How to get rich without being lucky (2019)

The book The Millionaire Next Door provided data to support "Seek wealth, not money or status".

The book was written by finance professors who examined the characteristics of actual millionaires. They found a lot of people who appeared to be millionaires did not actually have a net worth over a million dollars.

High status professional are expected to drive nice cars and live in a big house. It's harder to be a millionaire if you're spending a lot of money.

The authors were surprised to find that a lot of the Americans with a net worth over a million did not fit any of the "millionaire stereotypes" at all. They drive an old pickup truck and drink Bud Light.

I like the Tweet thread, but prefer the Millionaire Next Door cause it's backed up by actual data. It also seems like the Tweet thread is focused on advice that'll get you a net worth in the top 0.1%. The central premise of the Millionaire Next Door is a lot of people have "regular jobs" and get rich (depending on your definition of rich). See the janitor that amassed an $8 million dollar fortune: https://www.cnbc.com/2016/08/29/janitor-secretly-amassed-an-...

Discussions like these seem to miss the critical difference between individually and socially rational incentives and behaviors. Surely, given you at least live in a place that is sufficiently secure and stable with liberal markets and access to capital, anyone can get rich by following in the footsteps of the investor class. It is definitely not the case that everyone can get rich this way. If all 8 billion people on the planet did nothing but shuffle around paper ownership claims, there would be nothing to actually own. For an economy to produce anything at all, the vast majority of participants need to be on the ground making stuff, with only a tiny vanishing few shuffling paper at the top to decide who gets to own the inputs and outputs.

Maybe we'll actually reach some future where all production and maintenance labor is fully automated and most participants in an economy won't be human and we can just ethically enslave them for the benefit of human owners, but we're nowhere near that point.

I'm living right now in a hotbed of construction, a rapid growth metro, and I'm in the middle of it. Three lots I can see from my bedroom window are being leveled and turned into townhouses. That work is being done by people. They certainly have machine work multipliers. Nobody is carrying lumber and stone by hand from quarries to job site. Nobody is leveling the earth with shovels and trowels. But the bobcats and trucks are still operated by humans. Pipe is laid by humans. Walls are erected by humans. If all those people tried to do my job instead and became coders, or worse, tried to become investors, I and all the investors would be left with nowhere to live because no one would be building houses. We'd have no water or electricity if no one was laying the pipes and lines.

At some point, we should realize this and attempt to have an economy that recognizes most people in the economy have to be doing basic labor for there to be an economy at all, and figure out a way to accomplish this without these people needing to live paycheck to paycheck with the looming threat of a medical emergency able to wipe them out permanently. We can't just tell them to all change their focus from doing work to building wealth, because if they actually all do that, there will no longer be any wealth.

> Anyone can come here, be poor, and then work really hard and make money, and get wealthy.

While I agree with some of the article, I feel like this statement simply isn't true anymore. Probably for software/hardware engineers, but there's a shrinking middle class in America who can't afford a house despite working multiple jobs and doing everything right. My grandfather worked at Safeway and could support my mom and save up to buy a house. Seems like this would be impossible now. I don't know what the crux of the problem is, but something is definitely wrong with our system.

> You Won’t Get Rich Renting Out Your Time

> Live Below Your Means for Freedom

> Learn to Sell, Learn to Build

Personally I like these three pieces.

HN users are good at picking something they don't agree and agure against it. It's fine. But how about discuss what you believe is intereting and useful?

I love it how Americans and first world countries native born just love to bash these kinds of articles.

While people like me who came from 3rd world country that immigrated to US and first world countries can relate with posts like these.

"You want wealth because it buys you freedom—so you don’t have to wear a tie like a collar around your neck; so you don’t have to wake up at 7:00 a.m. to rush to work and sit in commute traffic; so you don’t have to waste your life grinding productive hours away into a soulless job that doesn’t fulfill you."

Am I the only one here who doesn't have any kind of "wealth" as defined by the author, yet doesn't suffer from any of the above? We don't wear ties, I don't have a commute, and I really enjoy my job. Is investing any of my time(as in - sacrificing time that would be otherwise spent with my family or just on relaxing) in "wealth" still the right choice?

