That's nowhere near "not worrying about finances". "Not worrying about finances" means you never have to work a job for income, you don't depend on the social safety nets of a single country, you never have to worry about affording a place to live, getting optional healthcare and so-on.
You're thinking that people who don't constantly have to worry about finances is what the poster is talking about, but that's worlds away from never worrying about finances again.
>I'm just amazed that anybody would think they need $10 million to be comfortable.
Seriously, read the thread again. This has nothing to do with comfort, it's about FU money.
I was responding to the HN comment, not the Reddit thread. If you're talking about having "FU money" and I'm talking about being "comfortable" then I think we are talking about different things.
> You're thinking that people who don't constantly have to worry about finances is what the poster is talking about, but that's worlds away from never worrying about finances again.
I agree, I think we have a different understanding of what it is to "worry" about finances. I am talking about the sort of worry that comes from not knowing where the next meal will come from, or not being able to pay rent. That, to me, is what worry is. I appreciate your explanation that others mean something different.
This shows a pretty big disconnect. And is something no one in their 30s+ would say.
The common rule of thumb is you can live off of an investment at 4% indefinitely(assuming 6% return and 2% inflation). This gives you $4,000 a year. Crappy insurance: $4,200 a year. Crappy 300 sq ft efficiency in cheaper town: $5,400 a year. Cost of owning a car: $5,000 a year(you could skip this expense, but you'll be spending most of it in increased cost of living in area with great public transit. You could also bike but not everyone's knees last forever)
And this doesn't include food/entertainment/travel/internet/phone/medical bills etc.
Yes it does. That was my point.
For starters, you're assuming I'd want to live off the investment, instead of continuing to work.
Regardless, I shouldn't have mentioned the arbitrary figure of $100K, which has made it so much easier for people to ignore my point, that many people are comfortable with much less than $10M.
$10M means you don't have to work, even when you can't.
I would still maintain that it is possible to live on much less than $10M, although some may not enjoy the change in lifestyle.
And I could spend 10% of the 1 million on just maxing out my unused pension allowance for the last three years, and probably I should do the same for my sisters.
Okay, fine. You mentioned that you're a student, so I'll assume that means you're 22: if you're a man, that means you have another 55 years. That $100,000 thus works out to an extra $1,818/year for the rest of your life, which is roughly a month's rent or a dozen or two really good meals a year. Is that a nice supplement to your wealth? Sure. Is it enough to make your life significantly better? No, not really.
Ah, but perhaps you're investing it, too. Let's say that you get 6% a year (optimistic), and withdraw 1/55th of the principal + interest each year. So this year you'll get $1,927, next year you'll get $2,006 &c. Is it nice to have that extra money? Sure! Is it going to be life-altering? No, not really.
Your general point is right, but the situation is even worse than you say since you are misinterpreting the 4% rule. It isn’t that you can live “ indefinitely” - it is that using historical returns, you could live about 30 years taking 4% (allowing for increases due to inflation) off an investment before it is zero. People seem to think that taking 4% means you won’t have to touch your capital - that isn’t the case.
>...What we now call the 4% rule comes out of research by financial planner William Bengen in the early 1990s. Essentially, Bengen tested a variety of withdrawal rates on several different allocations of stocks and bonds using inflation data and investment returns going back to 1926. After crunching the numbers, he concluded: "Assuming a minimum requirement of 30 years of portfolio longevity, a first-year withdrawal of 4%, followed by inflation-adjusted withdrawals in subsequent years, should be safe.”
https://money.cnn.com/2018/02/07/retirement/4-percent-rule/i...
Why would you not work doing whatever it is you do as an avocation, or if you like, a hobby or dream job? If it's what you love and what fascinates you, why would that not lead to income across your whole life? Granted, it'd take years to get to the point where it's sustainable, but surely there is tangible value in this?
I do not understand a mindset of 'My only purpose is to amass a pile of wealth so large that I don't spend any of it or do anything else ever, merely use the mechanisms of finance to subsist unproductively off the leakage from my giant pile of wealth, literally forever'.
How is this plan in any way good, ethical or beneficial to either the person or the society they're in? You're going to die having made no use of the hoard you seized, despite having taken it from others who need wealth of their own to survive. Rethink these assumptions.
