How to get rich without getting lucky

https://threadreaderapp.com/thread/1002103360646823936.html

by madmax108 • 8 years ago

647 506 8 years ago

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Mononokay3• 8 years ago

Naval's always sounded a bit like a Facebook quote bot to me.

He reiterates common knowledge in less concise ways than normally said while using the persona of a monk.

...Actually, that can sum up a lot of Tech Twitter.

madmax1083• 8 years ago

Honestly, I think that's true for a lot of VCs. They have to sound like they are smart and know the secrets of the industry so that entrepreneurs reach out to them (and many times on extremely skewed terms). But truth be told, a lot of VCs have been incredibly lucky with 1-2 bets they've made.

Just a couple days ago was an article on front page of HN by Sam Altman about how to run a company, whereas he himself has had one failed startup. Softbank exists more or less because of a huuuuge bet on Alibaba which paid off. In the end, I doubt any of these "How to" articles hold up the test of perseverence.

But survivor bias aside, it's still interesting to see how VCs think, and helps gain insight into their inner monologue.

jacquesm6• 8 years ago

Not all VCs are created equal. We work for quite a few of them and the range of knowledge, connections, personalities, founder friendliness and ethics is quite broad. As a result of that there are VCs that you really don't want to have anything to do with and VCs that it is a pleasure to work with and that go to bat for the founders of the portfolio companies they've invested in with great regularity.

irq11• 8 years ago

A former coworker of mine said this years ago, and it stuck with me:

”Silicon valley is full of people who stepped in shit once, and are therefore now experts on horses.”

tomhoward7• 8 years ago

I once heard PG say something like "It's crazy, but the YC startups that succeeded are the ones who followed our advice. The ones who failed, didn't".

He's never claimed there's anything particularly brilliant about his advice. Indeed he's joked that his presence in office hours sessions could be replaced by a 3-line shell script. "Make something people want", "talk to your users", "spend less money than you make"... that's pretty much it.

I think most of the really good VCs would be similarly modest about the value of their advice.

The principles are really simple and easy to convey.

The hard part is actually doing it.

maxerickson3• 8 years ago

The interesting test is whether anyone can usefully predict "Make something people want".

If no one is predicting that then the biggest thing YC is doing is making lots and lots of deals.

Mononokay3• 8 years ago

At the same time, PG doesn't have this whole "I am righteous and the most intelligent guy around," sort of thing Naval has the impression he is.

HugoDaniel4• 8 years ago

op forgot the "have rich parents","go to an elite school", "be born in a rich country" and some others similar to these.

jstanley3• 8 years ago

This article was "how to get rich without getting lucky", of course those things weren't in it.

HugoDaniel4• 8 years ago

That is the premise behind those points and the ones raised by the op: Luck is never part of the equation, just ask your average rich guy from rich families.

Patient0• 8 years ago

I would recommend reading "How to get rich" by Felix Dennis. He had a sense of a humour, but was quite wise too.

Singletoned• 8 years ago

He's also a really good poet.

tim3333• 8 years ago

Was, sadly. Throat cancer got him.

jacquesm6• 8 years ago

It's a hilarious book but it's not too thick on good advice, the most actionable bits boil down to 'be ruthless'.

Felix Dennis rode a wave and rode it well, there are more Felix Dennises in the world (every European country had their own it seems), so it was more a matter of place and time than anything in particular about Felix Dennis.

I found his take on being wealthy very refreshing, for that reason alone it is a good book to read. But do pirate it, wasting money on books with titles such as 'How to get rich' is counter to the writers wishes ;)

jacquesm6• 8 years ago

I know very few people that got rich without getting lucky and none of them would have been rich if they had followed this list.

The majority of them simply went into finance, consulting or real estate at a young age and invested their income smartly (retrospectively!). After the first million rolls in if you're young enough compound returns will take care of the rest if you can postpone altering your life-style.

tomaha3• 8 years ago

But one important part of their success was to invest their income. I know too many people that use their money to consume. Investing early in your life is what makes the difference. It's very easy to spend it on little things and claim to not have anything to invest.

plop_• 8 years ago

Do you have advices for young people in long term investments ?

Aaargh203186• 8 years ago

I know too many people that use their money to consume.

All those dumb poor people wasting their money on food.

thomasahle• 8 years ago

I know very few people that got rich without getting lucky
[they] invested their income smartly (retrospectively!).

This sounds like a contradiction?

smallbigfish• 8 years ago

To invest means to be somehow rich in the first place.

DEADBEEF• 8 years ago

Well there's the old saying that "luck is where opportunity meets preparation".

...as in "you make your own luck".

infinite8s2• 8 years ago

You missed the "very few people that got rich without getting lucky". With the full phrase both statements are in agreement.

imgabe4• 8 years ago

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

So they followed at least part of the list.

vinceguidry3• 8 years ago

This is a forum full of hackers, and hackers want to get rich by writing code. So this comment is unhelpful.

afpx• 8 years ago

Another strategy I’ve seen work very well:

Find out where high-status or wealthy people congregate for recreation. Pay close attention to their culture, mannerisms, language, and dress. Practice emulating them until sufficiently skilled. Frequent the same places as them until some begin to recognize you and believe you are one of them. Then, make them actually enjoy your company.

In modern times, this would probably be called “networking” or “sales”.

And, then there is marriage. Another ages-old strategy. But, pretty much the same strategy as above.

The rest of the wealthy people whom I personally know worked hard at software companies before the 90s and reinvested in equities, and later, real estate. (These cases could be considered luck, though. They had to be in the right place at the right time. And, that same strategy didn’t work only a decade or so later.)

rc_hadoken• 8 years ago

Isn't the marriage strategy primarily possible for the opposite gender..the prettier one that is.

liftdd4• 8 years ago

I'm 23 so please excuse my ignorance. I've been struggling with the marriage benefits personally. There are the extra single taxes, rates for insurance, etc.

However, in the US, with the amount of divorce (alimony / child support) it seems less than optimal to view marriage as an asset.

Or am I totally off the mark?

ryandrake2• 8 years ago

Yea, I saw the headline and thought: “Guaranteed this is some already-rich guy spouting generalizations and philosophy rather than revealing actual, actionable tactics.” And, well... I was right. I’d like to see someone actually take a normal, unlucky person and connect the dots showing all the steps between this “advice” and money entering a bank account. Now THAT would be impressive.

pascalxus5• 8 years ago

You NEED to check this NY Times article out: "96-Year-Old Secretary Quietly Amasses Fortune, Then Donates $8.2 Million"

https://www.nytimes.com/2018/05/06/nyregion/secretary-fortun...

orcdork• 8 years ago

These read like cold-reading for money - broad generalisations that apply mostly because of their broadness.

pavlov2• 8 years ago

”If you secretly despise wealth, it will elude you.”

How to be a Silicon Valley thought leader: talk like a Catholic’s handbook but replace “God’s mercy” with “wealth”.

jerguismi4• 8 years ago

lol

zeth___8• 8 years ago

I disagree with everything that guy says and as of two months ago I am a millionaire before I turn 30.

Pessimism is what keeps you from following the herd of lemmings over the cliff.

ericjang• 8 years ago

can you elaborate on what you disagree about?

zeth___8• 8 years ago

How much is it worth to you?

55555• 8 years ago

How did you make your money?

zeth___8• 8 years ago

Change jobs every 6 months or less, insist on a raise between each one. I'm earning just shy of 300k now. I don't see it stopping in the next decade either.

jacknews3• 8 years ago

"Wealth is having assets that earn while you sleep."

If you are earning wealth while you sleep, it must be coming from somewhere. Either it is illusory (eg interest, which is cancelled by inflation), or it is being generated by other people working.

"Understand that ethical wealth creation is possible."

Thus, this statement is dubious in the context of "wealth while you sleep".

dirktheman• 8 years ago

Would you consider people who work for you unethical, then?

Aaargh203186• 8 years ago

Looks to me that in his view the people who work for others are the victims.

nopinsight3• 8 years ago

You can create software/automation system that works/creates value for users. As a creator, you can ethically derive wealth from that value even when you are asleep.

Added as part of a reply:

Certain systems create value in excess of individual components you put into it. (That system may include a variety of resources that you pay market costs for, not only just your personal labor.)

The creator of the system can earn that excess value because it wouldn't otherwise exist. There is a term for this in an Intro to Economics textbook I read a long time ago, but I can't recall.

jacknews3• 8 years ago

technically, yes, but you had to work to create it, and probably have to continue to work to maintain it in the face of competition.

If you have created some kind of lock-in which allows you to extract rent indefinitely from some initial effort, then you have some degree of monopoly, which would be ethically questionable.

hyperpallium3• 8 years ago

It's impossible to create wealth without labour. But you absolutely can amplify labour (any kind of tool, harness a horse, build a water or wind mill). And you can also store wealth: labour now, use later (e.g. grainstore).

Neither are wealth crestion while you sleep.

These examples use an absolute measure of wealth, of food. Whereas, labour amplification in our society is neutralized over time: when everyone has the same tool, your labour is no longer (relatively) amplified.