“Industry, thrift and self-control are not sought because they create wealth, but because they create character.” - Calvin Coolidge

I think our generation is forgetting some fundamentals: money at the expense of anything else. The problem with this approach, is not only that it destroys character in the individual, but that it also scales externalities to the rest of society.

Part of this narrative is sold by startup culture and technocrats preaching to "change the world", while in reality the majority is just chasing quick money. From FAANGs to VCs, they control the media that convince young people to do the same: Robinhood, GameStop, cryptocurrencies are just reflections of this epidemic.

This article is as ignorant as it gets as it refers to a misquoted saying "money is the root of all evil". The real quote is "the LOVE of money is the root of all evil" (aka. GREED)

"The vaunted American dream, the idea that life will get better, that progress is inevitable if we obey the rules and work hard, that material prosperity is assured, has been replaced by a hard and bitter truth. The American dream, we now know, is a lie. We will all be sacrificed. The virus of corporate abuse – the perverted belief that only corporate profit matters – has spread to outsource our jobs, cut the budgets of our schools, close our libraries, and plague our communities with foreclosures and unemployment." - Chris Hedges

Americans are forgetting their values https://m-g-h.medium.com/why-we-are-dispensable-7a577eba4f3e

“ Wealth is money in the bank that is reinvested into other assets and businesses.”

So is it money in the bank then or is is it money reinvested? Or all of the above? He doesn’t really clarify.

Am I the only one that found holes in his thinking?

Example: the more houses we build the cheaper it will be...fact: there is more houses today than at any other time in American history. House prices are only increasing...buying up a scarce resource like land doesn’t help us create more of it, what helps us create more is investing in the resource.

I’m not trying to put Naval down since I do admire him and some of what he says, I just can’t put him on this guru pedestal others are...

I think true wealth is being able to control your time however you’d like. Everything else after that is about power.

Seems like the usual banal self affirmation post.

No luck? The author admits themselves that they needed an able body and a good education, for example. Privilege and luck is simply assumed and ignored. Just another example of survivor bias looking backward and saying "I made it with no luck at all!"

Its not a real introspection despite the spilled ink.

> Wealth is the thing you want. Wealth is assets that earn while you sleep; it’s the factory of robots cranking out things. Wealth is the computer program running at night that’s serving other customers.

In reality you still need people to earn money. Wealth really is the control over the limited means of production which allow you to gain out of the work of others.

There are also positive sides to it though: Having other people earn money for you is a pretty high incentive for bringing into the world new means of production

There's is for sure some good advice, but most of this is just useless word play, which does not give you any directions, but gives you a false sense of "life and society understanding". If you don't know that reading and work makes you wealthy, you're a probably a fool. It's important to tell people they can unite and work towards common good of humankind, but you should not title it "How to Get Rich".

> But for the fourth kind of luck, there isn’t a common cliché out there that matches the unique character of your action

“Right spot, right time”

I think there’s a lot of flaws in the reasoning and characterizing anyone who isn’t prioritizing wealth creation (or even the concept of a tax) as a parasite is extremely miopic. For one, if you don’t have any customers, good luck creating your wealth. The data repeatedly shows that a stronger safety net (which requires taxes) encourages more risk taking and better allocation of wealth creation. Characterizing those that aren’t able to have that freedom as parasites… you have to be really full of yourself to make a claim like that.

There's some interesting philosophical concepts here, but nothing really hacker newsworthy. This is just someone carrying on that we should be like him without telling us how. Does anyone else note the irony here that he says he is only interested in acquiring wealth, not in status, yet this whole article is really just advertising for his status?

I'd really like to read the continuation of this thought experiment. Which skills, if any industry knowledge is part of it, what the first steps would be, how to balance financial security and entrepreneurship ect.

"I like to think that if I lost all my money and if you drop me on a random street in any English-speaking country, within 5, 10 years I’d be wealthy again. Because it’s a skill set that I’ve developed and I think anyone can develop."