> You're going to die having made no use of the hoard you seized, despite having taken it from others who need wealth of their own to survive. Rethink these assumptions.
I would encourage you to rethink your assumptions. What you wrote goes completely against how economics actually works.
You are not "seizing" a hoard, and definitely not taking it from others. Unless you are literally a thief, that's just not how things work - you are making it seem like the economy is zero-sum, whereas it absolutely is not.
Also, having a pile of wealth that you don't spend is something that no one actually does - almost everyone invests their money, which means it is put to good use, as an investment - the wealth that someone created out of thin air, is turned into the building blocks for new people to create their own wealth.
I highly recommend you read a little about economics, it's one of the most rewarding and eye-opening things I've ever studied (only as an amateur, I'm not a professional economist or anything.)
Can you suggest some resources?
A good book for getting started, IMO, is Charles Wheelan's "Naked Economics".
The first thing that I read was "Basic Economics" by Thomas Sowell, which I liked a lot and highly recommend - however, keep in mind that Thomas Sowell is very capitalist/right leaning, and the book is quite "biased".
A great textbook, if you really want to get further into economics, is Greg Mankiw's Principles of Economics (almost all undergrad economics textbooks are called "Principles of Economics", for some reason, so you have to search by author.) That's definitely the place to go if you want to have a more sophisticated understanding of economics than you'll just get by reading books.
I had no money in Uni. My parents were boat people with no money either.
Not long after Uni, I had 100K in my account. Comfy, no mansion, no car.
The first thing I spent more than a couple of grand on ever was dental work. Felt great to fix the crossbite.
But here's the thing. You could just be alone your whole life, no wife, no kids. I've got friend who do that, and indeed they can live on near minimum wage and be perfectly happy.
Once you decide you want a wife and kids, the budget changes. By a lot. You'll need a bigger place to live. You'll want to send the kids to private school. You'll need a bigger car.
This can easily add up to several million depending on exactly what you mean.
For the record I did go on to buy an expensive sports car. Not worth it, surprise surprise.
Maybe it would be more correct to say You'll want a bigger place and a bigger car too, because there's no real need there.
But if you're going to have kids there's at least one other person who will have an opinion about this.
You will definitely reduce your chances of having kids if you insist on finding someone who is totally fine with squishing the kids together.
Not my opinion, but a lot of Americans hold up Scandinavia as such.
10% is about the best return you can count on (very optimistically) I don't know what country you live in, but 10k in the US, even for a single person, would put you far below the poverty line. No way you could afford that dental work after you pay rent on that. And let's not even talk about all of the other huge expenses that will come up later in your life.
$10m * 3% = $300k/year
That's a high end salary in the US. You could cut this number in half, and that would be ok too IMO. Less than some developers make. But you can buy a reasonable house, car, etc. Not a farrari though, unless you're irresponsible.
If you actually intend to live on this money forever, then the return you receive is really the maximum you can spend. And that's really not as much as you would think. Especially when you figure there will be some years where you won't earn anything (during recessions).
Again, if you live in an expensive country like the US. If you live in a poor country, maybe 10K is enough. But this article and these numbers, aren't really about that situation.
For the record, thousands of Australian university students live on less than US$10K per year. You seem to think we can't exist, but we do.
> No way you could afford that dental work after you pay rent on that.
And thanks, that is very helpful of you to remind me.
I think you need to revisit this in 10 or 20 years. I think you'll have a different opinion on this number.
$10k is not comfortable. That is poverty. And the question wasn't what is possible to survive on.
Again, I apologise if my comment/s seem impolite. I am not having a great day, but I don't mean to come across as disrespectful. I understand that I live in a different world to many of the people here on HN. I also think we may be talking past each other a little bit, using different definitions of "comfortable". I think it's possible that I don't know what comfortable is supposed to feel like, at least not the way most people here seem to be using the word. To me, comfortable is just having a loaf of bread in the cupboard, a roof over my head and a healthy body. I feel like that is all I need, and that's the point I was originally trying to make.
You might be happy as a PhD student, but your housing and life is entirely dependent on the university. You are one academic violation away from that all being in jeopardy.
What happens if you get a spouse and child? Will your current housing and savings be enough to support them and yourself if you both decide you want to stay with the baby instead of working?
