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You can distill all the advice this book has to offer into one sentence: Rather than succumb to lifestyle creep, direct your cashflow from your 9-to-5 towards o

You can distill all the advice this book has to offer into one sentence: Rather than succumb to lifestyle creep, direct your cashflow from your 9-to-5 towards other endeavors that can make you money. That's it. That's the book. There is no step-by-step guide on how to do this, just a narrative, anecdotes and a few examples mostly around real estate.

jacknews 2y ago
If his advice actually for real, it could be distilled further: own the means of production (or an indirect proxy, eg land).
- lenerdenator 2y ago
  Aye, the real trick there isn't in the book: getting some guy with more means of production than he - or any other human - could possibly exhaust in a lifetime to let you have any means of production of your own.
- jocaal 2y ago
  in capitalism, the most important factor of production is capital.
  - Nifty3929 2y ago
    There are two factors: capital (not money), and labor. E.g. the factory and the workers. Neither is more important than the other.
    - jocaal 2y ago
      My intro economics course taught there are 4: land, labor, capital, and entrepreneurship. > Neither is more important than the other. I would say capital is a more important factor than labor, because the tax responsibilities for earnings from different factors are different. Income tax is a lot more than capital gains tax. It is an undeniable fact that our system places more value on growth from capital, than growth due to increased labor efficiency.
    - fragmede 2y ago
      > Neither is more important than the other. The particular person pushing that notion may have been biased, in part due to a brief that society is neatly dividable into workers and the means of production. Certain classes of workers are seen as expendable by "factory owners" who demonstrate this by paint the minimum allowed wage to these classes of employees.
micromacrofoot 2y ago
Is it even possible to have a step-by-step guide for something like this? outside of "invest in index funds" or other historically secure and boring investments everything else looks like a crap shoot.
- toomuchtodo 2y ago
  https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card https://web.archive.org/web/20231213153144/https://i.imgur.com/u0ocDRI.png https://web.archive.org/web/20231213153144/https://i.imgur.c... https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio As 01HNNWZ0MV43FF mentions [1], you can just dump everything you can into VTI or VTSAX, and you'll be ahead of most people. If you're looking for something more, that will cost you time and money to research and manage exposure to (real estate, private equity, other asset classes beyond public securities, etc). Make as much as you can, invest as much as you can as efficiently as possible. That is what buys your time back. (not investing advice, educational purposes only) [1] https://news.ycombinator.com/item?id=41245973 https://news.ycombinator.com/item?id=41245973
- forgetfreeman 2y ago
  Eh. Everyone needs somewhere to live and the one thing in the world nobody's gotten good at making more of is land.
  - dweekly 2y ago
    (Gestures at The Netherlands)
    - kevindamm 2y ago
      (Gestures at artificial islands in the South China Sea)
      - forgetfreeman 2y ago
        yawns in sea level rise
01HNNWZ0MV43FF 2y ago
I'll add some unnecessary fluff: Don't invest in real estate. If it was a free lunch, someone else would eat it first. VTSAX is way less work. All that matters is the savings ratio. Everything else cancels out. I promise. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si... So a penny saved is actually worth more than a penny earned, because it means you need less invested to retire.
- monero-xmr 2y ago
  Owning rental property is a small business. You can earn far more, reliably, without the whims of a number going up and down, than you can by passively investing it. In general I have always found the passive investment "standard smart advice" to be wrong, but I'm a contrarian by nature. I actively manage everything because I like to know what's going on.
  - Naritai 2y ago
    Numbers go up and down for rental businesses all the time – up slowly as you collect rent, down quickly as you need to perform maintenance.
    - monero-xmr 2y ago
      Right, no one should ever do anything! One calamity and you go bust. That's why no one ever can handle managing rental property, it's so dangerous /s
      - orwin 2y ago
        It's good, but it's work. I have a friend, really good swift/iPhone dev who charge 350 to 500€ an hour (so 200-350 after taxes). If after taxes and expenses (loan repayment) he can earn 2-3.5k for less than 10h of work per year that can be a good investment. But that's not taking into account the principal he invested, the fact that the job would bore him, the fact that he can't improve his skills. It might be an okay investment for me (I'm a salary man, can't be bothered with freelance work), but for him I'd bet it's a money loosing proposition [edit] the 500€/hour is an outlier, he wanted out of a project and kept increasing his rates, which were accepted up to that point.
scrapcode 2y ago
They all say the same stuff essentially: avoid fast money hype & invest in slow, steady, low-risk vehicles.
- mewpmewp2 2y ago
  So then you would have been missing out on the tech? And invest in bonds?
  - yourusername 2y ago
    Tech is 30-40% of the S&P 500 so just investing in a index fund you would have exposure.
    - mewpmewp2 2y ago
      Yeah, but stocks is high risk.
      - orev 2y ago
        A single stock is high risk, an index fund is very diversified, and while it does fluctuate with the market, overall the risk is very low on a long timeline.
        mewpmewp2 2y ago
        I guess my point is that all of it's very relative, depends on your age, your circumstances, goals, geographical location and many other things. My random advice: Always try to increase income instead of reducing costs, as increasing income has infinite potential while reducing costs has very limited.
        lotsoweiners 2y ago
        Yeah that’s a great longer term strategy but cancelling Netflix and having dinner at home instead of Chili’s are actionable things you can do today that will put more money in your pocket.
Rhapso 2y ago
We can go even shorter: Be mindful that behaviors that once were useful may cease to be so and you should update them.
7thaccount 2y ago
Yep. Basically it just points out that rich people have passive income and this is better than just having a single normal job. For example: Gordon Ramsey has restaurants and TV shows and probably a product line or two. He makes a lot more money from that than just being a chef. This kind of shift requires a comfortability with risk that many don't have coupled with hard work AND luck.
hylaride 2y ago
Pretty much this. In Canada, we have a book called the Wealthy Barber ( https://en.wikipedia.org/wiki/The_Wealthy_Barber https://en.wikipedia.org/wiki/The_Wealthy_Barber ) that came out in the late 1980s that was a fictional story of a "rich barber giving financial advice to young people". It essentially lays the groundwork for compound interest working in your favour and gives sensible advice on life insurance, estate planning, etc. The TL;DR is the "pay yourself first and make it so that 10% of your income goes into a mutual fund before you even see the money"(1) and reasonably stay out of debt and you'll likely be financially successful. The other point is that money is just a tool and tools can be useful (buying food, shelter, pleasure), but can also hurt you (debt, bankruptcy, etc). In the book he even advises AGAINST real estate because of the PITA (pain in the ass) factor of having to deal with tenants and upkeep. 1. This is the 1980s and index funds weren't yet in the zeitgeist, but subsequent revisions address this.
Xen9 2y ago
Yours is ridiculously bad advice, but typical for those who work to say. Even for person with no other sources of income, the optimal path is investing such that you will within reasonable amount of time be able to with "certainty" move "reinvest income from X" instead of slaving. But mathematically speaking, even very high income seems to not to be possible since to invest 10000€ year you'd need to have about 1M€ in dividens. Time is truly the most valuable resource of one. But you fail to believe this. N.B: Elon Musk strategy of using pre-existing assets as collateral for loans is a great strategy for millionaire-businessmen.