The typical application of these ideas to todays society involves a moat or artificial barrier that prevents your labour from being commoditized, while you benefit from everyone else's labour, which is commoditized. Typically, "you' are an in-group, with special knowledge and powers.

imgabe4• 8 years ago

Paying people to work for you is unethical?

executesorder662• 8 years ago

Some would argue that if you make a profit from it, then yes it is unethical.

If worker A makes product P, and you sell product P for $1000. And then you pay worker A $800 for the work, you make $200 profit.

Worker A did $1000 worth of work, but only got paid $800. You did $0 worth of work (with regards to actually making P) but you got $200.

Hence it is unethical.

iicc• 8 years ago

The Internet has massively broadened the possible space of careers.

What does "space of careers" mean?

v3gas• 8 years ago

Space is a concept from math which basically means dimensions. It's just a fancy way of saying "there are more career opportunities now because of internet".

tylerhou2• 8 years ago

Or, probably more accurately, mathematicians borrowed the analogy of space to describe sets.

peter_retief• 8 years ago

Great ideas on power, money and influence but you really need to be lucky as well ;)

Cthulhu_• 8 years ago

Lucky to have the personality and intelligence to do the things he mentions, for example.

hyperpallium3• 8 years ago

If we define rich as not having to work, it could be achieved with a low income, but low expenses. At an extreme, perhaps, self-sufficiency, using knowledge and technology (even robots?) instead of back-breaking stope subsistence farming.

You would be rich, but also poor.

voctor• 8 years ago

Yes, someone can be considered poor because the only thing he/she got is money.

jerguismi4• 8 years ago

How do you define being poor? My definition: having to think about money or surviving all the time. With stable low-income job or even with small savings without job, you can live quite stress-free life if you keep your living expenses low. Meaning that you just have routines and hobbies that are inexpensive - cook home, live in cheap area, commute with bicycle, etc.

anoncoward1113• 8 years ago

This is basically my life right now and I am loving every single second of it.

Another tip here is to surround yourself with people who also love having low expenses and are adventurous and open minded.

My gf originally wanted to plan a vacation that involved a flight, hotel, and nights out on the city.

When I took her car camping on the beach 45 mins away from our job and cooked her dinner on the beach, for an all in budget (gas parking food etc) of like $27, she never looked back from her newfound hobby XDD

gnode2• 8 years ago

I think a better term is financially independent. I would say a better definition of being rich is having plentiful wealth such that you enjoy freedoms well above what's typical of the general population, or ones personal expectations. Being poor is the opposite; having wealth that limits your freedoms below your expectations. This is of course relative, but rightfully so.

keiferski3• 8 years ago

I’m going to take a contrarian view and say: figure out why you want to be rich, first. For most people, money is a proxy for respect, status, power, security, social skills, romantic attraction from others, free time, or otherwise.

If you can ignore the constant “only rich people are meaningful human beings” message that is blared 24/7 from western culture, you might find that it’s easier to just go after what you want, directly.

ryanwaggoner6• 8 years ago

I think he hints at this at the very end.

hyperpallium3• 8 years ago

When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place.

zuck9• 8 years ago

How does money get you social skills?

trevyn2• 8 years ago

You can pay people to coach you and to practice with in a low-stress environment.

Interestingly, in this same way, money can also buy happiness, through happiness coaching. :)

keiferski3• 8 years ago

If you’re poor and rude, you’re just an asshole. But if you’re rich and rude, well, then you’re “eccentric.”

Ma8ee• 8 years ago

Maybe you don't need social skills when you are rich enough.

pavlov2• 8 years ago

... the constant “only rich people are meaningful human beings” message that is blared 24/7 from western culture ...

I don't think it's only Western culture that is to blame. Middle Eastern, Indian and Chinese cultures seem to have even more ingrained versions of this core assumption.

maehwasu• 8 years ago

Correct. Western culture is probably the least materialistic of all major cultures (500M+ people).

adrianN• 8 years ago

Any tips on getting security+free time without becoming rich first?

keiferski3• 8 years ago

1. Keep expenses low, stay out of debt, the usual.

2. Avoid industries with boom and bust cycles. Additionally, avoid career paths that may become irrelevant in 20-30 years.

3. Instead, learn skills that will always be useful, regardless of the state of the economy. Typically this means the trades, but be careful there - certain trades are too dependent on a good housing market. Most medical fields (like nursing) are also pretty secure. Also consider boring fields like accounting or certain governmental positions. Many government jobs are a bit more stable than the open market - you are sacrificing income for reliability.

4. For bonus points, pick a field that allows you to easily freelance. In the future, when you have enough money and want more time, you can scale your work hours down.

anoncoward1113• 8 years ago

Depends on your definition of those two things.

Many people in developing countries have less than $1,000 in monetary/material assets, but have plenty of free time and a decent level of security.

They may not have the nicest house in the nicest location (a tin or concrete square box on a dirt road in a rural location with no jobs), but they are not in any immediate danger in terms of crime or disease.

Another way to create this by proxy in the US is by living in a camper van or large car or perhaps a cheap used RV and parking in one of the millions of free locations we have in the USA (BLM land, national forests, street parking, private land negotiated with a friendly owner).

But if you were wondering like, you know, where can I get a free house with no property taxes in a nice city neighborhood with free health insurance, I'm afraid it doesn't exist unless you are the child of a rich and loving parent.

jerguismi4• 8 years ago

Live in country which has generous welfare system (scandinavian countries). Here I think people have all the basic needs pretty much covered. You can only get your things messed up if you get hooked up on drugs or alcohol.

Though to me living here it seems that people are still all the time complaining and demanding more and more, though we have more safety nets than about any other place on earth.

simion314• 8 years ago

If you can work remote as a developer you can find a cheap home, you reduce your spending, work part time. You will have enough remaining time.

Then the problem is to find a way to be happy enough, you can have enough money but be unhappy.

fwdpropaganda• 8 years ago

I guess you didn't read until the end.

When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place. But that's for another day.

mmcconnell16183• 8 years ago

I read the article as pro-wealth, not pro-money. The author says that wealth is ownership of assets that generate money while you sleep. Ultimately, I see wealth as freedom of time. But there are two other big categories of wealth: health and social network. If you have FU money but also brain cancer or live on a planet by yourself, the money doesn’t mean much.

j2bax• 8 years ago

If you have FU money but also brain cancer or live on a planet by yourself, the money doesn’t mean much.

Definitely a sobering thought. How rich I really am...

whatshisface• 8 years ago

Here is a list of reasons that "enlightened" (i.e. not scrooge) people would want to be rich:

- The ability to secure the best medical care for yourself and your family in a country where this takes money to do.

- The ability to walk away from abusive employment relationships without a second thought or any stress.

- The ability to engage in high-level economic actions, the kind that aren't designed for your failure. (Buying a few franchises vs. buying a payday loan)

- The ability to, fundamentally, own yourself instead of being forced to act according to the interests of people with the money to pay you. Maybe you'll use that time to act in the interests of people who can't pay you.

yayana2• 8 years ago

It doesn't sound like you want to be rich, it sounds like you want to move to northern Europe, probably Scandanavia.

pc862• 8 years ago

Assuming that "rich" means "don't need to work at all, for the rest of your life, to keep a roof over your head and food on your table," none of what you listed require being rich.

The ability to secure the best medical care for yourself and your family in a country where this takes money to do.

I can only speak to the US but this is much more an insurance issue than a wealth issue. When I made $30k a year I had a ~$75k surgery and it cost me about $1200 all in, including follow-up copays with the surgeon, because I had good insurance through my employer. I probably had $15k in credit card debt at the time and rented a $400/mo room in someone else's house - certainly not rich by any stretch.

The ability to walk away from abusive employment relationships without a second thought or any stress.

This is all about skills, not wealth. Most folks on HN could leave their job today and walk into something making 95-120% of their current salary without much issue.

The ability to engage in high-level economic actions, the kind that aren't designed for your failure. (Buying a few franchises vs. buying a payday loan)

You don't need to be rich to get a franchise loan.

The ability to, fundamentally, own yourself instead of being forced to act according to the interests of people with the money to pay you.

This is so esoteric it's hard to even know what you're trying to say here. I'm sure you could find plenty of people with $10+ million net worths who feel beholden to act a certain way in the interests of certain people.

isolli4• 8 years ago

I would also add: The ability to live in a nice family home in a nice neighborhood. Which is on track to become prohibitively expensive in most places.

toweringgoat• 8 years ago

Actually, an "enlightened" person most likely wouldn't care about those factors. They'd be happy with a hut in the woods, depending on donations or foraging for food.

But as yayana points out, none of those factors depend on being rich in well run countries. (There are alternatives to the scandinavian models with a bit less nanny state that also achieve all of those factors, but the Scandinavian countries are the most famous for letting you not care about medical care and bad employers.)

tomhoward7• 8 years ago

People seem to be forgetting this one: to better the world by building or investing in new companies that do good things for their customers, employees and society, or by contributing to important non-profit causes.