What if your government passes legislation that costs you your job, your housing, or your healthcare?
The $10m money is about not worrying about anything other than global economic collapse and/or massive wars.
"Not worrying about money again" means never again. Not just while you manage to hold down a job.
I really like the peace of mind that gives me and everyone, even if that means I have to pay more taxes.
That's certainly better security, but it's still nowhere near the level I'm talking about. You're still having to concern yourself with money for things like smartphones, entertainment, holidays, etc. and you're one government crisis away from austerity taking a big chunk of that away. Also, keep in mind that there are still people alive who witnessed WW2. You can't take the stability of your country as a given.
The $10m number puts you in the position to even diversify away risks to your home country.
From the data it does not seem to make people here lazy, and being long-term unemployed is still bad for mental health and being part of society. I am not sure how much of this is cultural since it is surely connected to attitudes towards work.
Sure, but you're comparing apples and oranges. Almost 2 of those orders of magnitude disappear when you change $10M of assets into a few hundred thousand dollars of annual income.
A lot of the rest goes away when you notice that not worrying about finances "ever again" includes an awful lot of expensive things you don't pay for day-to-day or even year-to-year, such as the dental work you're putting off.
I think you might have a bias in your viewpoint here. At half would be 150k/year and is still significantly above what most developers make. And I am assuming only United states.
> above what most
I don't see the contradiction here?
Of course if you don't expect to invest, work or advance everything is going to be have to paid for up front and you will need a lot of money. But that isn't realistic for most people. It is very expensive to be a poor millionaire, but relatively cheap to be modestly wealthy.
We had obamacare which helped a lot.
I see people on HN talking about needing massive amounts of money to live and I just wonder where it all goes? What's it for?
Well there's the problem right there. Your salary should be higher than your cost of living because you're actively trying to save for retirement. Once you're actually retired you shouldn't need as much.
And I think they have a point: $100k is a lot of money, but what if you got sick and couldn't work anymore, ever? Wouldn't you be at the risk of starving or becoming homeless if you had to stretch that over 30 or 40 years?
Agreed.
> And I think they have a point: $100k is a lot of money, but what if you got sick and couldn't work anymore, ever?
That's a fair point. I don't really worry too much about getting sick and never being able to work again ever. I think some of this comes down to the level of risk that each individual is content to live with. If I had children or a family, perhaps I would be a lot more worried.
For example, if you wanted to spend $20k per year, then you would need $20,000 / 0.03 = $666,666 invested in index funds.
I'd be happy with something like $40k per year ($1,333,333 invested), or just a SaaS service that provides passive income. Running a business is far riskier, but it also gives you something to do.
And maybe I wouldn't mind having a nice house in an expensive city like New York, Melbourne, Vancouver, etc. $20,000 per year would be nice, but I think $200,000 would be pretty nice as well.
You're right, spending 40k for a couple is plenty to live on. It's all of the above that sucks up the rest if you want to retire (let alone retire early).
Give me $100k and I'll retire within the year. A few smart quick investments can really pan out. It can also fail, as we all should know.
Assuming that you meant something closer to $1M than $100k I would start to agree. At that rate an initial investment into a home becomes realistic and more advantageous investment options open up. You are still not living high on the hog (60k/yr, ish), but you will probably only have significant problems if you are struck by disaster, illness takes you, or you have children.
At a further 10x that (roughly what the OP describes) you must really screw up to ever be one of the poor again. Many inefficient ways of living (eating out regularly, nice homes, expensive hobbies) open up. These are what most people consider comforts, and so I generally agree with the sense that this is the band where permanent comfortable living becomes possible.
I think you have made the assumption that I would stop working. That might be the goal of many people, but it's not mine, and it's not how I would define being comfortable.
Aside from that, yes, I was using a fairly arbitrary number to make a point. I hadn't done the math. Which, here on HN, was probably a mistake. But for somebody who has never had more than $3K to their name, $100K in the bank still seems like a very comfortable safety net.
I understand how ridiculous this may sound. There’s a presupposition of access to capital / employment. A large chunk of the world doesn’t have access to that, to no fault of their own. But don’t discount yourself that quickly — a non-trivial amount of people have created and captured an insane amount of value. It doesn’t seem entirely fair, and to be honest, sometimes it isn’t.
