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Ask HN: What is the best financial advice someone has ever given you?
- qorrect 2y agoMost of the market gains occur overnight, not during trading hours.
- toomuchtodo 2y agoWealth is options, options are freedom. Get wealthy as fast as you can if you want freedom.
- pm2222 2y agoCompound interest. Save early.
- stavros 2y agoThe trick with compound interest is to find something that beats inflation, because inflation compounds more quickly than your savings interest.
- saltcured 2y agoAnother useful perspective is to recognize that a leaky vessel is better than no vessel at all. Savings is not just a poor performing investment vehicle. It's a security buffer which opens many choices down the road. Imagine if early society decided there was no need to stock food for winter because there is some loss in the process...
- stavros 2y agoSure, but the discussion is "where do I put my savings", not "should I have savings or not".
- cpach 2y agoIndex funds?
- stavros 2y agoYeah, hopefully.
- spicyusername 2y agoOne reason it's difficult to "time the market" is that doing so involves selling when it's going up and buying when it's going down, exactly the two things that are most difficult, psychologically, to do. Time in the market is better than timing the market.
- johncreatescode 2y agoI've been there. the anxiety of not knowing if it's the moment to sell, or if I would just lose extra gains.
- vunderba 2y agoThat's one of my favorite expressions - I think I first heard it in the Bogleheads subreddit. The redditor in question was trying to help a first time investor with a traditional three part portfolio (domestic, international, bond).
- mepian 2y ago"Markets can remain irrational longer than you can remain solvent."
- johncreatescode 2y agoThe main question is how to become solvent in the first place
- time0ut 2y agoRead the Bogleheads Wiki [0] for a simple broad foundation on basic personal finance and wealth accumulation. [0] https://www.bogleheads.org/wiki/Main_Page https://www.bogleheads.org/wiki/Main_Page
- jameshush 2y agoInvest in skills that pay money and spend less then you make. Skills are key because they’re inflation-proof, and no person or government can ever take them away
- johncreatescode 2y agoI always try to learn new things, and new skills that allow me to be able to get income even in a crisis. but how do you expand that so it doesn't depend on you, In the end, our body has an expiration date.
- AlwaysRock 2y agoSure. I worked in sales for many years and development for the last handful. It feels good to know that if somehow tomorrow development jobs were scarce I'd be able to walk into a sales job.
- ungreased0675 2y agoWhile this sounds good, and I agree, it’s hard to turn a big pile of skills into money. Employers are generally looking for exact fit puzzle pieces.
- wavemode 2y agoEmployers don't really care about skills, they care about paper that says you have skills (e.g. education, certifications, job experience). You could monetize the skill yourself, of course, though that's just called being an entrepreneur.
- carlosjobim 2y agoThat's what the majority of the planet's population are doing, and as a result they are getting poorer every year.
- cpach 2y agocitation needed
- ldjkfkdsjnv 2y agoDiversification is for poor people
- toomuchtodo 2y agoYou concentrate wealth to get wealthy, you diversify to stay wealthy.
- cpach 2y agoWhy is that?
- ldjkfkdsjnv 2y agoNobody gets rich from diversification. Its just what they tell uneducated people so that they dont take on huge risk
- johncreatescode 2y agoSo it's better to stick with it and focus your energy on one thing?
- jmcgough 2y agoIdk, keeping spending low and pumping everything I could into index funds worked really well for me with minimal risk. When you come from a poor background and can't bounce back as easily from setbacks, you may have a different risk profile.
- cpach 2y agoThis statement is so general that I feel it doesn’t really say anything. It’s true that Larry Ellison didn’t become a billionaire by buying and holding index funds. But for people who don’t feel a strong desire to buy their own yacht, index funds can be a very good investment.
- dosinga 2y agoOr the sophisticated. A diverse portfolio has lower volatility, which means you can leverage it more which then leads to higher expected returns
- lagniappe 2y ago"Buy it right, or buy it twice"
- ramesh31 2y agoThat the nature of the stock market is such that it is always reaching all time highs. If you look back at any 5 year window historically on the S&P500 for the last hundred years, instantaeneously it will always seem like we are teetering at the top of an apocalyptic bubble. But stocks go up. Keep to a schedule of blindly buying index funds regardless of market conditions, being unafraid to DCA on the way down, and you are guaranteed to do well on a 10 year time frame.
- meristohm 2y agoThat land is more valuable than money. Reminded of this while watching Lakota Nation vs United States. The Oceti Sakowin refuse the just-compensation settlement claim for the Black Hills; a people can live many generations on the land, while money is an intermediary and too easily lost.
- johncreatescode 2y agoYeah, I've noticed that. I've had the chance to meet with people who have their fortune on land. they might not have a lot in their wallet. but the amount of land they have is enough to build a small city.
- dosinga 2y agoThat doesn't strike me as financial advice; land is only more valuable than money if you care about a particular piece of land because of ties with it. Otherwise if you have money you can buy a piece of land. Having land takes effort, having money doesn't. You might enjoy the effort of course
- ted_bunny 2y agoI think it's more along the lines of a bird in the hand.