It isn't at all true that hunter-gatherers had only status and not wealth.

The Native American tribes of eastern North America used wampum, small, regular beads made from a few specific shells, as a store of value and medium of exchange.

Yes, they couldn't own that much more than they could carry. Some of these peoples did farm, some didn't, but all of them relied on hunting or fishing, and most had to move around at least a couple times a year.

But a wealthy Iroquois could wear enough wealth to buy many times what he could carry in meat, tools, furs, and anything else which other people could make available.

Shell money isn't limited to the Native Americans, either, it's been found in paleolithic grave goods and was quite widespread anywhere Europeans encountered hunter-gatherers.

>But the reality is everyone can be rich. We can see that by seeing, that in the First World, everyone is basically richer than almost anyone who was alive 200 years ago.

>200 years ago nobody had antibiotics. Nobody had cars. Nobody had electricity. Nobody had the iPhone. All of these things are inventions that have made us wealthier as a species.

>Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then. That’s because of wealth creation.

Ppl keep making this argument,and even though it is not wrong, rhetorically it is unpersuasive. People see the huge hospital bill, having to negotiate with insurers, tuition going up, bills unpaid, unrest and anger online and in poltics, etc. They feel like things are getting worse on a relative basis even if the iphone is more 10000x more advanced than a supercomputer 60 years ago.

You cannot make such an assumption because the subjective 'you' cannot experience both at once or compare and contrast the two. Both have advantages and disadvantages: Being a king means more status but also possibly dying of an infection and only having 0g wireless. Higher social status means generally an improved well-being.

This screed could be the keynote speech at a MLM conference.

The author is crossing streams with 'value capture' and 'value creation', they are not the same thing.

Investing does create value, but a lot of it is just poker. Being better at poker than a fool is a net zero-sum win for society.

Though most startups do create some value, it's also questionable in the big picture.

And a huge amount of value is created by individuals who are not able to capture the surpluses.

>Ending up in an orange jumpsuit in prison or having a reputation ruined is the same as getting wiped to zero—so never do those things.

Only if you lose everything too or get a really long sentence. I think Michael Milken is an obv. counterexample to this, having kept his wealth and reputation. Jordan Belfort got a lucrative book, movie and consulting gig from his behavior. many others.

> Humans don’t have that. I can cooperate with you guys. One of you is a Serbian. The other one is a Persian by origin. And I’m Indian by origin. We have very little blood in common, basically none. But we still cooperate.

I'm not a geneticist and I'm having trouble conjuring the right search terms to find a source, but I seem to recall reading not too long ago that all humans are more related to each other on average than members of most other species, because we very "recently" (still millions of years) went through a near-extinction event, making our gene pool less diverse than most other species because everybody alive today comes from the few people that survived that event. So altruism in most animals is actually more impressive than altruism in humans.

The idea that there's no luck involved is pretty dumb.

I don't see much logic in this wall of text.

"Seek wealth, not money or status". What? To get wealth you need money to buy it. To get to the point B you have to pass the point A. That's why people are seeking money.

Secondly, it's claimed that those who say "We don’t want money" are playing another game - seeking high social status. That's another perverted logic. Seeking high social status is the most reliable way to have a lot of money without doing anything useful. That's why corruption is everywhere – people go to power to be rich, not because they want or able to solve societal problems. People who really don't seek richness don't seek high social status either.

Perhaps a more realistic aim is "How to be able to live comfortably & not have to worry about having enough money in old age (without being lucky)".

Disclosure: I'm building a startup https://Tontine.com which brings this currently almost impossible target within reach of the majority of savers.

If you are lucky enough to live a long life then you'll also get rich but the ability to enjoy your life between 65-95 is what should matter more.

Making money is like a clicker game, such as Cookie Clicker. If you are earning a wage at a job, you're still in the boring part of the game where you click to get cookies. Wealthy people are playing the metagame, buying the grandmas and factories and space vortexes that automatically generate cookies. And that's when the game gets fun.

