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What a crock. We didn't have a pot to **** in when we were married in our twenties. In five more years, we should be able to completely retire and never have to work another day in our lives. Why? Because we didn't blow our money, lived modestly, made smart investments, and took the occasional risk. We don't have a big-screen TV, luxury cars, or the like. Not because we can't buy them, but because we choose not to stretch ourselves financially.
Case in point? When we bought our current house, the lender was shocked at how small our mortgage was going to be. "Why, with your income, you could borrow three times as much." This was in 2006 and, even then, we knew the housing market was on shaky ground. So we were prudent and bought a house at a bargain and steadily improved it rather than shelling out for a McMansion.
Working a job is usually not scalable in the way a business is. In most professions there is a ceiling. In a business there is no ceiling to how much can be made.
You didn't mention the fact that most businesses are futile attempts that never even make it off the ground.
You didn't mention the fact that most businesses are futile attempts that never even make it off the ground.
Yes many businesses do fail . But if you look at the people that currently run successful ones many of them had failures and learned from their early mistakes .
I don't think the stats are too truthful or helpful and they do add to people being fearful of starting something .
We don't do the same thing with jobs though .
Most people expect not to make much or get fired from their first Job.
I've realized there are tons of things in society that hold us back and much of it is our own thought processes rather than external factors .
Many people seem to aim for average . But as we are seeing average people are broke .
I'd like to see wages higher for people so that they could afford to live better and so that many don't have to rely on government help but would higher wages just mean higher prices for the same people the higher wages are supposed to help ?
I see more people going the business owner or self employed contractor route in the future .
This has already been going on a while but it is still the beginning .
Ever since the first humans started planting wheat and herding sheep instead of gathering berries and hurling spears at antelope, society has been ruled by a narrow elite: a king, some nobles and priests, and underneath them the vast multitude, some living very comfortably, others rather less so. The 20th century was a giant exercise in self-delusion, that we have abolished the immemorial rubric of king-nobles-priests, that we rule ourselves, that we have elections and representatives and consumer choice and dignity of individual fortitude. But do we? I contend that the new reality of this, our wonderful 21st century, is neither a dark-age nor the nightmare recompense for generations of mismanagement, but simply a reversion to historical reality. Again we’re sufficiently sober to acknowledge the primacy of kings, nobles and priests; these notables wear different guise and dispense different proclamations, chanting different mantras and so forth. But the essential principle is invariant.
The American Dream is supposed to be a repudiation of the yoke that our farmer-herder ancestors donned in exchange for release from the uncertainties and travails of hunter-gatherer struggles. That repudiation flourished for a while, however liminally and unevenly. Now that repudiation has been rescinded. We don’t necessarily live worse than our parents and grandparents. But we have fewer illusions.
What a crock. We didn't have a pot to **** in when we were married in our twenties. In five more years, we should be able to completely retire and never have to work another day in our lives. Why? Because we didn't blow our money, lived modestly, made smart investments, and took the occasional risk. We don't have a big-screen TV, luxury cars, or the like. Not because we can't buy them, but because we choose not to stretch ourselves financially.
Case in point? When we bought our current house, the lender was shocked at how small our mortgage was going to be. "Why, with your income, you could borrow three times as much." This was in 2006 and, even then, we knew the housing market was on shaky ground. So we were prudent and bought a house at a bargain and steadily improved it rather than shelling out for a McMansion.
Congrats on being able to retire soon that's great .
I think that everyone should plan and take action to retire ASAP .
It's kind of sad that many will be working way past their 70s especially since most people don't like their jobs .. I've read it's over 70percent!
That's a cool article pretty inspiring .. The sad part is some CEOs or hedge fund managers make that kind of money in a few months .
It's great that they were able to give and enjoyed their professions .
The money saved and invested can really compound over the years .
Personally id rather have money and know that could go towards being able to work less rather than buying things that quickly depreciate .
Carlos slim , The richest man in the world has lived in the same modest house for decades and doesn't own a yacht .
Warren Buffet is the same way as well .
I think there are many issues with retirement. One big one is that it's focused on the stock market. If you study the rich the vast majority did not become rich investing in the stock market.