Re: $100k, completely sane and reasonable expenses add up quickly. You’ll be surprised what costs rear their heads as you have more liquidity. You’re better off being broke while you’re in University and, once you’ve finished, learning the ropes and demanding compensation for your productive hours. You can calibrate your income against researched market rates / cohorts of friends if you’d like to optimize, and nobody will fault you for it — in fact, it’s expected.
You’ll figure this all out but for now it doesn’t matter: everybody here is giving you sound advice (based on pre-assumption of: University-educated individual), you just can’t see past the iron wall of academia yet. It’s a much bigger world than you can imagine, with a lot of opportunity to generate wealth if that’s what you’re interested in. (It doesn’t have to be, but some sort of optimization in this direction is helpful for general contentment given your pre-supposed opportunities: not everybody gets to attend college.)
It’s obscenely difficult to get there, but an entirely reasonable and well-defined goal for people who are willing to compete (and, with high likelihood, fail) in the market to get there.
It’s up to you to decide if you’d like to pursue that path. There are plenty of paths to stability without setting that goal; you’ll just find yourself arguing with a self-selected subset of people targeting it when you post on a place like HN.
You shouldn’t wish ill upon them, and they shouldn’t wish ill upon you. We’re all just figuring life out on our own, but if you’re in a professional career in your ~30s you’ll hear “$10M” (USD, or in North America) as a pretty standard target for a “dream amount.”
Why not take your current annual spend, multiply it by 1.2 for a nice cushion, and then figure out what you need at 3% to gain that annual return? This should come out to be roughly an order of magnitude less than $10M.
Very true, and thanks for my first chuckle of the day.
I certainly don't wish ill on anyone. I've suffered a lot, in various ways, but that has made me more compassionate, and I think therefore there has been value in that suffering. I have learned how to make do with very little.
Again, I appreciate your comments.
Ten years ago I was a broke college student doing lab grunt work. I couldn’t really afford coffee in the morning. I know what it’s like. He might not like me sharing this, but I watched my father who didn’t have a whole lot to begin with lose everything to his name just as I was preparing to enter the working world. That wasn’t even the worst of it for me personally, shit just happens.
I am very fortunate now to be able to work alongside some absolutely mind-blowingly talented people. Hit me up in ten years and see if I’m in a a cohort of people who have reached their dream amounts, but I’m not sure how much absolute numbers matter anymore. I’m happy. There’s a really big world out there. Don’t discount yourself and don’t sweat being broke in college. It’s part of the experience, humbles you, and grows something special that will allow you to relate to others more freely in the future.
I bring this up because: keep it up, keep asking questions, and when people tell you “$100k isn’t much,” work on figuring out what they know that you don’t yet. If you know it’s possible there’s a chance you’ll get there sooner than they did. Stay humble, but be hungry. Good luck in the future.
My point in saying all of this isn't to depress you or wave money in your face or anything-- just to be clear, I don't have that kind of cash. It's just that the math says somewhere in the $1M to $10M range is what you need to be legitimately isolated from personal financial stress.
The rule of thumb is that you can you can withdraw about 4% of your savings per year if you want them to last forever. $100k in savings gives an annual income of about $4000/year. There are places on earth where you can live on much less than that - my wife spent less than that for 2 years as a Peace Corps volunteer in rural Peru. There are very few in the U.S. Even in small towns, rent on a 1BR will run $400/month. That's already over budget. Here in the Bay Area, minimum rent is about $1000/month with roommates. Anything less and you're living in an RV. If you're really frugal you can live as a single person on about $20K/year.
Kids add a whole new wrinkle. An uncomplicated hospital birth is $20K if insurance doesn't cover it. A NICU stay is about $10K/day. Just the equipment to bring a kid home safely from the hospital and keep them safe (car seat, crib, high chair, diapers, babyproofing) can run a grand or two. Living in a 1BR is not really practical with a family (yeah, that's how my mom grew up, but her one non-negotiable as an adult was a house with a yard). Day care in the Bay Area is about $20K/year for a decent program.