I think our concept of "greed" is a bit misplaced. Greed is not about having more money just to have it. If you or I had as much money as Bill Gates or Donald Trump, we wouldn't know what to do with the huge amount left over after all our needs and desires are met. It's about being able to buy the next thing that automatically clicks for cookies, so that they can continue making cookies (money) faster. Increasing the rate of cookie generation means they're winning at the game. It's their hobby, it's their passion.

I was commenting about this earlier, here's a link to a study that says otherwise: https://advances.sciencemag.org/content/5/7/eaau1156.full

Or rather, it says people who are advantaged (ie lucky) considerably underestimate the contribution of this advantage to their success, and overestimate their own contribution.

On the article itself, the stated idea of status is truly naive if not delusional, and allows them to put anyone who disagrees with their idea into the box of "status game players, to be ignored".

I'm not going to read the entire article, it reads like advice to people who don't need it (upper middle class people). I'm sure it must be comforting to the author, and upper middle class and rich people, but in reality there is no clear path from "poor" to "rich", or else everyone would be taking it.

What I will say is they seem to understand that our economic system is irrational, and to take advantage of it seems rational. But an irrational system is also unfair, and I would rather people not praise this unfairness as "good". The author seems to be paying lip service to the idea of "ethics" while teaching people to abuse the system. And they dare to talk about "virtue signaling".

The missing detail is that 99% of people have no access to these wealth creation mechanisms. Having money into the stock market is already a >1% privilege and not nearly enough to generate wealth (unless you already have it).

This is an incredible piece of literature.

This says something useful in among the stock nonsense - which is that wealth is not about what you own or how much you can spend, it's about personal freedom.

The interesting corollary is that in a capitalist economy hardly anyone is free. You "win" freedom by buying it. And that's what wealth is really for.

This is why "We're all rich now compared to people two centuries ago" is nonsense. We're not, because the odds are good that we're more or less similarly unfree, especially if we're at the bottom of the heap and working the proverbial two or three jobs. Owning an iPhone doesn't change the fact that our time is almost wholly owned by others.

It's also why it's impossible for a majority of people to be free. Someone has to do the actual work that keeps the lights on and food in the shops. Most people won't do that work voluntarily, so there has to be social leverage - implemented with loss of freedom - to force them into it.

And it has to happen. Passive investing is worthless when there's nothing concrete to invest in. Corporate entrepreneurship is useless if there is no activity to manage, control, and profit from.

The exceptions to this are genuinely creative activity. Invention, innovation (to a smaller extent), and cultural creativity are all individually powerful and can be disproportionately valuable, socially and economically.

Coincidentally, they also attract more than their fair share of parasitic activity which seeks to capture their value for the benefit of others.

But more - some people need to have these differentials in personal power. They lean towards narcissism, and it's important for them to feel more powerful than others.

They will never, ever allow an economic system which doesn't constrain the freedom of those they consider inferior. It doesn't matter if it's run by machines or AI or any other magic technology. It's fundamental to their psychology to keep others in a one-down position, and they experience any threat to this as an unbearable narcissistic wounding.

Inequality is not primarily an economic problem. It's a psychological issue - a public mental health issue, where the point of inequality is to allow unhappy rather damaged people to feel better about themselves.

This is orthogonal to issues of building, researching, inventing, and generally getting shit done collectively. Without narcissistic friction all of those would proceed more quickly and smoothly, with astoundingly positive consequences.

The stuff about capitalism being intrinsic and status games being zero sum suggests a rather myopic view of society. Of course many economic exchanges are positive-sum. But it does not follow that this drive is universal; it just looks that way to people whose social circle consists of others engaged in the same virtuous circle. Nor does it follow that others don't get it or are playing zero-sum status games; there are different groups with different motivations.

Research suggests there are 4 major groupings whose interests are only somewhat coincident: https://advances.sciencemag.org/content/2/8/e1600451

Pseudo intellectual garbage, and the tweets read like if Ayn Rand wrote fortune cookies.