This is simply not true. Are you going to be Bill Gates by investing in the stock market? No. But who cares? You can still do quite well investing in pretty plain vanilla investment vehicles. I show examples of how people can do well in balanced mutual funds all the the time. Balanced funds aren't even 100% stocks...more like 65% stocks & 35% bonds.
$10,000 ($833.33 per month) per year invested in the following balanced funds starting 20 years ago and what they'd be worth today (All have gotten 7.93% annualized returns or better over the last 20 years except for Dodge & Cox Income which only got 6.22%):
Vanguard Wellington: $595,651
Dodge & Cox Balanced: $611,266
Mairs & Power Balanced: $608,894
T. Rowe Price Capital Appreciation: $707,013
Fidelity Balanced: $507,942
Fidelity Puritan: $502,234
Vanguard Balanced Index: $489,816
Vanguard STAR: $535,613
Vanguard Wellesley Income: $500,347 (This one is quite conservative 60% bonds & only 40% stocks).
Dodge & Cox Income $397,277 (This is a bond fund, the ultimate in conservative/boring investing).
Actually, the returns would probably have been a bit better as I didn't factor in dollar cost averaging in the bad years....which probably would have added to returns. These are all plain vanilla mutual funds that have been around since the 1980s or longer. So for someone to have 500K by their mid 40s or early 50s is quite achievable. From that point forward, if you keep investing your 10K a year, you'll be up to $1 million in 10 years if your returns are 6% and in 8 years if your returns are 8%. So hitting $1M by ages 55-65 is achievable for the majority of folks, yet few achieve this. Most folks in their 60s only have net worths around 200K-300K, and that includes their houses.
Quote:
Originally Posted by jm1982
Owning a business or real estate (which is also a type of business .ie a real estate investment company) is the most common path.
Nothing wrong with these paths, but they are not for everyone. And you can be a small business owner with a great income and still be broke if you spend it all. It's just that small business owners tend to save a lot more of their incomes compared to people with the same incomes who are employees.
I notice engineers are particularly good savers and they often invest in pretty plain vanilla stock/bond funds. The main thing is they focus on only true needs and invest large percentages of their salaries. The personal finance blogosphere is loaded with engineers who retired in their 30s.
The biggest problem people have in getting wealthy isn't the method (real estate, your own business, stocks, etc.). It's that they prioritize stuff they want to buy over saving. They expect to have money left over at the end of the month after they've bought what they think they should have....but that method usually just leads to being broke regardless of income level.
This former Goldman Sachs exec turned financial adviser pretty much nailed it here: What’s the biggest financial mistake people make?
The biggest mistake isn’t bad investment choices, it’s overspending. Most people are very surprised when they analyze their spending to discover that a lot of it doesn’t reflect their priorities.
This is simply not true. Are you going to be Bill Gates by investing in the stock market? No. But who cares? You can still do quite well investing in pretty plain vanilla investment vehicles. I show examples of how people can do well in balanced mutual funds all the the time. Balanced funds aren't even 100% stocks...more like 65% stocks & 35% bonds.
$10,000 ($833.33 per month) per year invested in the following balanced funds starting 20 years ago and what they'd be worth today (All have gotten 7.93% annualized returns or better over the last 20 years except for Dodge & Cox Income which only got 6.22%):
Vanguard Wellington: $595,651
Dodge & Cox Balanced: $611,266
Mairs & Power Balanced: $608,894
T. Rowe Price Capital Appreciation: $707,013
Fidelity Balanced: $507,942
Fidelity Puritan: $502,234
Vanguard Balanced Index: $489,816
Vanguard STAR: $535,613
Vanguard Wellesley Income: $500,347 (This one is quite conservative 60% bonds & only 40% stocks).
Dodge & Cox Income $397,277 (This is a bond fund, the ultimate in conservative/boring investing).
Actually, the returns would probably have been a bit better as I didn't factor in dollar cost averaging in the bad years....which probably would have added to returns. These are all plain vanilla mutual funds that have been around since the 1980s or longer. So for someone to have 500K by their mid 40s or early 50s is quite achievable. From that point forward, if you keep investing your 10K a year, you'll be up to $1 million in 10 years if your returns are 6% and in 8 years if your returns are 8%. So hitting $1M by ages 55-65 is achievable for the majority of folks, yet few achieve this. Most folks in their 60s only have net worths around 200K-300K, and that includes their houses.