I'm generally someone who thinks people overestimate what they need to spend to be comfortable by a lot - I saved 80% of my income, consistently, for a decade. Still, expenses go up a lot when you have kids, and oftentimes they go up a lot even without having kids, simply because inflation. I'm really glad that my top-line was quite high for the first decade of my career, because I have a number of friends from college who thought "Oh, I don't need a lot of money to be happy" and therefore took career paths that didn't generate a lot of money, then got to 35 and found out that their career path does not support having a family.
$1 million will provide you with enough money to live comfortably. You'd still need to be somewhat frugal and be mindful of the hedonic treadmill. But that's not "never worrying about finances again". $10M will get you there. $100k when you're young is a good start to retirement savings, a hefty real estate down payment, or temporary living money while you spend several years chasing a dream. But that's about it.
I see where you are coming from, and agree with you. I am happy to say I'm at a point in my life where I feel I will never have to worry about finances, and I'm nowhere near $10MM. I'm 30 years old, live alone in an apartment that could be big enough for my wife and a kid if I decided to marry and have a kid. I save/invests around 60% of my income. I'm not at $100k on savings/investments yet, but can easily calculate when that will be and it's not too far in the future. I work full time, and I'm looking to reduce hours/days worked before I turn 40, but maybe I won't. If I will, financial implications will not be the major factor of that decision.
So yeah, considering I'm comfortable with two or three less orders of magnitude less than 10 million... I'm as amazed as you are.
if you weren't worrying about finances at some level why are you going to work today instead of going on holidays in a nice spot ? could you handle, say, your house burning overnight with all your belongings ?
Never means never, not "comfortable enough to turn a blind eye to the potential problems that may come sometime in the next 60 years".
I care about my finances. But I don't worry about them. I have a high degree of certainty that, barring getting a disease that prevents me from working for multiple years, I won't have major financial problems for the rest of my life. The fact that I live in a country with good public healthcare (Spain) is a factor here.
>? could you handle, say, your house burning overnight with all your belongings ?
100% yes. My belongings are worth less than $10k. It would be annoying, but completely manageable.
I think that is the key to understanding much of the disagreement here. Some people seem to concentrate on the possibility that something catastrophic could happen, which admittedly, is true. But I think it's possible to be comfortable in life, with that risk. Most people don't have a choice but to bear that risk, and many would still, I believe, describe themselves as happy and comfortable.
I think by "comfortable", some people mean "immune to any possible threat", in which case, I begin to understand their point of view.
I don't see any distinction between "caring" and "worrying" in this context: "worrying" means "thinking about it". When people say "without having to worry about finances again" it must be understood as "don't even want to think about their account balance ever in their whole life".
I have thoughts and regards about my financial situation, and will for the rest of my life. I think everyone has such concerns, so saying that someone cares about their financial situation is kind of meaningless. If that's your definition of worrying, even the richest person in the planet worries about their finances.
I certainly don't torment myself thinking about my financial situation, nor do I think I will ever need to again.
EDIT: Actually, there are people who don't care. I've seen them. But these people generally have never learnt to care: they are either children, who havne't had to handle money yet, or people spoiled people who essentially behave as children. In my experience, not caring about money is not related to how much money you have.
I'm really curious how you forsee this working out. Even if you can live comfortably on the federal minimum wage (about $15k/year) you're going to have to be able to consistently bring in something like 25% returns on your investments to stay afloat.
Improving your life in the least bit is the whole point of life itself. Being that as you grew up in poverty, came from nothing monetary wise, and are already in school you're already doing better than you were imagined to.
You'll go far; it takes a long time.
Knowledge of investments will take you far in life. Ferraris are (fast)depreciating assets that take a lot of time and extra expense, they're simply not good investments unless you're a race car driver. Not when a Toyota will do the same for you.
Whenever you can, take care of your teeth. Eventually, they can hurt more than just your mouth.
I wouldn't apologize. You're just being real.
The point I was trying to get across was not that you need $10 million in order to live comfortably. I was just saying that having that level of wealth won't really provide you with any additional material goods. The only thing you gain at that level is more financial security. At that level of wealth you could go through a divorce and have a major medical emergency all at the same time, and still come out of it with enough to be able to live in a nice home, have a vacation home, travel in first class, etc.