jacknews 2y ago

If his advice actually for real, it could be distilled further: own the means of production (or an indirect proxy, eg land).

lenerdenator 2y ago
Aye, the real trick there isn't in the book: getting some guy with more means of production than he - or any other human - could possibly exhaust in a lifetime to let you have any means of production of your own.
jocaal 2y ago
in capitalism, the most important factor of production is capital.
- Nifty3929 2y ago
  There are two factors: capital (not money), and labor. E.g. the factory and the workers. Neither is more important than the other.
  - jocaal 2y ago
    My intro economics course taught there are 4: land, labor, capital, and entrepreneurship. > Neither is more important than the other. I would say capital is a more important factor than labor, because the tax responsibilities for earnings from different factors are different. Income tax is a lot more than capital gains tax. It is an undeniable fact that our system places more value on growth from capital, than growth due to increased labor efficiency.
  - fragmede 2y ago
    > Neither is more important than the other. The particular person pushing that notion may have been biased, in part due to a brief that society is neatly dividable into workers and the means of production. Certain classes of workers are seen as expendable by "factory owners" who demonstrate this by paint the minimum allowed wage to these classes of employees.

micromacrofoot 2y ago

Is it even possible to have a step-by-step guide for something like this? outside of "invest in index funds" or other historically secure and boring investments everything else looks like a crap shoot.

toomuchtodo 2y ago
https://en.wikipedia.org/wiki/The_Index_Card https://en.wikipedia.org/wiki/The_Index_Card https://web.archive.org/web/20231213153144/https://i.imgur.com/u0ocDRI.png https://web.archive.org/web/20231213153144/https://i.imgur.c... https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio As 01HNNWZ0MV43FF mentions [1], you can just dump everything you can into VTI or VTSAX, and you'll be ahead of most people. If you're looking for something more, that will cost you time and money to research and manage exposure to (real estate, private equity, other asset classes beyond public securities, etc). Make as much as you can, invest as much as you can as efficiently as possible. That is what buys your time back. (not investing advice, educational purposes only) [1] https://news.ycombinator.com/item?id=41245973 https://news.ycombinator.com/item?id=41245973
forgetfreeman 2y ago
Eh. Everyone needs somewhere to live and the one thing in the world nobody's gotten good at making more of is land.
- dweekly 2y ago
  (Gestures at The Netherlands)
  - kevindamm 2y ago
    (Gestures at artificial islands in the South China Sea)
    - forgetfreeman 2y ago
      yawns in sea level rise

