Comment by csomar | Hacker News Reader

Comment by csomar | Hacker News Reader

My life has change (and also my little mind) thanks to Hacker News. I should say "I read enough, yet a lot", may be more than 500 pages (I already printed 200 or so).

Not only my financial situation changed, but also the way I view the world. Just 400 days before now, $25 is my monthly money pocket that I get from my parents and it should cover all my expenses (except clothes, food and obviously housing).

Now I have my own Internet subscription ($30 a month) and also I just purchased a VPS and a couple of SaaS service. I did bought my Nokia feature phone ($150) also myself and this little netbook I'm typing from ($400). That in 300 days or so, and by the end of this year, I'm planning on buying a Sony Z series, 23'' monitor and a smartphone.

I have 3 years browsing and reading the Internet, but it's only in the last year that I started making money out of it (not browsing! the internet). This wouldn't be done without Hacker News. I should also mention that my English was revamped considerably and ... okay, lot of things actually.

Thanks HN! You didn't give me money but you did teach me how to make it and also LIVE happy.

Don't spend all your money on toys... The few hundred dollars you've spent already, had you invested it in your business, or even put it into savings, could be worth tens of thousands or even millions a few decades from now.

That's something I learnt while working and it really helped me a lot (and will in my professional life). However, I don't have my own computer (shared one, except this netbook); so I need a better setup for my development.

I try to prioritize the items I need. An external hard-drive comes first, because I should have a backup strategy. The monitor is more important, because I need better display...

Certainly, I'll offer myself an Android as a gift and that also should serve and help me in business (read emails in the go, check statics, HN on mobile instead of computer...)

If you can learn the power of compound interest at your age, you're going to retire very comfortably.

I read some of the Wikipedia article about it. However, the bank won't give you 20% yearly, yet barely enough to cover the inflation. Nor the stock market and real estate do, so I wonder how compound interest would help and in any way?

It would manifest itself if you invest in your own company.

Sorry, let me clarify.

Let's say you started investing/saving at the age of 18 up until 65, and lets say the amount you put in per month over that period of time was $800 per month - this is pretty low, given how much your income should increase over time.

At a conservative rate of return of 5%, at age 65, it would be worth around $1.8 million, $1.35 million of that being the compound 5%, and only roughly $450,000 being what you put in.

Essentially, the earlier you start saving, the bigger your runway, and the more comfortable you'll be later in life, without having to compromise on your lifestyle right there and then.

The later you start, the more you have to put in each month to get the same outcome at the end.

Something I wish my parents had taught me :)

Of course, if you start your own business, and are successful enough, the numbers look way, way, better. This is essentially just your fallback position.

5% is not a particularly conservative rate of return.

Hasnt the stock market historically grown at a 10% annual rate

Factor inflation and taxes.

Yes, I agree (~8% over the very long run I think). But it's not timescale invariant. Look at what it's done over the past 10 years, for example (-1%). I'm not trying to say that the stock market doesn't grow over time. I'm just trying to say that if the mean annual growth is truly 8%, it has a really high variance. Thus, there are some things that I wouldn't count on (say, the ability to arbitrage from a 3%-interest loan into straight profit, for example) which I might try to do if the return was consistently 5%. I suppose that for me, when I think conservative, I think consistent.

The 8% claim is misleading and possibly harmful. Nobody wants returns to be that "lumpy" - down for 10 years! Who could stand it?

All investments have a certain lifespan on them - with things like bonds and T-bills, interest payments and maturity are fixed and contractually obligated, while with equities it's up to company performance. To really do well, you have to think like a trader and run all investments over a specific timeframe with predetermined exit signals for profit, loss, or trend changes.

It may look as if Warren Buffett lets money sit in the market. But he is actually running trades over decades of time. He has to - he literally has too much money to make useful(percentage-wise) profit in smaller time frames.

I agree that the 8% number is, at once, misleading, harmful, and true! True because it is a simple observation, but misleading because people behave as though the future recapitulates the past, of which there is no guarantee.

I think that the "misleading and harmful" part is more important--which was the crux of my original comment about the lack of consistency.

Not only that - the last half century has been the most productive period of US growth in it's history. Just because it happened during the last 50 years doesn't mean the same will occur in the future. At the moment, economists are thinking that with the enormous amounts of debt in this country, it will be a while before we see any kind of sustained growth.

By buying some technical toys and net access now, he can invest in himself and potentially make much more than interest from secure investments or real estate. Either way he's learning faster.

Don't spend all of your money on toys… Great advice, but be sure to spend some of it on toys!

Also, pick toys which have utility, make you work out, teach you something, and are different than the past toys you've bought. Try to learn from play too.

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