Haha come on. You know that is not true. I live a pretty good life where I get to move country every few months (in Europe), have expensive hobbies, ski 100+ days a year and after currency conversion make closer to 50k.
For what it's worth, I only work 2 days/week, if I "needed" 100k USD I could go to a full time position but I don't see why I would ever "need" that. Especially if I was choosing to live in 1 location and spend less time on hobbies.
Also part of the 100k goes towards a retirement fund (investments in bank savings, real estates etc) and saving for any unforeseen circumstances. I can't imagine living in united states with less than 100k per year and paying for tuition fees for your kids, house loan/rent and have a decent savings. If the medical is free, and i have an option for retirement and not that much strings attached, 50k would suffice..
If you had to guess, what percentage of people outside HN, outside Silicon Valley, do you think would consider having $10M to be a risky bet? I'm sorry, but I believe that is very, very disconnected from the reality that most people live in.
I understand you, I have been a student and believe me I lived for few dollars a day (that too in a comfy way) including accommodation and food. When I started a job in 2004, making 200k USD was my dream retirement amount. Now I don't call it would be comfortable with even $10 mn and never having to work again. I would definitely keep working as long as I can even with $10 mn in my bank. It's not that I am greedy and have to constantly go for vacations or stay in 5* places. When you have a partner and kids, you really need to spend that much money to live in the social status that you ends up in your society. Home mortgage, kids school fees, dress, food, family outings and it could easily add up. You are talking about in the range of 10k-200k per year depending on the country/city you live in. In expensive cities where you need 100-200k to live comfortably, $1mn will last you only a few years even with good return on investments adjusted against inflation. It's very unfortunate but it's true. You too shall see that day when you grow up.
btw i just noticed and in case you need any emergency assistance, feel free to ping me, it's not that I am rich, but can help you out in anyway i can - murukesh @ <google's email service.com >
Yes, I can appreciate that.
And I appreciate your offer. It's honestly pretty nice just to know that somebody here understands, and cares. We have all struggled, and will continue to struggle, in our own ways. Kindness is everything.
Because you were raised poor, you still are poor, so your views on life do not revolve around one of the finest and most exclusive automobiles money can buy. You've never been in a position to be even remotely close to owning a Ferrari, so your brain has ignored the value they offer.
Yes. Driving a high speed status symbol can be rewarding. It can start conversations. It can get you access to groups of people who would never have looked at you before. Is it easy to write them all off on the premise of "if they wouldn't talk to me when I had a Honda, then they are vain and I don't want to talk to them?" Sure. But you'd be missing out on potentially meaningful connections. On top of that, hearing a visceral exhaust note while rapidly accelerating is adrenaline inducing. Does it get boring after 10,000 hours? Probably. But, what doesn't in life?
The same way a trust fund child never views owning a dump or being in debt. It just isn't in your payscale/range, so why waste the brain cycles?
Studying. I learn (not skim or read but study like I did in uni) new things all the time for the past 30 years and it does not get boring while it costs very little to do so (I do not need diplomas or certificates but I am hard on myself and I do do exams if I can find them like it is real).
I grew up in a very wealthy area and learnt to stay away from that kind of people.
This statement strikes me as very disconnected from the reality that the vast majority of people on this planet live in, and honestly, a little bit irritating. I'm well aware that many here on HN would be millionaires, but as somebody who grew up in poverty and is now a full-time uni student with no savings in the bank, and no safety net, I wouldn't describe my life as comfortable, but I'm not starving or sleeping on a park bench either. My largest expenses are rent, food and medical expenses. If somebody were to give me a hundred thousand dollars to invest, I am quite certain I could live comfortably for the rest of my life. I'd never own a Ferrari, but why would I need to?
In other words, I think your comment reflects the very problem that the posted article is discussing. To me, the idea of needing $10 million to be comfortable and not have to worry about finances seems absurd. Unless your idea of a comfortable life involves owning a luxury car, or renting a $2,000 a night suite. I live on what many here would consider to be an extremely low income, and the only thing I feel I'm really missing out on is desperately needed dental work, and even that would be measured in thousands of dollars, not millions.
I apologise if my comment sounds harsh or impolite. It is not intended to be. I'm just amazed that anybody would think they need $10 million to be comfortable.