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Comment by PatientTrades | Hacker News Reader

> Rule #1: Your career provides your wealth.

I mainly disagree with the first rule. Your career should not provide your wealth. Your career should keep your bills paid, provide security for the future, and allow you to live a comfortable life. Investments in financial endeavors like real estate, businesses, stocks, etc, education, and family is what provides wealth.

Update: Not sure why this post is getting downvoted? A career provides MONEY not WEALTH. There is a big difference. It is up to you to convert that money into wealth

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And how, exactly, does one embark upon an endeavour such as owning real estate, starting a business, buying stocks, acquiring education, or starting a family?

For almost every single person, the main source of their wealth will be their career.

Unless you are planning on inheriting more money than you expect to make from your career from your extremely wealthy parents, you're going to have to accept Rule #1.

And if you borrow money to accomplish these things, you are in violation of Rule #7, don't use leverage.

> And how, exactly, does one embark upon an endeavor

By using the money earned from your career to fund ventures. A stable career should provide you with money to build wealth. However, simply working a 9-5 everyday will not provide wealth as the rules implies. It provides money, not wealth. There is a difference

It will take you decades of saving to have the kind of capital that can show a return that's even remotely comparable with your salary.

But you don't need to replace your salary, just cover your expenses :-).

For example, if you can save ~96% of your gross income and safely draw 4% from your investments, you can cover your expenses after only a single year. (Of course, you will never save 96% of your gross income, due to taxes.)

Where does the money for those things come from, if not your career?

> Where does the money for those things come from, if not your career?

The money to fund wealth building ventures comes from having a stable career. However, the act of having a career does not build wealth as the rule implies.

Harry wasn't saying that if you have a career, it will build your wealth, as if this were some automatic thing.

He was saying that the initial source of the funds that you use to build your wealth will come from your career.

Unless of course you're lucky enough to inherit those funds, but if that's the case, you already know it.

Arguing that "your career provides your wealth" isn't valid because "you use the money from your career to build your wealth" is like arguing "father provides my food" isn't valid because he actually just gives mother the money to buy the food.

Pointless. You're arguing semantics, and pretty meaningless semantics at that.

The career is necessary (the point from the article) but not sufficient (your point, I guess).

I think this bit from the article sums up the intent of rule #1:

> Your investments can make your future more secure and your retirement more prosperous. But they can't take you from rags to riches. So don't take risks with complicated schemes in the hope of multiplying your capital quickly.

He wasn't making a statement about how to become wealthy, instead, he was trying to warn you against get rich quick schemes.

He would probably consider endeavors like real estate investing a part of your career.

Many people are downvoting you but you're right. Browne is implying that your investment returns will not outpace your career earnings. This may not be true at all, with compound interest over a lifetime.

For a contrived example, let's make the following assumptions:

1) There is no inflation.

2) Your capital investments always return 5%.

3) Your salary is $100,000 and does not change.

4) You are able to save 50% of your income and invest it.

At year 0, you are worth the equivalent of $2,000,000 invested. It won't be until year 40 that your investments are returning the same amount as your starting salary. Presumably, you plan to retire sometime around year 45 (~65-ish).

Thing is, there is inflation, a 5% return isn't guaranteed, your salary will probably increase, and saving 50% is pretty ambitious. All of these things actually make it harder to get a better return than your salary.

This is incomplete as well as incorrect.

It is incomplete because: presumably you do not die immediately upon retirement. A 30 year retirement would see your investments compound for an additional 30 years after your career income stream ceases. This can dwarf the $2M total you save over a 40 year career at $50k/yr.

It is incorrect because even after the 40 years your net worth is $6.5M on gross lifetime earnings of $4M.

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