RikNieu2• 8 years ago

It's like you know me personally...

bootsz3• 8 years ago

Reminds me of this quote, can't remember by whom (maybe Tim Ferris?) something along the lines of: "You don't really want a million dollars; what you really want is the kind of life that you think you need a million dollars to have"

sshtunnels• 8 years ago

I wonder what he means by that. To me it's the exact opposite. I don't want anything extravagant - none of the things one might picture when one thinks "millionaire's lifestyle"; no big house, no luxury car, no exotic vacations, etc. The only (or at least primary) thing I'd like is the security to pay my modest expenses and cover any potential emergencies in perpetuity, without relying on a job and without moving to a cheap country to reduce living expenses (I would like to stay close to my family in the US). For that, I do need a million dollars, and even that is barely enough.

sershe• 8 years ago

To start, basically regardless of a person, money is time (at a certain standard of living). Too many people internalized working for money as something expected and/or inevitable... I'm not saying it's not normal, or unfair or bad; it's simply something you put up with, like driving - if your car drove itself, you'd never drive except perhaps for fun occasionally.

Even if you love your job and would do it if you were wealthy, it's still the same analogy... it's much better to go drive from A to B for fun every day you want, than to have to drive from A to B for work every day. In fact, thinking of my own situation, I like my job and I like to code in my free time... but both being burned out occasionally and just having less free time means I do much less of the latter than I want to. So instead of writing some code I find interesting I have to fix somebody's legacy systems at work... or even create something nice at work, but less interesting to me (although more commercially viable, obviously) than what I would do otherwise.

xstartup• 8 years ago

While he certainly knows how to sound like a guru. There is a far easier way to create wealth out of thin air than reading these tips.

parf02• 8 years ago

please enlighten us.

hguhghuff• 8 years ago

Is Naval rich?

I think the most valuable advice in getting rich is from people who are moderately rich.

Advice from people who aren’t rich is stupid.

Advice from billionaires seems irrelevant because their circumstances are so exceptional.

How did the friend of a friend make $20million ... there’s an interesting question.

I could give you advice on how to not get rich.... just make what are in hindsight a constant flow of wrong decisions about things that could have led to financial gain. I’m an expert at that.

ryanwaggoner6• 8 years ago

My guess: looking at his investment track record, Naval is probably quite rich (8-9 figures) and he spends a lot of his time dealing with other pretty rich people, both successful founders and other rich investors. Just a guess though.

Edit: https://angel.co/naval

Investor in Uber, Twitter, Postmates, Yammer, and about 60 others. Wouldn’t surprise me if that’s a fraction of the total. Not to mention cofounding AngelList. I doubt he’s scraping by :)

paulsutter• 8 years ago

Surely at least 10 figures (early investment in Uber has returned 10,000x)

mrnobody_67• 8 years ago

$100m+ for sure with that portfolio. And he got liquidity on his Uber investment with the recent deal that was offered to shareholders.

jacobush• 8 years ago

We are just helping out our fellow millionaire friends, by reallocating wealth to them. :)

tomhoward7• 8 years ago

He was pushed out of the startup he co-founded (Epinions) and walked away with very little. He then sued the the VCs [1], leading to an out-of-court settlement, and used that settlement money to start AngelList.

So he went from being not-rich 10 years ago, to being very rich now due to his success with AngelList and related investments.

I think the advice he shares in this post is consistent with how he's built his own success. Both Naval and his brother, Kamal, have long been writing and speaking about concepts like stoicism, mindfulness and other techniques for developing good judgement and emotional health, so it's likely these ideas were imparted via their family and have influenced their thinking for a long time.

[1] https://www.mercurynews.com/2013/02/06/naval-ravikant-of-ang...

siberianbear• 8 years ago

I got rich in Silicon Valley from my equity compensation. I bounced around various companies and startups. Two of them were successful and had public offerings. Of those two, one was spectacularly successful.

Sure, luck played a role. But my pure grit and tenacity also played a role. Taking on hard bugs and solving them played a role: I solved a lot of hard bugs that others couldn't solve. Spending Saturday afternoons at the library reading books on topics like software program management and phase locked loops played a role. Having some talent at hiring and managing people helped. Spending my teenage years writing clever little programs in 6502 assembly language on my Commodore 64 instead of smoking weed and partying helped. Having a strong knack for math and computer science helped. Living simply and reinvesting my profits helped.

In my 20s, I couldn't understand why people at my same wealth level in Silicon Valley were often driving $100K cars and engaging in other types of ostentatious spending displays. I was constantly surprised by the people making lots of money who didn't really have any clue how money works. Wall Street has its own game to separate you from your wealth, and they'll do it if you don't understand how the Warren Buffets of the world value equities and read balance sheets.

You have to get up and out and play the game to win. If you play, you'll lose a lot of games. When you lose, don't lose the lesson. There is a secret message embedded in every failure. Figure out the message, get up and go at it again. Sometimes, you'll suffer a humiliating failure a few more times before you get the lesson.

Of course, someone who is too lazy to go play the game will ascribe success to "luck." And the person who just can't "get" the secret messages embedded in their failures will ascribe success to "luck."

I've been dirt poor. For a whole year at the university, I slept on a camping pad on the floor because I couldn't even afford a real mattress, much less a bed. I've also been middle class, and now I'm rich. It's clear that being rich is better than being middle class, and being middle class is better than being poor, but being rich has its own problems. Even if you don't advertise your wealth, malicious actors smell it on you and try to separate you from it. Rich people sometimes say things like, "My only real friends are the ones who were my friends before I got rich." I get that mindset completely.

Money lubricates a lot of things in life, but it doesn't completely solve very many issues. The one single thing that I appreciate the most about money is that I'm no longer obliged to sell my own time just to survive. I spent my afternoon today, a weekday, taking a walk in the park, meeting a friend for a late lunch, going to the gym and then reading a book. In my previous life, I would have been stuck at work and wouldn't have done any of those things.

I read through the list and agreed with every item. Some are very broad, and I'd add some caveats if I were discussing them in detail. The one that made me think the hardest was "Ignore people playing status games. They gain status by attacking people playing wealth creation games." That's true, but sizing people up and figuring out what "game" they're playing is part of being successful.

dnomad• 8 years ago

Sorry, but it's a bit rich when people who literally won the lottery call for hard work. The reality is you got lucky. There were probably many people who worked harder than you and saved more than you who will never enjoy anything close to your success.

And that's okay.

All wealth is based on luck or coercion (really, just coercion). This is trivially true if you understand what wealth is: claims on the labor-time of others. Since most people aren't in the habit of freely giving away such claims in order to accumulate such claims you either need a gun or you need to stumble upon something that other people need so much they'll surrender their labor-time -- literally they're time on earth -- for. I say stumble upon because presumably when you were born you didn't "own" much of anything. (And yes, to complete the analysis, the only thing that prevents others from simply seizing whatever it is you've lucked into is somebody else has guns and stops them in return for a cut. It's coercion all the way down.)

And that's okay. While capitalism doesn't alter the essential nature of wealth -- it's not magic -- it does strongly incentivize those with wealth to try and accumulate more wealth. Capital demands to be put to work immediately, always, 24/7, to acquire more capital.

If you understand this then it should be clear the article is silly and there are and there will always be only three ways to get "rich" (which again, just means to accumulate labor claims).

1. Be lucky.

2. Get some guns, some men, and declare that you are now rich. (This is what people mean when they say sovereigns can "print money" or that sovereigns cannot default. The wealth of sovereigns is structurally inherent. As Keynes might say, a sovereign is wealth, that is, it is labor claims.)

3. Go to work for those who are already wealthy and make their lives better, that is literally make "the rich richer."

The article rambles and uses a lot of silly words to say #3. And while the author may mention society understand that whatever you want to do "for society" will require you begging for capital from rich guys like the author.

When I explain this to bold young college students who are very hesitant to go to work for the "Man" (in finance or law) it always leaves them very depressed. To lighten the mood a bit I will say this: not all capital is subject to free, anonymous exchange (the logic of the market). This is the key insight of Marx: there are relations that can produce wealth (labor claims) that do not require price signals. Which is just a fancy of way of saying you can actually make yourself quite wealthy without buying/selling anything. (Unless you're one of those insane Randroids who believe when a mother sings to her newborn baby she is somehow profiting from the "exchange.") The interesting thing about what Marxists would call such "non-reified" capital is that it can have tremendous though hard to measure effects and it can operate at global scale eg open source software and many world religions.

sokoloff6• 8 years ago

"I am a great believer in luck, and I find the harder I work, the more I have of it." -- Thomas Jefferson (apocryphally)

morgancmartin4• 8 years ago

Wouldn't you agree that the harder someone works, the greater their chance of becoming rich?

You seem to argue that the OP has absolutely no claim to the wealth that he has worked for and his preferable situation is due entirely to luck. This is of course preposterous and easily disproved, so I'm curious to know what your answer to this question is.

Assuming your answer is, "no, not entirely" then my follow up question would be, do you believe that his situation is due _mostly_ to luck, and only marginally to his hard work? This is a more interesting question and one I would be interested in discussing assuming it's your take on the matter.