- toomuchtodo 2y agoSee threads on "The Rate of Return on Everything, 1870–2015." Control-F "land." We often make the mistake of equating money with wealth. Money is simply the currency needed to exchange for goods, services, or assets (which can include securities, commodities, real estate, amongst others), while wealth is control of something of both current and potentially future value to people who will pay for it (see assets previously enumerated, although the list is in no way exhaustive). For example: Would you rather I give you $100? Or a share of SPY? If you intend to spend, probably the fiat. If you intend to hold for future wealth, more likely the security. And if you intend to be financially secure, you are very likely of the mindset of accumulating assets that will appreciate in value at favorable prices. https://academic.oup.com/qje/article/134/3/1225/5435538?login=false https://academic.oup.com/qje/article/134/3/1225/5435538?logi... | https://doi.org/10.1093/qje/qjz012 https://doi.org/10.1093/qje/qjz012 https://news.ycombinator.com/item?id=40650326 https://news.ycombinator.com/item?id=40650326 - June 2024 (148 comments) https://news.ycombinator.com/item?id=19817584 https://news.ycombinator.com/item?id=19817584 - May 2019 (260 comments) https://news.ycombinator.com/item?id=16078059 https://news.ycombinator.com/item?id=16078059 - January 2018 (151 comments) (additional threads exist, but without comment, therefore not cited)
- oarla 2y agoA few of them 1. Health is best wealth. 2. Don't forget about the high risk when chasing high rewards. 3. If it's too good to be true, it's probably isn't good at all.
- johncreatescode 2y agoI lost a ton of money by not having the third one in mind. (mostly crypto)
- ilrwbwrkhv 2y agoYou are either born in wealth or you make it through entrepreneurship.
- b_emery 2y ago... or by marrying into it. Or, by owning things that increase in value.
- AlwaysRock 2y agoThe book, "The Richest Man in Babylon" has an incredibly basic rule in it. Save at least 10% of your income before you spend on anything else.
- joemazerino 2y agoOptimize your tax deductions. Things you think might not be deductible could be depending on the reasoning. Get a tax lawyer but deduct aggressively.
- usernamed7 2y agoI've got a few i like: Put your money to work for you. Time in the market is better than timing the market It's better to own a small basket of good companies than a large basket of mediocre ones gold is an important security in some cultures; but the US economy is a better bet if you can make it.
- koinedad 2y agoNo joke: “Don’t buy stuff you can’t afford” - snl https://youtu.be/R3ZJKN_5M44?si=Ahdvgr3FNIOl40Q9 https://youtu.be/R3ZJKN_5M44?si=Ahdvgr3FNIOl40Q9 Literally changed my life
- johncreatescode 2y agoI was one of those, I used to tell myself that I could afford it, and well. i couldn't to be honest that's why I created my app. just so I have a small "advisor" on if I should or shouldn't buy certain things. in case you want to give it a look. https://www.producthunt.com/products/innerwallet https://www.producthunt.com/products/innerwallet
- znpy 2y agoNever ever buy a property (a flat in my case) together with someone else. You should rather better offer to pay half the mortgage or have the other party pay you half the mortgage, but never buy together. Of course I heard this and did buy a flat with my now ex anyway. I was lucky enough to manage to buy back the remaining half (burning basically all of my savings) but for a few months i was hunted by the idea of having to give up the place i worked so hard for. Don’t… don’t do it.
- johncreatescode 2y agoSomeone told me on another post. "don't get divorced", yours is a little bit more logical haha.
- ravelantunes 2y agoBefore you invest in something, determine how that thing creates value. If you can’t determine how it creates value, it is most likely a short-lived scheme. Risk aside, it has also become a principle of mine that I refuse to try to generate income or gains from anything that, at the end of the day, isn’t generating real value for society.
- perilunar 2y agoi.e. don’t play zero-sum games.
- instagib 2y ago90 something percent in SPY, the rest in speculative stocks. Hard to beat the s&p without significant risk. Get to $1M without considering your primary residence net worth so you can invest in other mediums unavailable to the general public.
- canistel 2y agoThe skills (or traits) that make a quick fortune are the same that lose it overnight...
- saddist0 2y agoDo not believe everything you read on an online forum (including HN). Always do your due diligence.
- intellectronica 2y agoTo increase your savings and investments focus on making more, not spending less.
- anthony100 2y ago7 words: "Earn more, spend less, invest the difference."
- anthony100 2y agoIf you need investment advice, I would recommend putting your money in an S&P 500 fund. Source - that's what Warren Buffet recommends most people should do.
- cloche 2y agohttps://thetaoofwealth.wordpress.com/2013/02/17/harry-brownes-17-golden-rules-of-financial-safety/ https://thetaoofwealth.wordpress.com/2013/02/17/harry-browne... 1. Your career provides your wealth 2. Don't assume you can replace your wealth 3. Recognize the difference between investing and speculating 4. No one can predict the future 5. No one can move you in and out of investments consistently with precise and profitable timing 6. No trading system will work as well in the future as it did in the past 7. Don't use leverage 8. Don't let anyone make your decisions 9. Don't ever do anything you don't understand 10. Don’t depend on any one investment, institution, or person for your safety 11. Create a bulletproof portfolio for protection 12. Speculate only with money you can afford to lose 13. Keep some assets outside the country in which you live 14. Beware of tax-avoidance schemes 15. Ask the right questions 16. Enjoy yourself with a budget for pleasure 17. Whenever you’re in doubt about a course of action, it is always better to err on the side of safety
- smeej 2y agoDon't let the world tell you what you want. A few days before I found out a company I worked at early was going to go public, which ended up 5x-ing my net worth, I had just been thinking, "Even if I had all the money in the world, I don't think I would want to live somewhere else, or drive something else, or own other stuff." Everybody and their brother had an opinion about what I "should" do with my newfound wealth, but having that "Don't let the world tell you what you want" refrain in my head kept me from blowing it on a bunch of stuff that wouldn't have made me any happier.
- muzani 2y agoPassive income only after your active income has stopped growing exponentially.