Nothing wrong with these paths, but they are not for everyone. And you can be a small business owner with a great income and still be broke if you spend it all. It's just that small business owners tend to save a lot more of their incomes compared to people with the same incomes who are employees.
I notice engineers are particularly good savers and they often invest in pretty plain vanilla stock/bond funds. The main thing is they focus on only true needs and invest large percentages of their salaries. The personal finance blogosphere is loaded with engineers who retired in their 30s.
The biggest problem people have in getting wealthy isn't the method (real estate, your own business, stocks, etc.). It's that they prioritize stuff they want to buy over saving. They expect to have money left over at the end of the month after they've bought what they think they should have....but that method usually just leads to being broke regardless of income level.
This former Goldman Sachs exec turned financial adviser pretty much nailed it here: What’s the biggest financial mistake people make?
The biggest mistake isn’t bad investment choices, it’s overspending. Most people are very surprised when they analyze their spending to discover that a lot of it doesn’t reflect their priorities.
I definitely agree it's usually overspending versus bad investments .
I agree that the 'vanilla' funds are probably a good bet for most people. Having the money put in automatically definitely makes it a lot easier.
8% return isn't anything to sneeze at , but it seems that real estate has more of a potential to give you better returns. There are other benefits such as using leverage or even doing deals with little to none of your own money. One great deal can net one a lot of money relatively quickly. There is also the ability to pull your money out with refinancing ,something you can't do with stocks.
You are right though that it's not for everyone and it's usually a more active type of investment, versus stock market even with a property manager.
I definitely agree it's usually overspending versus bad investments .
I agree that the 'vanilla' funds are probably a good bet for most people. Having the money put in automatically definitely makes it a lot easier.
I'm glad we agree.
Quote:
Originally Posted by jm1982
8% return isn't anything to sneeze at , but it seems that real estate has more of a potential to give you better returns. There are other benefits such as using leverage or even doing deals with little to none of your own money. One great deal can net one a lot of money relatively quickly. There is also the ability to pull your money out with refinancing ,something you can't do with stocks.
You are right though that it's not for everyone and it's usually a more active type of investment, versus stock market even with a property manager.
Real estate is great, but as you said, it is much more of an active investment. It also takes a lot more know how. And even if you have the know how, you may not have the time to do it. You may not want to answer maintenance phone calls at 3AM that always seem to happen in bunches when you also have a lot going on with your day job / family. Then you have to have the know how to manage and screen tenants, and have the guts it takes to throw them out if they aren't paying and/or are causing problems. Uggh. No way would I want that. Owning enough rental real estate to support yourself either takes a long time or requires you to take on a lot of debt/leverage if you want to get rich fairly quickly. And it's more like running your own small business.
But I do like the Vanguard REIT Index. It has returned 9.55% over the last 17 years, beating the S&P 500 Stock Index's 7.17% over the same trailing 17 year period.
In the most recent Forbes edition of the richest people, some of them made it up from nothing. A LOT of them inherited wealth and from a time when government wasn't deciding winners and losers in economics. It is possible to be successful at something, but it is in a different world now. For every one that makes it big, there are 20 or many more who fail and fail big enough not to be able to recoup. Wealth makes more wealth usually. For every good idea that flies high e.g. Facebook, Twitter there are many other smart geeks who don't get their idea sold to anyone. Is it luck or skill? Both I think.
it's both for sure but it's not about creating the next facebook.very few people end up billionares but a good amount end up multi millionaires with lots of finacial freedom.
it's actually probably harder now to be middle class than in the past but a lot easier to be rich.the internet really is an amazing thing that provides lots of opportunity to make money.it's also a lot cheaper and easier to start a business than it would have been pre internet.
sure it's a lot easier to make money if you already have a lot(although most people would still find a way to **** it up) but sitting around complaining that someone else was born luckier than you wil get you nowhere.
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