01HNNWZ0MV43FF 2y ago

I'll add some unnecessary fluff: Don't invest in real estate. If it was a free lunch, someone else would eat it first. VTSAX is way less work. All that matters is the savings ratio. Everything else cancels out. I promise. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si... So a penny saved is actually worth more than a penny earned, because it means you need less invested to retire.

monero-xmr 2y ago
Owning rental property is a small business. You can earn far more, reliably, without the whims of a number going up and down, than you can by passively investing it. In general I have always found the passive investment "standard smart advice" to be wrong, but I'm a contrarian by nature. I actively manage everything because I like to know what's going on.
- Naritai 2y ago
  Numbers go up and down for rental businesses all the time – up slowly as you collect rent, down quickly as you need to perform maintenance.
  - monero-xmr 2y ago
    Right, no one should ever do anything! One calamity and you go bust. That's why no one ever can handle managing rental property, it's so dangerous /s
    - orwin 2y ago
      It's good, but it's work. I have a friend, really good swift/iPhone dev who charge 350 to 500€ an hour (so 200-350 after taxes). If after taxes and expenses (loan repayment) he can earn 2-3.5k for less than 10h of work per year that can be a good investment. But that's not taking into account the principal he invested, the fact that the job would bore him, the fact that he can't improve his skills. It might be an okay investment for me (I'm a salary man, can't be bothered with freelance work), but for him I'd bet it's a money loosing proposition [edit] the 500€/hour is an outlier, he wanted out of a project and kept increasing his rates, which were accepted up to that point.

scrapcode 2y ago

They all say the same stuff essentially: avoid fast money hype & invest in slow, steady, low-risk vehicles.

mewpmewp2 2y ago
So then you would have been missing out on the tech? And invest in bonds?
- yourusername 2y ago
  Tech is 30-40% of the S&P 500 so just investing in a index fund you would have exposure.
  - mewpmewp2 2y ago
    Yeah, but stocks is high risk.
    - orev 2y ago
      A single stock is high risk, an index fund is very diversified, and while it does fluctuate with the market, overall the risk is very low on a long timeline.
      - mewpmewp2 2y ago
        I guess my point is that all of it's very relative, depends on your age, your circumstances, goals, geographical location and many other things. My random advice: Always try to increase income instead of reducing costs, as increasing income has infinite potential while reducing costs has very limited.
        lotsoweiners 2y ago
        Yeah that’s a great longer term strategy but cancelling Netflix and having dinner at home instead of Chili’s are actionable things you can do today that will put more money in your pocket.

Rhapso 2y ago

We can go even shorter: Be mindful that behaviors that once were useful may cease to be so and you should update them.

7thaccount 2y ago

Yep. Basically it just points out that rich people have passive income and this is better than just having a single normal job. For example: Gordon Ramsey has restaurants and TV shows and probably a product line or two. He makes a lot more money from that than just being a chef. This kind of shift requires a comfortability with risk that many don't have coupled with hard work AND luck.

hylaride 2y ago

Pretty much this. In Canada, we have a book called the Wealthy Barber ( https://en.wikipedia.org/wiki/The_Wealthy_Barber https://en.wikipedia.org/wiki/The_Wealthy_Barber ) that came out in the late 1980s that was a fictional story of a "rich barber giving financial advice to young people". It essentially lays the groundwork for compound interest working in your favour and gives sensible advice on life insurance, estate planning, etc. The TL;DR is the "pay yourself first and make it so that 10% of your income goes into a mutual fund before you even see the money"(1) and reasonably stay out of debt and you'll likely be financially successful. The other point is that money is just a tool and tools can be useful (buying food, shelter, pleasure), but can also hurt you (debt, bankruptcy, etc). In the book he even advises AGAINST real estate because of the PITA (pain in the ass) factor of having to deal with tenants and upkeep. 1. This is the 1980s and index funds weren't yet in the zeitgeist, but subsequent revisions address this.

Xen9 2y ago

Yours is ridiculously bad advice, but typical for those who work to say. Even for person with no other sources of income, the optimal path is investing such that you will within reasonable amount of time be able to with "certainty" move "reinvest income from X" instead of slaving. But mathematically speaking, even very high income seems to not to be possible since to invest 10000€ year you'd need to have about 1M€ in dividens. Time is truly the most valuable resource of one. But you fail to believe this. N.B: Elon Musk strategy of using pre-existing assets as collateral for loans is a great strategy for millionaire-businessmen.