Comment by padobson | Hacker News Reader

Comment by padobson | Hacker News Reader

I think this is completely feasible starting with a $0 net worth and having a college education. I am not remotely surprised he got to a $100k salary working full time plus nights and weekends. You'd be surprised how many people you can pass up in the work force just by showing up on time and working more than them.

Frugality is also huge. If you can save 15-25% on products you knew you were going to buy anyway by clipping coupons or buying in bulk or searching for deals, that's far better than making 15-25% in the stock market because there's no risk.

The real estate thing, too, isn't as hard as you think. Multi-unit dwellings can often be purchased at the price of a normal house and rented for 2-3x what a normal house would go for. If you can find a three or four unit building for $100-$150k and live in one of the units while you pay down the equity and fix up the other two to increase they're rental value, then getting $500-$600 per unit becomes very possible. That's $1500-$2400 a month to go towards mortgages, which would easily support two $100-$150k houses.

With regards to the idea of having a cap on savings returns, this is very true. But savings are also different from investments in that whatever you were going to do with your discretionary investments, you now have more capital to work with because of your savings.

Example: You make $3000 a month and your monthly expenses are $2000. That leaves you with $1000 a month to invest. If you haggle on rent, clip coupons, and use second-hand stores and flee markets to get your monthly expenses down to $1500 a month with no reduction in lifestyle, then you have $1500 a month to invest.

The 50% increase in your investments means a very large gain on returns. With compounding interest at 8%, you can accrue $180k+ over ten years on $1000 into savings every month. When you change the savings to $1500, then you only need 1% return to save the same amount of money OR you'll have $276k at the original 8% rate. You're either massively reducing your risk or massively increasing your return.

In any event, saving money on expenses should be the number one priority of any investment strategy.

Note: I used this financial calculator for this comment - http://www.thecalculatorsite.com/finance/calculators/compoun...

"that's far better than making 15-25% in the stock market because there's no risk"

Not really, because clipping coupons won't ever make you enough to retire.

I guess this comment I'm replying to was downvoted for being too vague and blunt, but it's a perfectly valid point.

Let's say my monthly expenses (in areas that might theoretically have coupons - e.g. house rent isn't going to come with a groupon offer) are $2k, then saving 25% of that is only ever going to net me $500/month, and there's a hard cap based on how much I'm already spending.

Whereas with investments, there's no cap on it, except the amount I have to invest, which could be much, much more than $2k.

Obviously this skips over the question of success in those investments, but that isn't the question being discussed.

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