I disagree that wealth is limited (we can mine an exhaustless supply of minerals for instance). But he nails everything else.

It is true that becoming rich requires luck. So does completing college, landing a plumbing apprenticeship, or learning how to race a horse.

I see life like I see poker. You need to learn enough about the rules to know when the odds are in your favor, then make your bets to take full advantage of the odds. In life, raising your skills in specific and deliberate areas will improve your odds. Then, you have to have enough agency to make the bets.

Is that a guarantee that you'll achieve wealth? Certainly not. But you can learn how to improve your odds, and then take actions to put yourself in that improved position, and then be persistent and attentive to your progress. Analyze, adjust, optimize.

Persistence is the thing, and by persistent, I mean over decades. If you're a solid poker player, you can make money over time. You may or may not ever have the right luck at the right time to win a major tournament, but you can still make a living at the vocation you choose. It's the same in building wealth. Have a deliberate plan that his high probability, but be open to identify windfall opportunities, and make a bet if you see the odds are worthwhile.

There were a few deliberate choices I made to grow wealth. Each also took some amount of luck to transpire:

- Choice: I put myself through college. My parents couldn't help, I had to pay for it myself.

   Luck: There were state and federal loan and grant programs to help with the cost, or I'd never have finished.

 - Choice: I decided to major in computer science instead of music. 

   Luck: My dad's advice was that I'd be able to afford a more comfortable life in computer science. He'd chosen music.

 - Choice: I made the choice to move to Silicon Valley from the Midwest. That's where technology seemed to happen first.

   Luck: The only way I could do that was by living rent free for 3 months with a friend in Santa Clara that I happened to know.

 - Choice: I intentionally asked by boss for more responsibility. 

   Luck: The company was in a growing market and needed engineering leadership. Promotions and raises followed.

 - Choice: I developed a business plan to open a new sales/services office in a foreign country.

   Luck: I had spent a lot of time traveling to that country on business and made friends with the people who established the business based on my plan and hired me. It was a lucrative choice.

 - I chose a lifestyle that left extra $ in the bank each paycheck, and then invested that money.

   Luck: My partner happened to have conservative approach to money management, and I listened to her.

Each step was about improving my odds. Once I determined what to do, I had to find a way to make it happen, even if it took other people's assistance in some way. Finding that assistance at hand was the lucky part. I just had to have the agency accept it and act.

So he invested in Clearview AI and wish.com. Thanks for that ... not. "Wealth is assets that earn while you sleep; it’s the factory of robots cranking out things." Yeah, robots for sure.

This has a real "I've read Rand and I'm using cocaine" vibe.

> But the reality is everyone can be rich.

Reality is everyone can not be rich. So this is pseudo philosophy, with all due respect.

This reads like a parody. He’s trying to raise the status of tech entrepreneurs, painting it as the only truly virtuous endeavors, while literally saying he’s not into playing status games.

But there are plenty of other gems in here too. Some come off like silly ignorance, others as callous or at least very tone def.

  You have a ton of parasites in you, who are living off of you.

Umm, no I don’t. If you’re talking about micro fauna, that’s not parasites. Otherwise, Dude, you need to get that checked.

   It’s not about taking something from somebody else. It’s from creating abundance.

But “disruption” inherently leads to winners and losers. There is a transfer from one group to another. Sure the end state may have more abundance than before but unless you address the disruption to those that lost out, you’ll have people, perhaps many, who feel left out, impoverished and distrust or despise the system. You can label them as “status” seeking haters of wealth creation, it’s a nice simple narrative, but divisive and counter productive to actually making the system work for more people and generate more wealth.

  Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France.

You have no understanding of the plight of the poor and homeless in America. French countryside estate with a dedicated staff to provide for all your needs, or the homeless guy standing on the corner with the “hungry” sign? Of course the latter is often afflicted with mental illness and substance abuse, but those factors are in no small part driven by our society’s abundance distribution choices. Or is the “hungry” sign just an attempt to seek higher status? I think it’s just food.

   We would all be living in massive abundance.