Edit: a word

avoutthere• 8 years ago

I read through the list and agreed with every item.

I'm not particularly wealthy, but I agree. And you have my sincere congratulations on your success, which I, unlike others, recognize as the product of your hard work and risk-taking.

snarf21• 8 years ago

Not saying you aren't talented or hardworking but this is strictly survivorship bias. I would bet that there are other people who worked even harder than you but didn't get rich due to something outside their control. It also seems like you are smart enough to not endlessly chase even more and be happy with the largesse you already have so kudos to you for that.

wilsonnb5• 8 years ago

Having some talent at hiring and managing people helped.

Luck.

Spending my teenage years writing clever little programs in 6502 assembly language on my Commodore 64 instead of smoking weed and partying helped.

Lucky enough to grow up with access to a computer in a time when that wasn't common.

Having a strong knack for math and computer science helped.

Luck again.

joaomacp• 8 years ago

Then what isn't luck? Everyone reading this thread is lucky, since they have access to the internet, and were lucky enough not to be hit by a car and killed before in their lives.

You can still improve your chances substantially.

frockington6• 8 years ago

All of those are skills and trait the poster has, not luck. Your logic is concluding that the poster drinking enough water to survive is luck

icedchai• 8 years ago

Are you saying everything is luck? come on...

My dad taught me about investing when I was a teenager. I actually applied this for the next 20+ years. Was this luck?

refurb2• 8 years ago

You argument is not a worthwhile one.

No matter the example, you could always narrow it down to "luck".

"Lucky you didn't get run over by a car"

"Lucky you didn't get cancer and die"

"Lucky WW3 didn't start and destroy your country"

What's the point?

indescions_2018• 8 years ago

>> Study game theory

And you start seeing mini prisoners dilemmas in all interactions. Maybe dated, but still loads of fun: Game of Life John Conway's Winning Ways For Your Mathematical Plays

https://annarchive.com/files/Winning%20Ways%20for%20Your%20M...

I'd add probability theory to the mix. Computer Age Statistical Inference is a modern classic

https://web.stanford.edu/~hastie/CASI/

RickJWagner• 8 years ago

There's a lot of great advice in that post, but too much to digest in one pass.

The author is right-- anyone can become rich, if they simply spend less than they earn and invest it for the long run. It's been proven over and over again.

zer0faith• 8 years ago

Money is dumb but it is a necessity to move forward in life. Without it we can't provide for our family, possibly not have a family or have the basic every day needs. We become bound to this society that is so focused on money and status that we forget about the little things. Little things like memories, friends who are always there, pride in something you've created, or things you feel at your core. Those things are true wealth and not "having assets that earn while you sleep".

s-shellfish3• 8 years ago

Being poor reminds me of PTSD honestly, though. You get caught up with wealth and status because every new decision brings you back to a past where your existence was chaotic. It's like the chaos of the past maps onto how you interpret the present. Reminders are everywhere in culture, and I think people get caught up in these games of dominance because the experience of poverty is traumatizing. Even if everything in your life is perfect and functioning optimally, there's still that fear - can't delete memories, and honestly, I think that's the primary motivator for those who hoard wealth in a completely unreasonable, counterproductive fashion. Tragedy and anger, these things push us in directions we do not have perfect control over. These things are hard to heal from, but it can be done.

zeusk• 8 years ago

The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.

These are some of the least accountable people I know.

frockington6• 8 years ago

I had the same thought, all 4 of these people have F you money and publicly do whatever they want with zero reprecussions

11thEarlOfMar4• 8 years ago

The highest probability for success for the 'everyday person':

- Earn as much as you can from your own work. Take a 2nd job, change to a higher paying job, ask for more responsibility and a raise at your current job, go back to school for a more lucrative degree, ...

- Spend much less than you earn. Economize, share an apartment, buy an inexpensive car, shop at Trader Joe's and Costco, ....

- Learn how to invest. This is really important. The most deliberate and highest probability of ultimate success is likely mutual funds. Individual stocks can goose it, but should only a small portion of your wealth, as they start to bring a luck factor into the mix ...

- Protect your investments. Health insurance is really a must in the US, might be a must elsewhere. Work for a company that offers health insurance. Car insurance is a must. Other insurance is probably wise.

- Be patient. The compounding effect of investing takes a long time, but once it gets rolling, it's pretty much unstoppable.

nojvek• 8 years ago

Health insurance is a must in US because the entire country systematically doesn’t give a shit about how inefficient it is. I guess some people make fat bucks at the expense of people’s lives.

My pay + company benefit == $650/month to Anthem.

I still end up paying $5000 for all pre-pregnancy costs out of pocket and the baby isn’t even here yet.

In Australia it would be 10% of that, purely because they got their shit together a long time ago.

Someone12344• 8 years ago

In the US insurance companies themselves are meant to fight to keep prices down, but right now due to a miscalculation during the creation of Obamacare ("Patient Protection and Affordable Care Act") they're incentivized to INCREASE medical costs...

Why? The 80/20 Rule ("Medical Loss Ratio" rule).

The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs.

Meaning insurance company executive wages can only come out of 20% of your premium, so if the CEO wants that pay increase they have to increase overall healthcare expenditure, premiums, and by extension their 20% cut.

While the 80/20 rule was a fantastic idea on paper, it changed insurance company's incentives in such a way so that premium increases are good for them.

You might be thinking "but in a competitive landscape people would just switch!" but there's nothing competitive about health insurance, people cannot even pick their own (their employer does) and most employers only offer two of the larger ones from that state.

indemnity• 8 years ago

I’m in New Zealand, have a six month old son, we paid $0 from finding out she was pregnant up until going home after she stayed three days in the hospital to get comfortable with feeding him (there were no complications, no caesarean).

All checkups + scans pre-birth were free.

It would have cost money only if we decided to go for a private obstetrician, I think it’s the same in Australia.

So if it’s one of the 90% of births with no complications, going for the free public option just makes sense.

Someone12344• 8 years ago

shop at Trader Joe's and Costco

Huh? Was that trying to say save money at the supermarket? Because those are two stores I don't associate with saving money, they're stores that offer premium products at reasonable prices, but they aren't going to compete with actual discount retailers.

It is just really odd examples/usage in that context...

k__2• 8 years ago

Also, this only helps if you're living in some place where food is expensive.

ryanSrich• 8 years ago

The lowest end Grocer in my area is Safeway. Trader Joe's is still cheaper.

ethagnawl• 8 years ago

N=1, but shopping at Trader Joe's in NYC will save you money -- if you can bear the crowds.

11thEarlOfMar4• 8 years ago

Yeah, for sure you can find $60k diamond rings and $30k cognac at Costco (not kidding, see Costco in M.V.). But you can also get the least expensive per weight corn flakes, milk, potatoes and beans. And croissants...

I used those examples as a versus to the daily $7 Starbucks breakfast that many young folks seem to go for.

falcolas9• 8 years ago

Counterpoint: Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range. Investing works mostly because of the current trend of artificially propping up the stock market. Any failure in your investment strategy leave you in the same boat as the current boomer retirees who are trying to get back in the workforce.

Not to mention, your life is going to be pretty miserable if you're working two jobs and spending a lot of effort on living frugal. There's just something off-putting about the thought of spending decades living frugally and working yourself to the bone so you can retire and finally have fun.

The exemplar folks who advocate doing this, a'la Mr. Money Mustache, are real pieces of work too. They tend to hide the fact that they went into the process with an inheritance to fund their their nest egg and are working nearly full time in their "retirement" as paid frugal advocates.

11thEarlOfMar4• 8 years ago

I have no mustache and was born with no silver spoon, Had to work my way through college. This approach to building wealth worked for me.

encoderer2• 8 years ago

Investing works mostly because of the current trend of artificially propping up the stock market.

This belief could cost you a lot of money.

dasil003• 8 years ago

They tend to hide the fact that they went into the process with an inheritance to fund their their nest egg and are working nearly full time in their "retirement" as paid frugal advocates.

Whoah, do you have evidence of this? I mean, yeah, some people have certain advantages, but if they are being paid for advocacy and if it's a trust-fund baby thing that would be really interesting.

On balance though, I'm not really opposed to a message to live frugally. We live in a culture that continuously bombards us with materialistic advertising, and this doesn't really lead to long-time happiness. I'm skeptical that being frugal implies some kind of deprivation or overwork. In fact if you're frugal then theoretically you can afford to work less.

bootsz3• 8 years ago

Not to mention, your life is going to be pretty miserable if you're working two jobs and spending a lot of effort on living frugal.

Agreed. A few follow-up points:

1. Frugality isn't a binary state. There's a balance to be struck. Some people really do waste money on frivolous things that don't actually bring them much real satisfaction, and in that sense being more frugal is definitely worth it. But once you've eliminated most of the excessive spending habits, the payoff of frugality really starts to drop aggressively as you cut out more and more (diminishing returns). Skipping your $4 latte isn't really gonna change the game for you if you're trying to become Bill Gates.

