Comment by blackrock | Hacker News Reader

Comment by blackrock | Hacker News Reader

To be honest, when I see all these excesses of the super rich, I just want to puke.

I am dumbfounded how the normal people can just celebrate it, and dream that they too can one day become one of these billionaires.

And yes, while it is true, that some people can truly rise from rags to riches, or create a computer program that can take over the world. For the majority of us, the odds are not in our favor. You can work hard, or work smart all your life, but you will never become rich.

It takes money to make money. There is no truer maxim than that.

These people live the life of luxury and pleasure, while the rest of us can barely make ends meet. And I'm not talking about the programmers, but rather, the other people that aren't blessed to have well paying jobs.

Sometimes, I think that there should be a legal limit on the amount of wealth that someone can accrue.

But even this doesn't solve the problems that our society is facing. It doesn't solve the homelessness. It doesn't solve the expensive housing crisis. Or the student loan crisis.

Meanwhile, for the rich, life is great. Technology is abundant. Money just makes more money. Opportunities are plenty, if you have the right connections.

Anyways.. back to the grindstone. When I become a billionaire, I'm going to buy myself a super yacht too.

I was whinging about wealth inequality and my spouse (European) rolled his eyes and said: "This is a solved problem. Your taxes are too low." A quick look at wealth inequality in the USA vs EU told me he might be right.

Wealth inequality in itself should never be the only goal. My parents grew up in China in the 60s, and to them wealth equality doesn't mean everyone is rich, it means everyone was equally poor.

Too often than not that's the form of wealth equality we see. So we need to keep low wealth equality while give enough incentives to people to raise the total wealth of the society, and that is a much harder problem to solve .

Switching to a fair monetary system is one option for this.

High taxes can narrow the gap between lower and middle classes. However, some upper classes will remain because they can pay experts to manage their tax planning. Finland is known for being a high-tax, egalitarian society, but Finnish celebrities are regularly criticized for keeping their wealth outside the country in a low-tax jurisdiction. And within Europe there are a number of law offices which exist solely to help Europeans establish citizenship and tax residency in Malta or the Caribbean islands.

This is absolutely not true. If you choose a career wisely, make room in your budget for savings, by the time you are in your 50’s, you absolutely will be wealthy 9/10 times. Maybe not superyacht wealthy, but not worrying about retirement, buying a new car, or unexpected costs, type wealthy.

It doesn’t need to be this way!

Billionaire level wealth aside, amassing a few million over the course of a lifetime isn’t as difficult as people think, it just requires discipline.

Live well within your means and invest your saved money in assets consistently, compounding and time will do the rest.

Most rich people get there slowly, and don’t appear to live a rich person’s lifestyle. Conversely, a lot of people who appear rich have little accumulated wealth.

If you’d like to know more, Have a read of “The millionaire next door” and “I will teach you to be rich”. They changed my outlook on what being wealthy meant, and I’m now putting thousands onto my net worth every month in a automated way.

A middle-class person with a retirement account is not in anywhere near the same league as a superyacht owner. Yes, you can and should achieve financial independence in old age by investing a reasonable percentage of your income over time, but that has nothing to do with the billionaire class.

> and I’m now putting thousands onto my net worth every month

Lucky you. A lot of people I know don't even make thousands per month. They make less than $2,000 after taxes. With this, accumulating millions isn't possible, not even slowly. And even these people are way better off than other's who barely make $1,000 or even less.

This is the beauty of it - you don’t need to make thousands per month to work towards making thousands per month.

The money you do invest can generate a return, which when re-invested compounds. Yes, this happens very slowly at first, but over the course of many years gets you towards your thousands per month.

I don’t have thousands left from my 9-5 job every month, but my assets (accumulated over years) work for me, and I just add what I can to that money making machine.

True, but this is a huge misdirection.

The difference between the top 1% and top 0.1% is in itself absurdly large.

Your Existence or presence alone creates money making opportunities, and in some cases you are effectively beyond the law.

Talking about millionaires is like talking about your friends who are rich lawyers in the same breath as Bill Gates.

It’s the difference between the moon and Saturn.