What makes you so sure the abundance would be so evenly or widely distributed? The abundance we have now is becoming less and less evenly distributed, so jumping to this conclusion just hand waves past some big hurdles in getting there.

   It gets hijacked by improper pricing of externalities. It gets hijacked by improper yields, where you have corruption, or you have monopolies.

Then perhaps the journalists that criticize tech entrepreneurs are actually functioning as a break against this hi jacking? “Status” and “wealth” games not so clearly delineated huh?

   Capitalism is not even something we discovered. It is in us in every exchange that we have.

You can literally say this about any human behavior. Again, this just hand waves and papers over difficult and complex choices. It just assumes his world view is inherent and virtuous.

   We are the only animals in the animal kingdom that cooperate across genetic boundaries.

False. And easy enough for anyone to search on this topic and see so.

   Everybody can be successful. It is merely a question of education and desire. 

Wow. If there was any doubt before, it’s now obvious we’re in a complete fantasy at this point. There’s no bias, no prejudice, no advantages that one group has over another. Wait, well except education. Clearly we need to fix that because education isn’t as easily accessible to all, right? But that’s no big deal.

   I’m not talking about monopolies. I’m not talking about crony capitalism. I’m not talking about mispriced externalities like the environment.

Yep, never mind. You’re not talking about the real world.

It goes on and on like this but Im done here.

> The purpose of wealth is freedom; it’s nothing more than that. It’s not to buy fur coats, or to drive Ferraris, or to sail yachts, or to jet around the world in a Gulf Stream. That stuff gets really boring and stupid, really fast. It’s about being your own sovereign individual.

This makes sense.

> Today, I would rather be a poor person in a First World country, than be a rich person in Louis the XIV’s France. I’d rather be a poor person today than aristocrat back then. That’s because of wealth creation.

I'm not sure we can have it both ways.

If the purpose of wealth is to be sovereign and have the freedom and time to pursue my own interests, whatever they are, then it's better to be a wealthy person at any time in history than to be a poor person at any other time in history.

A poor person today is going to spend 8-12 hours per day, 5-7 days per week, working and commuting, depending on how many jobs they have, just to pay for necessities. An aristocrat in any time period is going to have far more time to do any of the things that fulfill him. Air conditioning, health care, and Netflix don't make up the difference.

In engineering, its just as important to know what not to do. I am an expert at knowing how not to get rich.

Did Naval steal this from Frank Underwood?

"Money is the McMansion in Sarasota that starts falling apart after ten years. Power (or status) is the old stone building that stands for centuries"

It's the same thing he's saying here, but like the guy Frank Underwood was talking to, Naval doesn't recognize that financial wealth is only more secure and fungible than social status if you can manage to move said financial wealth around before stuff hits the fan. So many examples to cite, ranging from Venezuela, to Zimbawe to Cyprus.

And mind...stuff inevitably always hits the fan, when stuff hits the fan you want to have loyalists who'd defend you against your enemies.

The whole reason why all investigation relating to Trump will end in a nothing burger. He has 75m people who follow him and the political cost of doing anything to him is simply too high.

Also same reason why Musk can't be touched even though he violates the law every day, he has a huge cult following and the political cost of doing anything to him is again simply too high.

Ideally you make money by lying low, then diversify (unless you are a hedge fund manager, in that case you are already diversified), then use money to build a following.

I say ideally because you need smart people around to make money and smart people tend to be repulsed by people who are hyperfocused on building a cult following and a great social status (exhibit A : the turnover rate at Tesla)

fuck being rich. I just want to be able to afford a small house to live with my family. If I saved 100% of my salary for a decade I still would't be able to afford half of it.

“Wealth is assets that you earn while you sleep”

Sorry, but somebody is still producing that wealth through their labor. It’s just not your labor. Wealth in the sense that the author is using the word is when you collect the fruits of other people’s hard work.

No matter how you set up your economy, only a small number of people can live like that, so no, by definition this is not a strategy that everyone can use. Otherwise, who would be doing all the actual work?