2. Frugality to me is kind of the "lowest common denomitator" of financial strategies, which is why so many "experts"/"gurus" tend to preach it. "Spend less than you earn" is a dead-simple concept and worthy advice to a certain extent. But trying to increase wealth more and more by cutting out less and less is not really a great long-term strategy, especially if you're interested in achieving significant gains in wealth. It's arguably much more effective to invest time and energy into things that will increase your earning potential over time rather than fretting about small guilty pleasures or trying to squeeze a couple more basis points of return out of your portfolio of mutual funds. Things like: gaining a valuable skill that's in-demand; honing and improving those skills over time; taking on leadership/management responsibilities; starting a business; meeting and forming relationships with people who are smart & successful or at least aspiring to be; etc.

See also: https://xkcd.com/947/

rdiddly• 8 years ago

If I recall right, Mr. M.M. defines retirement basically as financial independence, regardless of how you spend your time. Working because you want to is very different from working because you have to, so I'll buy it.

And as far as I know, he and his wife earned their money in tech jobs. The math is believable: let's say your household makes $130,000 a year (which I haven't done), and lives on $30,000 a year (which I've done... not fully voluntarily mind you but it wasn't hell on Earth either). You're saving $100,000 a year. In about 10 years you're a millionaire and could continue living on $30,000 forever without working. (Assuming 3% interest, which is doable without much investing effort, luck or expertise.) That's financial independence. Keep working at that point, and you only improve your lot. You can earn $10,000 a year as a full-time musician and live on $40,000. Or stay in tech and put 100% of your salary into principal while interest or dividends pay your living expenses.

Increase your monetary needs, i.e. your financial dependence, and it takes longer. Which is what most people do.

20years5• 8 years ago

This is a good counterpoint and something my Dad points out often. He was very frugal, worked long hours and saved as much as he could so him and my mom could have a good retirement. She passed away at 42, so that never happened. He has so many regrets and wishes he invested more of his money & time in experiences with her while she was alive.

I think there needs to be a balance. The trend of working crazy hours to save as much as you can, living overly frugal, etc. will not always lead to happiness or fulfillment. I like to think of it as how can I optimize my time and finances for "life" rather than retirement. That doesn't mean I don't have a nest egg, it just means that not everything is going into that nest egg.

gascan6• 8 years ago

spending a lot of effort on living frugal. There's just something off-putting about the thought of spending decades living frugally

There's a whole range there. You don't have to live on ramen. But you can be really aggressive about insurance premiums, utility bills, etc. You can learn home & auto repair & maintenance. You can make major life structure choices (Can your family live with one car?). These all can make a huge impact on your finances, and don't hurt the way perpetually living like a college student does.

Counterpoint: Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range.

If this is the "get rich without getting particularly lucky" advice, perhaps we should assume it's also the "get rich without getting particularly unlucky" advice. There's an endless list of terribly unlucky things that would ruin just about anyone, but don't generally bear planning for.

segmondy4• 8 years ago

You can have lots of fun living frugal. Living frugal doesn't mean not having fun. Having fun is really cheap and free if you set your mind. Walking, hiking, bicycle ride, board & card games. Hanging out with friends at home and watching Netflix. Cooking at home and drinking at home. These are fun and cheap, the fun in it depends more so on the crowd. Going out to party can also be fun but this becomes the difference in spending $20 at home vs $200 in one night. Frugal is buying an old reliable honda/toyota for $3,000 vs picking up a $40,000 entry level benz. So what if you die before you make it? So what? We are all going to die.

Retric• 8 years ago

Saving 60% of your income is an achievable goal.

Start at say 25 and that's going to give you a much better than 1:10 chance of being able to very comfortably retire someplace cheap. If nothing else 1 year of work = 1.5 years not working, but at 4% return (over inflation) and 15% investment taxes you can retire in 15 years.

tyrust3• 8 years ago

Your chances of dying before "making it big" and retiring are somewhere in the 1-in-10 range.

I'd like to see how you came to this conclusion.

Painting with broad strokes, one can retire after working in tech for 15-25 years. Start at 25 and they are done by 50. Current death rates for dying between 25 and 50 are less than 0.7% [0]; that's not even correcting for the fact that the wealthy likely have a reduced mortality rate [1].

[0] https://www.cdc.gov/nchs/products/databriefs/db293.htm#age_s...

[1] https://scholar.harvard.edu/files/cutler/files/jsc160006_01....

test65542• 8 years ago

There's nothing off-putting about living frugally and taking care of your financial health. Working yourself to the bone is not necessary, but stopping and forming good financial habits that last a lifetime is a great thing to do. Just like there's nothing off-putting about becoming fit and taking care of your physical health. However you can over-do it on diets and exercise too.

skookumchuck5• 8 years ago

current trend of artificially propping up the stock market

I've been hearing that forever. Yet still the market goes up an average of 7% per year after inflation.

Any failure in your investment strategy

You'd still be doing well with a diversified portfolio even living through the 2000 and 2008 crashes. The 100% guarantee of failure is to do nothing.

ramen-san• 8 years ago

The reality is you need to increase your top line earning power. Working for decades earning average compensation for your location will get you an average outcome (which means a late in life, short retirement, at best). You need to super charge your earnings and savings for a number of years. Ideally through doing higher value work, as opposed to simply working more hours.

If you’re not making enough, and having financial flexibility is important to you, then considering a career change is in order. You might need to go down before you go up. Invest in yourself through education and experience and leverage that to get into a higher paying path (see more on this here: https://ramenretirement.com/2018/04/30/wealth/)

Once you have some real savings and wealth, then it’s all about investing it properly to generate inflation protected passive income (IPPI). I prefer real estate for this (see here for more on RE investing: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). I don’t think enough people consider alternative investments. Putting all your eggs in public markets is a low cash flow proposition, along with lower long term returns (see how returns compare here: https://ramenretirement.com/2018/03/18/ultimate-guide-to-rea...). If you have excess savings, you don’t need all that liquidity and should consider less liquid investments that might have higher returns: https://ramenretirement.com/2018/02/23/youre-too-liquid/

Lastly, people talk about the 4% rule, but that’s bullshit for a whole host of reasons: https://ramenretirement.com/2018/01/21/4-percent-rule/

Save money. Build wealth. Invest it wisely, considering alternatives other than the stock market. That’s the path. Simple, but not necessarily easy.

marketgod6• 8 years ago

Look at the S&P 500 for the last 100 years. Does it always recover. Your scenario is far out and would require the entire society to change. Might as well take advantage of the fact you know this information, if true.

tru2changes• 8 years ago

A simple investment thesis of investing in a low index fund (S&P 500) which has yielded about a 9% return over 50 years would product result most would find supremely satisfactory. Consider this, $10,000 compounded over 50 years without any additional capital and without taking any capital out would yield a return north of $25 million. However, the hardest part is not reacting emotionally to market dips and irrationally withdrawing your funds before the compounding machine really works. The other challenge is no one wants to get rich slow.

ryandrake2• 8 years ago

Hmm... I’m still sitting here waiting for that “magic” of compounding interest to take effect. So often HN (and r/personalfinance) investment advice reminds me of the ol’ Draw the Rest of the Owl meme[1]. Just “do mutual funds” and you’ll one day be a millionaire because Compounding Interest. Ok well thanks to a few recessions, poor timing of grad school and bouts of unemployment, my retirement is not much more than what I put into it. So there seems to be some other secret step between “buy mutual funds” and “retire comfortably“ that I’m missing...

1: http://i0.kym-cdn.com/photos/images/original/000/572/078/d6d...

11thEarlOfMar4• 8 years ago

'bouts of unemployment' this is bad luck and you are correct that it can take the wind out of anyone's sails.

Looking at the math, it's not difficult to find a mainstream mutual fund like FCNTX that has been pretty big for a long time. Since 1993, 25 years ago and encompassing both the dot com bust and the sub-prime catastrophe, it has returned, on an annualized basis, around 9%. I use that example because it's a pretty mainstream fund that has been highly rated by Morningstar most of those years, so it isn't hard to identify it as a fairly safe place to get excellent returns. I've been in it for most of those 25 years and when I first chose it, I was for sure a novice at investing. Note that today, it is only one of several funds in multiple sectors that I hold, I've diversified over time.

There really is no way to get rich quickly that does not involve a large dose of luck. The <30 multi-millionaires in Silicon Valley tilted the odds in their favor via a variety of means, but I'd guess that for every example of those people, you'd find dozens who moved to the area, worked their asses off in startups for a few years and then crashed and either settled for a regular job or moved elsewhere.

graedus2• 8 years ago

Ok well thanks to a few recessions

I'm interested in this guy's[0][1] approach to take most of the downside risk out of recessions/bear markets/crashes compared to buy-and-hold. Basically, start with a diversified portfolio, and when any of them closes below their monthly 12mo moving average, sell it and buy treasuries.

I'm sure there are thousands of more sophisticated models out there, but the nice thing about this is its simplicity - minimal management, just rebalance once a month according to a single rule and forget about it. Looks like it works well, backtested against lots of historical market data sets.