Suppose you make $24k. Investing $2400/yr from age 22 and earning 5% returns, you investments pay $540/mo in today's dollars by age 65 [0]. Add in $1,110 in tdoay's dollars from Social Security [1] and you're at 85% income replacement.

Of course there are big problems with saving 10% of so little, and your retirement account could be even more at risk in a financial emergency, but in principle retirement works up and down the income ladder.

[0] https://retirementplans.vanguard.com/VGApp/pe/pubeducation/c...

[1] https://www.ssa.gov/OACT/quickcalc/

"and earning 5% returns"

This is basically impossible for reasons explained here:

https://voxeu.org/article/suprasecular-stagnation

I'm old enough to recall the boom of the 1990s. Me and my professional friends were constantly invited to come to seminars about investing. All the mutual funds were trying to convince us to invest in the stock market. At that time, the stock market was booming, so it was easy to believe that investing in the stock market was a legitimate way to become wealthy.

All of the pitches recited the same set of numbers: we could invest in low risk mutual funds and get 12% returns, or we could invest in high risk mutual funds and get 16% returns. It was explained that when we were young we should prefer high risk strategies, and as we got older we should prefer lower risk strategies.

Then the crash of 2001 happened. Nasdaq took 10 years to come back to life. The stock market was flat for many, many years.

Around 2003 we started getting invitations to seminars that taught us how important it was to invest in real estate. We were told that the value of homes had never gone down, in all of USA history. It was the safest investment, and had significant returns.

Then the crash of 2008 happened. My friends who had bought homes were underwater. Even as recently as 2015, I still had friends who owed more on their homes than the homes were worth.

These notions that it is easy to get stable long term returns has not been born out by my experience, or the experience of any of my professional peers.

Our actual experience was very well described by the Bible:

"I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."

http://biblehub.com/ecclesiastes/9-11.htm

And yet the annualized rate of return of a total stock market index from 1990 to 2017 is 9.82%. There are absolutely booms and busts. It’s absolutely not stable when you look inside the cycles. But there are, reliably, cycles. Period and amplitude vary. But on a long enough time horizon, it works out. It’s also expected to decree as your risk exposure as you get closer to retirement to mitigate the risk of retiring at an unlucky time.

And yet, starting tomorrow, we might be at the start of another down cycle like the one that ran from 1966 to 1982. That was 16 years. For any actual living individual, it would be life changing, in a bad way. Even for young people. From 1966 to 1982 the nominal stock market index declined slightly, at a time when inflation was in the double digits, so the real rate of return was horrible.

Yes - no one is proposing that one can retire in 16 years. The S&P 500 over a 40-year working career from 1966 to 2006 returned 5.57% after inflation [0].

[0] http://www.moneychimp.com/features/market_cagr.htm

What people talk about is consuming a lot. Having an expensive yacht, for instance.

If you save up like a squirrel, you don't get the benefits of being wealthy, even if you are. And how rich are you really if a bit of consumption would significantly reduce your future consumption capacity?

I would argue you're not really rich if you can't just spunk money on whatever you feel like. And no, changing your desires to desire less might be just as satisfying (in fact I try to do that too), but it's not being rich, in the sense people ordinarily mean.

While the dictionary defines rich as "Possessing great material wealth" the real value of being rich is not having to worry about being poor (feeding yourself, affording rent, etc.). After a certain threshold, earning more does not increase happiness [0], and I would argue there is a big gap between being able to afford "a bit of consumption" vs spending money on whatever.

[0] http://www.purdue.edu/newsroom/releases/2018/Q1/money-only-b...

"Billionaire level wealth aside, amassing a few million over the course of a lifetime isn’t as difficult as people think, it just requires discipline."

And a lot of luck.

This should be obviously false before you even start looking into the specifics.

Do you think if everyone in the US just made different choices everyone would be millionaires in a generation? No? Then your advice doesn't work.

Without a massive increase in productivity, the only way someone can be a millionaire is if other people are poor.

At this point one could ask whether "excess wealth" shouldn't be used to battle society or species wide problems, like global warming and certain deceases.

True. There should be a hard cap on the amount of pollution (carbon emissions, etc.) that an individual may generate each year, wealth notwithstanding. Of course, this would be almost impossible to enforce and trivial to circumvent :(

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