Ask HN: You have $1-5k – how would you bootstrap your retirement? | Hacker News Reader

Ask HN: You have $1-5k – how would you bootstrap your retirement?

9 pointstonteldoos3 comments

Good day all,

This is a hypothetical question, but I imagine a potentially useful one.

Let's say you're mid-thirties, working, with a family, house...all the usual trappings. However, you're not managing to save much (in this case, defined as something meaningful like 30% of your salary), and even though you put money into a retirement fund (say 10-15%), you know it won't be enough to see you through retirement.

You have skills (technical or otherwise), some financial savvy (have made some investments in the past, have a budget, etc), some free time (but not much) and, for the sake of argument, somewhere between $1000 and $5000 kicking around in a bank account.

How would you take this money, and make it into a meaningful nest-egg (20-30 years from now), while (initially) maintaining the status quo on the rest of your life?

Do you invest? Do you start a side project/business? Do you save some more, and buy a franchise (and let someone else run it)? Do you do something much more outlandish?

Has anybody done this? Success stories? Epic fails?

Very interested in reading your stories :)

I would ponder https://news.ycombinator.com/item?id=10350016 , especially Takeaway 1.

A quick calculation of the annual rate of return you would need to achieve in order to grow $5000 to say $1M in 30 years should be enough to rule out a plain vanilla investment strategy.

I'm going to get accused of talking my book here, but since it's the right answer: you should achieve a salary bump for yourself and invest substantially all of it net of taxes. Switching jobs is likely to be the most straightforward way to achieve this salary bump.

We're mutually financially savvy with regards to investment returns, right? $5k invested today increases your safe withdraw rate in retirement by approximately $5k per year. You need a lot more. There is no investment available for purchase on the open market such that $5k transformatively changes your retirement scenario, even 30+ years out.

You need about ~$200k++ to contemplate buying most franchises, and hiring a manager for them eats most of the revenue if you're only doing it for one. (Someone who owns one Subway pays a lot of money for the privilege of cutting a lot of bread. Someone who owns ten Subways does pretty decently for themselves.)

Side projects are an option, and a few thousand bucks is (more than) enough to launch many of them. (Say, writing an e-book on a technical subject.) Getting the salary upgrade strikes me as an easier bet to make, though. If you want to go the side-project route, there exists a wealth of information on previous HN threads/etc about the mechanics of selling e-books.

Short version: start collecting emails immediately, write about the eventual topic of the book for public consumption, continue collecting email addresses, begin writing book, continue writing public content and updates to mailing list, finish writing book, launch with three price tiers at $50/$99/$249, promote to email list, make $X0k with fairly high degree of certainty, invest in retirement, rest a bit, continue growing list and watering it with regular emails, write another book on related subject, repeat.

There's a related SaaS-y method, the mechanics of which are quite similar to ebooks but the execution cycle is much, much longer in the typical case when doing it as a side project.

Modest success story: I'd be behind the curve on retirement savings but for bingo and burritos. I made an app which made bingo cards, made a very modest amount of money with it, and put a few thousand dollars into a little company which makes burritos: https://www.google.com/finance?q=NYSE:CMG (Scroll back to 2006~2008, when I was still at the day job and hence able to sock away most of my bingo earnings.)

That's very not reproducible, but was a happy accident. (I got approximately market returns from the 75% of my investments which I made in index ETFs and have generally been shellacked on every one of my for-fun investments other than Chipotle, but the Chipotle one dominates my investment performance.)

If all you have is $5k sitting in a checking account, keep it in there because you're going to need it for a rainy day.

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