[0] http://michaelritger.com/2017/10/19/tactical-asset-allocatio... [1] https://www.youtube.com/watch?v=YGnNGuo5ywg

pascalxus5• 8 years ago

You have to wait a really realllllly long time.

marketgod6• 8 years ago

Look into the options market. Especially in choppy markets you can make a lot of money.

Edit: To add to this instead of using the mutual funds as a store value and being scared of holding stocks, you can buy puts as protection on your stock. Or you can buy spreads on stocks you like.

hoechst2• 8 years ago

this is way better (and more real) advice than a collection of disjointed, pretentious one liners.

empath75• 8 years ago

Don't get sick. Don't have kids. Don't get laid off. Don't have any unplanned emergencies that wipe your meager savings out. Don't enjoy life now.

orasis• 8 years ago

Read MJ Demarco’s book “Unscripted” and you might come away with the opposite opinion.

jandrewrogers• 8 years ago

Even simpler, it is an equation with three variables: income, expenses, and rate of return on savings. An important point is that you do not need to hyper-optimize all three variables to achieve a good outcome, which makes it adaptable to many lifestyles and circumstances. Hyper-frugality is not the only path. There are multiple viable strategies that can be built around optimizing one or two variables and paying minimal attention to the others.

Frugality (minimizing expenses) is the easiest strategy to execute and it covers the broadest range of individual situations.

I know some engineers that take the approach of aggressively maximizing income, which requires a different kind of investment/sacrifice, allowing them to achieve their goals without hyper-optimizing expenses or rate of return. I would make the observation that this strategy tends to take a human toll, so not for everyone.

The rarest strategy in the wild, because it is the most technical to execute, is hyper-optimizing rate of return. I only know a couple examples of this, including one who went from -$50k (debt with no assets) to financial independence in ten years (and handily beat the S&P500 every single year) on a modest engineer's salary. This requires a deep investment in understanding a foreign domain almost no one is familiar with and achieving a degree of mastery. It has the highest payoff long-term but it also requires the most diligence and effort upfront. Making this work requires an unusual kind of person.

Being frugal and investing in index funds is definitely the path of least resistance for many people, but many people (or their partners!) do not want to live a hyper-frugal lifestyle. Fortunately, there are other options available with their own set of tradeoffs and engineers are well-positioned to take advantage of them.

sizzle2• 8 years ago

As an investing noob, most of my money is parked in low interest savings accounts. How much of my life savings should I park in index funds? Any smart investing resources/guides you recommend? Thanks for your time.

jandrese4• 8 years ago

- Make sure you don't marry, or if you do absolutely don't have kids.

- Become a hermit

Saving money was so easy before I had kids. Once you have kids you need a car big enough to transport them. You need a house big enough to hold them. The missus insists that just going camping isn't really a vacation and they need to see some sights (real travel). And travel with kids isn't cheap. You gotta start getting the family insurance plans and the million little school fees and your bigger house has more stuff to break in it and the kids break stuff... Worst of all you multiply your chances of having some big medical problem--the death knell for any frugal living plan--the more people you have to care for.

Also, Costco doesn't really save you that much money unless you were the kind of person who always bought the top-of-the-line premium whatever. For people who typically only buy the base model widget the price is pretty similar or slightly more expensive typically.

starchild_3001• 8 years ago

I do agree with your assessment that kids are the biggest expense and possibly the biggest joy in life. Well it’s a risk and difficulty worth for many of us. But do your math.

After certain age family is the biggest and maybe the only close friend.

Social ties are important and usually healthy. Having kids and family can also be very motivating. After all, why do we live?

heedlessly3• 8 years ago

also don't have kids. They are a money suck.

joeblow9999• 8 years ago

"Work for a company that offers health insurance. "

Small nitpick: You can always buy your own insurance. Obamacare made it harder to buy good high-deductible plans for yourself but even so, you can get your own directly. Don't go without health insurance, especially catastrophic coverage, unless rent and food are all you can afford.

erjjones• 8 years ago

If you were to take a random room of people. Reset all of their incomes to square one. In a few years the same people that were rich to start would emerge "rich" again.

Some people are willing to be disciplined and motivated to change. While others talk without the walk.

heegemcgee• 8 years ago

What makes you so sure? Has a study like this ever been attempted?

k__2• 8 years ago

Funny thing is, most people who talk about how they got rich had some luck in the first place.

They got a good paying job or they got a big lump (>50k) of money somehow (heritage, insurance, lottery)

Then they talk about how they invested it in real estate or something.

The hard part is getting to the baseline needed for profitable investments...

frgtpsswrdlame4• 8 years ago

No they wouldn't. Most rich people aren't particularly disciplined or motivated to change. They're just lucky.

u90g4u8904• 8 years ago

False.

Donald Trump is rich because his dad left him an inheritance. His businesses were fraught with turmoil. If he just kept the money in an index fund, he would be richer than he was today.

http://fortune.com/2015/08/20/donald-trump-index-funds/

So reset everything to square one, and there's one person who's not going to make it on their wits.

Need more examples? How about Bill Gates? No doubt, a very smart guy. But he would not be where he is today without that fateful meeting with IBM, where MS negotiated providing DOS for the PC. How did he get that meeting? His mom worked for the United Way, and knew IBM's CEO.

https://forwardthinking.pcmag.com/software/286148-the-rise-o...

Then consider everything else that led to that day. He grew up in a fairly well-off family which could afford to send him to MIT. He was in the right place at the right time when Gary Killdall dropped the ball. He had the benefit of excellent timing, as the window for establishing OS dominance on the PC was very small. I'm sure Gates would even tell you - his success is, in large part, a product of luck.

What I'm saying is, to become rich, it's not enough to be talented. You have to get the right opportunities and seize those opportunities when they come to you. In my experience, there are more people with talent then there are opportunities. So that random room of people is always going to turn out different.

ikeboy• 8 years ago

There are no get rich quick schemes. That's just someone else getting rich off you.

Eh. There are a handful, they're just unethical and sometimes illegal. E.g. https://www.aqr.com/cliffs-perspective/virtue-is-its-own-rew... explains how you can easily beat the market by investing in sin stocks.

Similarly, you can make money really quickly if you mess around with grey market goods, shady affiliate networking products, "health" products, etc. But every so often some of those guys get busted.

tim3333• 8 years ago

The term "rich quick scheme" generally implies a con but some schemes to get rich work out such as ViaWeb which led to indirectly to this website.

"Paul : E-commerce was not my life’s work. I didn’t actually want to spend my life working on this. I did it to get money and make that money."

thisisit• 8 years ago

I really doubt you can get rich by not being lucky. I was like Naval and thought many of my achievements were due to sheer hard work. And then I read this article about luck:

http://nautil.us/blog/-the-key-to-good-luck-is-an-open-mind

And I got the book mentioned in the article - The Luck Factor by Richard Wiseman.

One of the exercises in the book is to think over how things have unfolded in your life - what would have happened if you took left inside of right when you met your partner or got a great job? And when I thought it over, there has been some element of luck involved. At my first job I wasn't supposed to be there for an interview but went along with a roommate as I had nothing better to do.

Now I believe sure you can work hard and do most of the work in Naval's list but all of it will ensure you are lucky when you run into one of the long term people in a long term industry. And everything will fall in place.

erichate• 8 years ago

What is luck really?

Determination + Opportunity = Luck

mlboss• 8 years ago

+ randomness

shams93• 8 years ago

We have all these ideals about hard work but in reality the economy is largely a casino. With crippling student debt most young people have been hamstrung from the gate. Milleneals don't generate wealth like boomers because most milleneals were effectively born into indentured servitude with the exploitation over education. Sure you could try to go without a degree in 2017 but good luck getting your foot in the door to anything today without education.

thanatropism3• 8 years ago

Unethical idea that just struck me -- why not just flee the country?

You can make a living as an english teacher and translator in A LOT of places.

mixmastamyk• 8 years ago

    - Student debt
    - Healthcare 
    - Housing
    - ?

mrhappyunhappy• 8 years ago

If you can’t find work, create your own. Worked for me and I’ve been at it happily for a few years now. Best decision ever made.

samsolomon2• 8 years ago

I've always had a theory that there are some variable luck factors that we can control.

Meeting driven, creative and important people is a huge multiplier for luck. It, perhaps more than anything I've done, has changed my life for the better.

I had a solid job in Mobile, AL working for an ad agency. Although, it felt isolating from the tech world. To combat that I started a publication interviewing designers and entrepreneurs just to stay plugged into the community.

So much good has come from a couple years and dozens of interviews. I met a co-founder, was paid to host a similar podcast and have made a ton of friends around the world. Not to mention, I might not be working as a designer had I never started doing interviews.

Give yourself opportunities to be lucky.

dwaltrip2• 8 years ago

To combat that I started a publication interviewing designers and entrepreneurs just to stay plugged into the community.
So much good has come from a couple years and dozens of interviews. I met a co-founder, was paid to host a similar podcast and have made a ton of friends around the world. Not to mention, I might not be working as a designer had I never started doing interviews.

This is a really cool idea that makes perfect sense. It's basically a way to get plugged into an ecosystem of effective and interesting people. And everyone loves to talk about themselves, so I'm guessing it wasn't too difficult to find interviewees (at least once you got past the first barrier of being a publication with no history).

