. You get close to 4.5% cashflow (interest plus imputed income) on 20y treasury bonds alone, for example. Why take pricing risk to your income when you can get it directly in dividends/distributions that are very secure?
- lokjhfvvv 3y ago
  You’d never put your whole nut into treasuries unless you wanted to get killed by inflation. You’re looking at a 50 year retirement if you’re in your 30s. “4%” (Trinity study style I mean) is the pop culture number that accommodates down markets and inflation over 50 years, to a first approximation.
  - adam_arthur 3y ago
    Definitely not, though I was just demonstrating the kind of cashflow you can get from a (default) risk free bond. The days of buying an index and selling 4%/year being your best strategy are past. At least until/when yields decline again. If you're strategic and barbell your portfolio somewhat, you can generate around 10% with moderate risk (and this is 10% distributions/dividends, not including any capital gains). The best outcome for retirees is to build a solid income portfolio and then hope that inflation really does subside and valuation multiples compress again, which would leave you with significant capital gains while portfolio income is preserved. If inflation resurges or remains moderately high, capital gains will be more limited.

uticus 3y ago

> Is this universal? You tell me, we live in the same world. Humans universally have serious issues with greed, selfishness, and all manner of other ugly things. We are not basically good, we are basically evil. A twisted man has a sort of twisted Midas touch, so that even if he has natural abilities in managing wealth things become tainted. He may even realize he's a dragon (speaking as a fellow twisted man). C.S. Lewis had some things to say about people who suddenly realize they are dragons in "The Voyage of the Dawn Treader." The problem isn't wealth, it is our hearts.

IggleSniggle 3y ago
> The problem isn't wealth, it is our hearts. That sounds like the dragon, seeking to deflect blame away from the treasure hoard it is protecting, if only for itself.

neilk 3y ago

Like any engineer, I know more than a few instant-millionaires. The ones who were capable of being happy before money continue to be capable of being happy. They had sources of self-worth outside of money, social connections outside the office or hanging with their startup bros, and interests that are intrinsically satisfying even if they are not profitable. You don't need all of the above, but you do need at least one. The ones who don't have any of the above will go to dark places.

mdekkers 3y ago
Almost all of my problems can be immediately solved with large amounts of money. Those that cannot will certainly be made more bearable by the simple fact that I have a lot less to worry about, and that I will have more mental and emotional resources available to deal with them. Money will _absolutely_ buy happiness. Whoever tells you otherwise is fooling you.
- csdvrx 3y ago
  The same thing was said by other famous philosophers, such as A. Grande who publicly declared: "whoever said money can't solve your problems, must not have had enough money to solve them". Yet there seem to be many other things playing a role in happiness. Besides the famous ones like love, I can cite Ikegai, Wanderlust, Ubuntu, Hygge, Wabi-Sabi (...), and it may be foolish to concentrate on just one of them.
  - sseagull 3y ago
    Money doesn't bring happiness, but lack of money can bring hardship and lack of happiness. Money can alleviate hardship and stress, but happiness is more than absence of sadness, hardship, or stress.
    - csdvrx 3y ago
      > Money can alleviate hardship and stress, but happiness is more than absence of sadness, hardship, or stress. Indeed: happiness seems to require a certain degree of introspection to realize other things, such as social status or Ikegai, are needed too - hence the (also) famous corollary "Ain't got enough money to pay me respect; Ain't no budget when I'm on the set; If I like it, then that's what I get, yeah" My favorite philosopher indeed!

deleted 3y ago

[deleted]