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Comment by umvi | Hacker News Reader

I found out that my grandfather was a multimillionaire later in life as well, but I would never have guessed because he lives in an inconspicuous house in a middle class neighborhood and drives an inconspicuous car (Honda CR-V). He complains about milk and gas prices like most people and basically just doesn't telegraph his wealth at all (except by buying exclusively Wheaties as his breakfast cereal).

He grew up during the great depression though, so maybe that has something to do with his miserly ways.

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Maybe this is just me, but I don't actually consider having a couple million dollars as "rich", I know a couple folks worth hundreds of millions, and the way they behave are certainly different.

It's enough to maintain a swell lifestyle without working. It is meaningfully different than not having enough money to stop working.

That there's people with even more money is true enough.

If you only know person worth $2 million, they're rich. If you know 10 millionaires, the person with $2 mil might not seem so rich to you anymore.

The United States farm real estate value, a measurement of the value of all land and buildings on farms, averaged $3,140 per acre

While the average farm size has been increasing approximately two acres per farm each year since 2012, the number of farms is decreasing. Today, the average farm size is 444 acres.

444*3140 1,394,160

US average farmer is a millionaire. Go ask one if he feels rich.

Do most farmers actually own the land that they work on? I was under the impression that most farming is done by large companies and that there are not many small independent farmers that exist.

When I was working on farms ( 30 yrs ago ) most farmers were still on property they owned. During that time I saw the shift to corporate farms and I dont know that answer as I have found less labor intensive work.

Most of the corporate structures I saw were family or a combination of family and friends.

I think many farmers are pretty levered. Whether its mortgage on the land or loans for operating capital, to make a decent return on equity you've got to borrow.

I would agree with that perspective. I knew a few farmers that owned it all but those have passed on.

A couple million dollars is a retirement nest egg. You can stop working, stretch it carefully until you die, and leave a small sum to your heirs.

To be very rich requires upwards of $100 million. Then you can access high paying investments which will generate enough income to afford a couple houses, hire help, buy a boat and a plane, and have enough left over after taxes to increase your assets to offset inflation. Actually, if you want a jet plane (with hired pilots, mechanics, hangers, etc) and a couple nice houses (>$10 million each plus staff) in the nicest places (Beverly Hills, Palm Beach, Jackson Hole), you need upwards of $1000 million.

A couple million dollars is more than a nest egg. You can retire immediately and provide for your family and yourself your whole life with that kind of money.

Only if used productively. Which, assuming you built it from more or less nothing, you probably have been doing to get to that point.

Having money does not make you wealthy. Having the correct financial arrangement to consistently make more than you spend is what makes you wealthy.

Entirely dependent on location, lifestyle, family status, etc. Yes, with $2m you can retire tomorrow and get something like $100K/year in pretty much guaranteed income not pegged to inflation. (You can argue the numbers but certainly <$200K/year with moderate risk.) And you can certainly live on that amount of money but equally certainly not with an opulent lifestyle--especially if you don't own your house/condo, have college expenses, like to travel/eat out etc.

ADDED: Yes, you're "rich" but not jet-setting in business class at resort hotels, multi-million dollar coastal city condo, eat at top restaurants on a regular basis etc. rich. Which is actually just fine for a lot of people who have no particular interest in those things.

Wait, how would you guarantee 5%? I don't see "put it in an index fund" as "pretty much guaranteed".

Annuities, high grade corporate or muni bonds, mix in some high dividend yield blue chips, etc. I'd mix with some riskier investments that were higher return on average.

Nothing is guaranteed if things go totally to hell, of course. (And I did make the qualification of not being pegged to inflation.) But unless we get to a very bad place, I think that assuming 5% on these sorts of investments is a pretty safe bet.

(ADDED: But pick your own number. 3-4% probably is closer to the really very safe modulo inflation given instruments like CDs in that range. But you're reinforcing my basic point. $2M is not really the basis for a huge annual income in perpetuity or even over a multi-decade timescale if you don't have other income streams to add to that mix.)

The market return for the past century has been something like 7% (after inflation). If you're investing in time spans longer than 10 years then typically you expect something in that range.

Past performance does not promise future results, and the world could end tomorrow, but it's not a bad idea to plan that you'll get an average of 5%+ on market investment.

(I'll note that you're responding to someone saying "pretty much guaranteed" and dropped that qualifier in your question).

I know about that, I meant besides that. An average return doesn't mean a consistent return from year to year - e.g. $100,000 / year from 2 million. I was just curious how other people would invest to target a high probability of 5% each year.

That is wrong, if you live in a wealthy country. The safe rate of return right now is a few percentage points at best. If it stays like that, and we get inflation, then it is going to be even worse (wealth shrinking happening now depending on tax variables of the retiree.)

$2m invested with 2% real returns is $40,000/y. So you could provide for your family but I think it would need to be pretty frugal and move away from major urban areas. (Maybe buy a 500k house and live off $30,000/y)?

That said I think semi-retire is the best bet. You have $30,000 for existence, and then go and do a gig every now and then for that foreign holiday or home repair or whatever.

You don't have to finish with the same amount you started with. If you aim for finishing somewhere between $2m and $0, you can spend between $40k and $100k per year.

Absolutely, but if you plan on doing this from 30 to 85, say, then it probably won't make much difference, and you might as well save the lions share for medical bills, rainy days or even inheritance down the line.

It doesn't become easier to beat the market when you have more than $100 million.

Anyone with a couple $1000 can buy cheap etfs or index funds

Yes but the $100 million guys can afford higher risks with higher returns. The $1000 guys can only play it safe with small returns.

The $1000 guys can afford humongous risks if they're 20 year olds saving for retirement. In fact, if they have a job to live off of, their risk tolerance is going to be far greater than a rich person living off their wealth.

From what I understand, the thing that changes when you have lots of money, is you can act as an investor in individual ventures that are much riskier, but with a much higher potential payoff. If you can drop $1 million without being ruined if it doesn't pan out, you can multiply your money very quickly when things do happen to go your way.

In fact, isn't that basically the entire premise behind all the VC funds that fuel Silicon Valley?

>isn't that basically the entire premise behind all the VC funds

Which often don't have especially high rates of return.

I don't really disagree with your basic point. At least somewhat higher investments do give you access to a wider variety of financial instruments even if diversified through a third party.

Yes, yes, the wealth curve is essentially a vertical line at the right-hand edge. Don't pity the poor decimillionaires.

What if they are physically handicapped? What if they are lonely? What if they spend their time and energy investing in 3rd world countries?

Consider checking your prejudice at the door.

From the sounds of it, they're relatively rich for the part of the country they live in.

It is not 'just you', but it does peg you as being part of a tiny part of the population that can hold these beliefs.

For the very very vast majority 100K in liquid funds would be a fortune they could never imagine acquiring outside of a huge lottery windfall.

GP said nothing about liquid funds, and this thread is mainly talking about people's life savings.

in this context, one million dollars is really not much. if you have no job or pension, one million in assets grants you the ability to spend about $40k a year safely. you could certainly have a comfortable retirement this way, but it would be far from a luxurious lifestyle.

What are the implications of only buying Wheaties for breakfast? That doesn't scream wealth to me, but I also don't eat breakfast cereals, so have a blind spot.

It was mainly a joke for people familiar with breakfast cereal prices; I consider a box of cereal that is less than ~$2.50 to be a "good deal".

I've never, ever seen Wheaties for <$4 per box, and it's never on sale.

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