How did you get the idea? Did you have any relevant experience prior to starting the interviews and then making a publication out of it?

What do you think might be some less intensive alternatives? Starting a publication is not for everyone.

segmondy4• 8 years ago

Everyone is lucky. We are lucky to have been born. Some of us are "more lucky" than others. It all depends on how you wanna measure lucky. I think the idea that most of these articles are trying to drive home is that we shouldn't depend on ALL LUCK alone. But rather craft a deliberate plan to achieve whatever we wish to. Whatever the steps that lead to our dreams, there will always be an element of luck.

eanzenberg2• 8 years ago

That's not how statistics works. "At my first job I wasn't supposed to be there for an interview but went along..." doesn't mean if you passed on this and got the next job you would be any worse or better off. Luck literally means random chance, which would mean that if you didn't take this job it would have changed your outcome vs. all the other possible outcomes if you passed on it.

downrightmike• 8 years ago

Luck Factor link (its only 5 pages and interesting): http://richardwiseman.com/resources/The_Luck_Factor.pdf

Animats• 8 years ago

What's the author's net worth?

Ask a group of rich people if they made their money in real estate, and most of them will say yes.

internetman55• 8 years ago

I don't know why people can't be normal and just have a reasonable career plan with reasonable savings & investment plan for retirement. Seems like people who write on websites don't give a shit or want to work 80hours a week so they can retire at 38

cryptozeus2• 8 years ago

Yes what's wrong with that

cryptozeus2• 8 years ago

I have already reached this but still not rich "When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place. But that's for another day."

Mc_Big_G• 8 years ago

From the article: The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon

Trump is one of the "most accountable people"? This sentence threatens to invalidate the entire article.

pitt1980• 8 years ago

Whole article seems like a bunch of koans, that would be interesting to see fleshed out, or argued one way or the other.

I'd be interested in reading why those four people strike someone as the most accountable people.

But at my current level of worldly enlightenment, its not evident on its face to me.

mcguire2• 8 years ago

...then get lucky.

Reality: there are millions of people out there doing exactly the things listed. And they are not rich.

BTW, does anyone really think Oprah, Trump, Kanye, and Elon are "accountable?"

And then:

"Don't partner with cynics and pessimists. Their beliefs are self-fulfilling."

I see this a lot in these sorts of "pro tips", and it always makes me check to see if my pocket is being picked. Somebody needs to point out the holes in your grand scheme. But then, I'm a bitter, albeit moderately wealthy, cynic.

hoechst2• 8 years ago

why aspire to "have way more money than you need"? cause that's what this "how to get rich" bullshit is about.

set your focus on what you love to do, not on acquiring more than you need. that probably won't make you happy anyway.

if you chose to work in IT because you enjoy it, you're already super fucking lucky anyway. you're sought after and money's good (generally speaking).

if you feel like you need more, do the actual work to make it happen. don't listen to generic one-liners by some pretentious investment guru.

kpennell• 8 years ago

You have good points. But I think you'd also probably enjoy Naval's thoughts as well.

There's a great moment in an interview with him where he says that he watched multiple friends get rich and not become happier.

tim3333• 8 years ago

Getting rich is often a result of providing value to other people and so can be a positive for society. You can always give the spare to charity if you want.

oliwarner4• 8 years ago

Isn't this the tenth how-to-get-rich post today? I guess that's fairly standard, and I ignore them, but they're getting votes today.

I'm a little surprised that —since every other thread on HN is about hacking your diet/wardrobe/matress to counteract the crushing depression you get from your job— nobody is putting one and one together.

There is more to life than money.

I don't want to sound too hippy but there is. There is value in relaxing with friends and taking time out to raise your family, and living with clean air outside a big, machine-like-city.

The struggle to become rich is an immense burden with its own serious costs. You might make it, but I'd suggest you ignore "aspirational" money posts on HN and learn to be happy with what you have. Just strive to be good at what you do. It's not the American Dream™ but you'll get a hell of a lot more from life.

iamwil• 8 years ago

You didn't read his last sentence.

sfoley• 8 years ago

For the lazy:

When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place. But that's for another day.

oliwarner4• 8 years ago

I had, it's not what I'm saying though.

I'm saying that prioritising money makes you unhappy. It's a toxic culture where only a few make it. Author is saying those few still aren't happy.

Subtle distinction but I think I'm going much further.

sjosji• 8 years ago

What is it with HN that so often people comment without having read the full article? And then complain about other HN threads while doing so.. Sigh ..

melling2• 8 years ago

No one said that money was the most important thing. You added that.

Then you proceeded to tell everyone else how they should live their lives.

Understanding how to effectively generate wealth, build companies, etc is something that has certain advantages. For instance, this will allow for more time to appreciate the other things in life.

Warren Buffett spends most of his day reading, which he loves to do, for example.

He’ll be donating 99% of his wealth.

Your life is your choices but, quite honestly, you’re adding noise to the conversation that people were trying to have.

oliwarner4• 8 years ago

Buffet?! Sure. He's both from an influential family and was a prodigy for business. He's also been very lucky. If you think you can course-correct your life to rival a Buffet just by the power of these self-help articles, you're a fantasist.

I'm not telling anybody to do anything. Just opining my view that outright happiness is not a hard state to reach. One can be content with very little. When your goal in life is "more", fulfilling it is nigh on impossible.

But you do you.

sebleon• 8 years ago

Getting rich is a quasi zero sum game. By definition, only 1-5% of the population can be in the “financial elite.” While this advice piece might be correct, it will be useless for >95% of its readers.

shanecleveland• 8 years ago

I've been listening the entire back catalog of NPR's "How I Built This" blog. The interviewer always asks if their success is due to hard work, skill, intelligence, etc. or luck. All of them acknowledge some luck is always involved. But the best quote I recall, but don't remember he interviewee, was "The harder I worked the more luck I found I had."

Highly recommend the podcast. At first I cherry-picked the interviews I thought I would be interested in, but they are all good, regardless of the company or industry.

vannevar• 8 years ago

This list of aphorisms is riddled with advice where luck probably plays a dominant role, so the headline is misleading. There are reliable ways of getting rich without needing (much) luck, but they take a long time if you're starting with very little capital. But they are proven, they do work, and they generally involve a lot of saving and investing throughout your primary earning years, in real estate or other stable assets. They generally don't involve serial entrepreneurship, which this article seems to advocate.

jgalt212• 8 years ago

passive income is not a good way to get rich. It's taxed a much higher rate than capital gains.

probably should amended to create vehicle that gives off passive income, then sell the vehicle's future cashflows for better tax treatment.

stcredzero2• 8 years ago

Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.

If there is market value in a skill or knowledge, the market will find the people who can be trained in it, then train them. Perhaps a talent is required to be competitive.

Corollary: Beware of fields which have artificial gatekeeping. They are in a disadvantageous market.

Become the best in the world at what you do. Keep redefining what you do until this is true.

Borrowed from Scott Adams: It's hard to become a top 5% in a given field. It's easy to get to the top 20%. So find two synergistic fields where you can get to top 20%. This makes you a top 5% cross-disciplinary expert.

There are no get rich quick schemes. That's just someone else getting rich off you.

Often, it's other people getting rich off of the efforts of a huge mob, while making a small sliver of that mob fantastically rich.

ConfusedDog3• 8 years ago

Which fields have artificial gatekeeping? Do you have any examples? I'm not familiar with the term and couldn't find it online...

stcredzero2• 8 years ago

Which fields have artificial gatekeeping?

Massage Therapy is one. This varies state to state in the US, but you have to have a license.

fnbr2• 8 years ago

Investment banking is one, another is corporate law. It's incredibly difficult to get a job in either field without a degree from a top school, with top grades. Google hires lots of people with degrees from state schools (or without degrees!). That's not the case at, say, McKinsey. Neither job inherently requires a degree from a top school, but it's almost a prerequisite to get the job.

simonebrunozzi• 8 years ago

If you have a decent chance of getting rich (read: well-paying job or income source), then the biggest impact on your "wealth" is going to come from two things: your ability to invest wisely, and your ability to optimize your taxes. (that's my two cents, of course - happy to be challenged on these two assumptions).

Most investing relates to Real Estate. I've been involved and knee-deep into real estate investments for most of my life, as someone who had always wanted to "get rich" (not obsessively, but still with a strong focus). I am not rich now, but I can't really complain.

Most real estate investments are made in a silly way. Most of the people I gave advice to showed me countless mistakes on the way up. They could be way richer if only they spent a few dozen hours more on understanding investing or specifically real estate investing.

The most common mistake involves the usual "rent vs buy" dilemma. It's a hot debate every time it comes up. There are plenty of "online calculators" that are supposed to help you figure out what's the best decision. However, most people ignore important factors that go beyond the financials. I believe this is important, and in fact I wrote an extensive blog post trying to list a dozen important questions to ask yourself when you are considering whether you want to buy a house or not [0]. I don't mean to self-promote here, that blog post was the result of a few hours of work, prompted by the N-th discussion on the subject, and I believed there was a need to put something clear in writing.

Now, when someone asks me for financial advice that relates to real estate, I point them to the blog post first, and then I'm happy to discuss more if they need to.

[0] https://medium.com/fabrica/the-rent-versus-buy-dilemma-12-im...

danenania2• 8 years ago

In poker, the fastest way to climb the ladder in stakes is to play a tight-aggressive style and be conservative with your bankroll (make sure you have plenty to cover the variance of the stakes you’re playing), but also occasionally take ‘shots’ at higher levels with a small portion of your bankroll. If you run good during your shot, you stay at the higher level. Otherwise, you move back down to rebuild.

In short, you take frequent calculated risks when the downside of failure is low. I think a similar strategy can be very effective in life.

test65542• 8 years ago

One of my most lucrative life decisions is to not play poker.

perfmode• 8 years ago

poker has made me a better thinker and risk taker.

and i haven’t really played poker in the past 12 years.

rubicon33• 8 years ago

This gets broken down and fails against skilled players who are adept at noticing conservative play styles just like this. It's quickly punished by small pots on what should be big wins. The trick isn't just conservative play, but deceptive and difficult to track play with an underlying trend of conservatism.

danenania2• 8 years ago

I didn't say you should play conservatively, but that you should (generally) manage your bankroll conservatively. These are very different things.

antisthenes• 8 years ago

Playing against skilled players is not how money in poker is made.

If you're playing against 9 other skilled players, money will mostly move around the table, and the only winner will end up being the casino due to rake.

The easiest way to increase profitability in poker is to play against people significantly worse than you are. Not unlike life, where the biggest factor of success is being born in the right country to the right parents.

ggm• 8 years ago

When it comes down to it, rich is a very odd concept. I sometimes wonder if the overarching desire to get "rich" should be in the DSM

carapace• 8 years ago

"The Art of Money Getting" by P.T. Barnum

https://www.gutenberg.org/ebooks/8581

(audio book) https://archive.org/details/art_of_money_getting_librivox

In the United States, where we have more land than people, it is not at all difficult for persons in good health to make money. In this comparatively new field there are so many avenues of success open, so many vocations which are not crowded, that any person of either sex who is willing, at least for the time being, to engage in any respectable occupation that offers, may find lucrative employment.
Those who really desire to attain an independence, have only to set their minds upon it, and adopt the proper means, as they do in regard to any other object which they wish to accomplish, and the thing is easily done. But however easy it may be found to make money, I have no doubt many of my hearers will agree it is the most difficult thing in the world to keep it. The road to wealth is, as Dr. Franklin truly says, "as plain as the road to the mill." It consists simply in expending less than we earn; that seems to be a very simple problem. Mr. Micawber, one of those happy creations of the genial Dickens, puts the case in a strong light when he says that to have annual income of twenty pounds per annum, and spend twenty pounds and sixpence, is to be the most miserable of men; whereas, to have an income of only twenty pounds, and spend but nineteen pounds and sixpence is to be the happiest of mortals. Many of my readers may say, "we understand this: this is economy, and we know economy is wealth; we know we can't eat our cake and keep it also." Yet I beg to say that perhaps more cases of failure arise from mistakes on this point than almost any other. The fact is, many people think they understand economy when they really do not.

pascalxus5• 8 years ago

I love how succinct this article is. It's densely packed with great content, without all the filler material most authors try to add in books.

but, i don't really agree with this part: "When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place"

superjisan• 8 years ago

This ignores most poor people who are too busy trying to feed their family in the short term and our society's inability to properly give them a safety net for them to learn new skills/ get ahead in life.

rich-and-poor• 8 years ago

Society is a privelege and not a right, without "our society" and it's shortcomings you're back to hunting for food and succeeding, or perishing

liftdd4• 8 years ago

Cannot agree more.

jksmith• 8 years ago

I blew so much money on this young girl in 15,16,17 it put me in a hole and we aren't together anymore. Was making close to 300k/yr in an area where that's a shitload of money. I could have paid off a bunch of debt, IRS, put a chunk in retirement, lots of stuff. Would I do it again? Oh hell yes because it was an incredible experience. Money ain't shit unless it facilitates an experience you'd never, ever get otherwise. There's different motivators for making money. I've definitely found mine. Writing a new revenue generator right now and I've written so much code I definitely wouldn't have the energy to do this much work unless I had experienced what I did.

magice• 8 years ago

Man, I disagree with about everything from this opinion. And I hate that I have this urge to write out the point-to-point rebuking:

+ "Wealth is having assets that earn while you sleep." : Really? Are we playing the "let's redefine everything so that it works out like I say" game now?

+ "You’re not going to get rich renting out your time." : the top 1% of Americans are dominated with doctors and lawyers who, guess what, rent out their time.

+ "You will get rich by giving society what it wants but does not yet know how to get." : The concept of "first-mover disadvantage" should really solve this. Look, Palm produced a smartphone, and Apple also produces smartphone; Apple make trillions, Palm died. The society clearly want smartphone. Why did Apple succeed but Palm failed?

+ "Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you." : please see above for doctors and lawyers, whom are all trained by the society. Plus, if other humans (i.e. the society) can't train you, who does? God sends angels to you?

+ "Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now." : And if you are interested in, says, building rafts (or horse-drawn carriage, or any of these things), you will get rich so fast that your stomach will starve.

+ "Building specific knowledge will feel like play to you but will look like work to others." : sigh. Right.

+ "The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon." : Ummm. One, Trump brand and accountability have adverse relationship. Two, some of the most rewarded people on earth don't do business in their names. Bill Gates used Microsoft, in case you forget. Corporations exist for a reason.

+ "Become the best in the world at what you do. Keep redefining what you do until this is true." : Yes, and the best vendors always win! And Windows is the greatest OS on earth! And Facebook is the best social network! You get my sarcasm.

So, conclusion?

My father taught me this, which I believe to be true: small wealth is by hardwork, great wealth is by Heaven. If you want to be affluent, be industrious at work, be acceptable to society, be prudent in finance; and you will eventually get there. If you want to get richie rich rich, well, pray (plus all of the things for little wealth). This kind of "I get lucky now I will give stupid advices" things really should go away.

mmaunder• 8 years ago

"When you're finally wealthy, you'll realize that it wasn't what you were seeking in the first place. But that's for another day."

Freedom is what you were seeking all along.

pascalxus5• 8 years ago

my last response didn't post, so here's the link of an ordinary person doing it: It's the invest a little and wait a long time approach: 96-Year-Old Secretary Quietly Amasses Fortune, Then Donates $8.2 Million https://www.nytimes.com/2018/05/06/nyregion/secretary-fortun...

contingencies• 8 years ago

IMHO there is a lot of terrible advice here.

"Go slow and you'll make it" puts a cap on success and is not very stimulating. If your idea of life is sitting in a room under a roof you nominally own watching TV with an up-with-the-Jones' car, you've already lost.

In youth while time rich invest in yourself to develop skills and experience, focusing if possible on areas others miss and cannot learn effectively through formal educational programs (eg. R&D, deep science, extensive practical knowledge in a trade, languages, travel and worldliness, etc.). Never allow rigid formal education to destroy your innate curiosity - cherish it: it is the most powerful force for learning and achievement that you have.

Be a talented generalist, not a specialist. High value and high growth opportunities do not emerge consistently from one area but rather general industries. A capacity to absorb and manage cross-disciplinary knowledge rapidly and effectively is worth ten times more than extreme specialization, 99 times out of 100. Don't over-skill in areas that age fast (eg. programming frameworks, design fads, many formal qualifications, etc.).

In young adulthood invest in a partner, they will be your strongest asset in times of need and provide strength, a sounding board and risk-hedging as an alternate actor for all future ventures. If you can, find one from another culture and continent with a different passport, perspective and language... this will give you and any children half a world more options in the future.

Take risky career path moves. Following a crowd might help you to survive, but never to thrive. Just make sure you accrue some capital so that you have options.

Finally, invest in high leverage opportunities in potentially high growth businesses in which you hold substantial equity. If you can't find one, start one. By the time you've done a couple (ideally in a couple of sectors or markets) you'll be worth funding by deeper pockets (read: superpower obtained - partially outsource venture risk) and quite capable at executing. Your first successful exit will place you ahead of your peers, who you will feel empathy and pity for realising they have wasted decades conservatively limiting their own life experience.

RandomCSGeek• 8 years ago

I think a better strategy than trying to be rich is,

1. First decide what is the median lifestyle that you want to live. Then decide how much it costs.

2. Next decide what are the tasks which make you most satisfied. Consider doing those tasks that would earn you at least what is required as per above criteria. As a rule of thumb, the most satisfying tasks(ex: world tour with your spouse) will earn the least.

3. Invest, so that you could switch to doing more satisfying tasks, as your threshold of money to be earned via job will go on decreasing.

There's no point in working hard, doing a job you don't like, to earn millions/billions, when you won't be spending most of it. After all, you might get hit by a car today, and you'll never know how those millions of yours got spent by your kids.

How to get rich without getting lucky

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