But that isn't at all what the quote says, that's what you attributed to it.
Perhaps that's what the HN audience really thinks of rich people and thus skipped that point? Someone thinking they are better than others based on wealth alone is an unmistakable negative in my book.
Having different values from "you and me" doesn't make people evil.
For most of history, it (mostly erroneously) did. In 2019, this also applies. It's just applied much faster over global distances through the Internet.
Personally I think both extremes are terrible, but leaning on the side of cynicism seems safer.
"soft where we are hard, and cynical where we are trustful"
In other words, how they are different from others. Not that they are fundamentally soft, cynicalm or bad.
It is more like they think they are better than us, and "but really they think they are better than us".
This studies are not even about the super-rich, people with like $50k cars are showing less consideration toward people that they fell are poorer.
Which is nonetheless both pertinent and important to keep in mind.
Only one claim per comment?
The rich man’s mentality can also work for middle class people if every purchase they make is a long-term well-informed decision, rather than flying with the pop culture of what everyone else is currently buying, wearing or visiting. For example, buy timeless durable unfashionable clothing, buy a used but durable car from which you can extract the best value in the long run, buy products which can be utilised for many purposes, etc.
With enough money, you can afford to wait for a good deal because you don't need the money right now to live. When you're wealthy, you can brave health issues, accidents, sudden crossings with the law, etc. without ever truly touching the money-in-wait for a good deal. When you're middle-class you definitely don't have as much cushion.
This is similar to the logic of "the best time to buy is a recession", except its difficult to buy during a recession purely because it's more likely that a middle class person's cushion is gone due to economic conditions and thus has no money to buy good deals.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.” ― Terry Pratchett, Men at Arms
No idea about the billionaires, but I can shift £5k from a current account to another current account with another bank for the princely sum of £0.00
It's likely not free (but probably not outrageous either)... Last time I did something like that the transaction cost was small (< €10) but the human element was large due to approvals (think i was in the bank over an hour and it involved 4-5 bank staff to make it happen). Anti-money laundering processes cost money and many of the crypto-currencies ignore this for now / pass the problem to the fiat ⇆ crypto exchange operators.
On the flip side, I saw a payment go through for one our suppliers today. $50 invoice. > $25 processing fee because it was a european bank processing a USD transaction. :/
For those not familiar, FPS offers 2h (normally instant) transaction speed.
As I understood, traceability is included by-design in Bitcoin. Maybe you didn't see the other comments, but all the bitcoins of this wallet can be traced back to one or several entities. All history of all transactions is available to everyone, so could you explain what do you mean by "ignored"?
I can wire hundreds of thousands of dollars from and into my consumer banking account for free. At work, multi-million dollar wires transfer for free, with an email confirmation and virtually instantly.
Cryptocurrencies are cheaper if you're laundering money or move money around too infrequently to bother optimizing for it.
And just today https://www.bbc.co.uk/news/world-us-canada-49643015
I don't pay outgoing wire transfer fees on my business account.
It’s rather moot as people and companies don’t keep a billion sitting in the same bank account.
He grew up during the great depression though, so maybe that has something to do with his miserly ways.
To be very rich requires upwards of $100 million. Then you can access high paying investments which will generate enough income to afford a couple houses, hire help, buy a boat and a plane, and have enough left over after taxes to increase your assets to offset inflation. Actually, if you want a jet plane (with hired pilots, mechanics, hangers, etc) and a couple nice houses (>$10 million each plus staff) in the nicest places (Beverly Hills, Palm Beach, Jackson Hole), you need upwards of $1000 million.
Having money does not make you wealthy. Having the correct financial arrangement to consistently make more than you spend is what makes you wealthy.
ADDED: Yes, you're "rich" but not jet-setting in business class at resort hotels, multi-million dollar coastal city condo, eat at top restaurants on a regular basis etc. rich. Which is actually just fine for a lot of people who have no particular interest in those things.
Nothing is guaranteed if things go totally to hell, of course. (And I did make the qualification of not being pegged to inflation.) But unless we get to a very bad place, I think that assuming 5% on these sorts of investments is a pretty safe bet.
(ADDED: But pick your own number. 3-4% probably is closer to the really very safe modulo inflation given instruments like CDs in that range. But you're reinforcing my basic point. $2M is not really the basis for a huge annual income in perpetuity or even over a multi-decade timescale if you don't have other income streams to add to that mix.)
Past performance does not promise future results, and the world could end tomorrow, but it's not a bad idea to plan that you'll get an average of 5%+ on market investment.
(I'll note that you're responding to someone saying "pretty much guaranteed" and dropped that qualifier in your question).
That said I think semi-retire is the best bet. You have $30,000 for existence, and then go and do a gig every now and then for that foreign holiday or home repair or whatever.
Consider checking your prejudice at the door.
Anyone with a couple $1000 can buy cheap etfs or index funds
In fact, isn't that basically the entire premise behind all the VC funds that fuel Silicon Valley?
Which often don't have especially high rates of return.
I don't really disagree with your basic point. At least somewhat higher investments do give you access to a wider variety of financial instruments even if diversified through a third party.
For the very very vast majority 100K in liquid funds would be a fortune they could never imagine acquiring outside of a huge lottery windfall.
in this context, one million dollars is really not much. if you have no job or pension, one million in assets grants you the ability to spend about $40k a year safely. you could certainly have a comfortable retirement this way, but it would be far from a luxurious lifestyle.
While the average farm size has been increasing approximately two acres per farm each year since 2012, the number of farms is decreasing. Today, the average farm size is 444 acres.
444*3140 1,394,160
US average farmer is a millionaire. Go ask one if he feels rich.
Most of the corporate structures I saw were family or a combination of family and friends.
That there's people with even more money is true enough.
I've never, ever seen Wheaties for <$4 per box, and it's never on sale.
That's also one of the few things I do respect about 'old money': they really drill it into their kids to not be ostentatious and wasteful with the familial wealth, thus escaping the aforementioned trap.
> Die erste Generation schafft Vermögen, die zweite verwaltet Vermögen, die dritte studiert Kunstgeschichte, und die vierte verkommt.
> Bismarck (1815–1898)
EN:
> The first generation creates wealth, the second manages wealth, the third studies art history, and the fourth degenerates.
P.S. If it "should be" cheap doesn't it make sense to complain when it's expensive?
Penny pinching and then dying a millionaire sounds awful, because what's even the point of having all those millions if you lived like you had nothing the whole time? Just a number on some imaginary scorecard?
Wasting away all your earnings and living a life of "luxury" with nothing in your savings is at least just as bad, because if something catastrophic happens, you got nothing.
Gotta strike that happy balance, where you get to enjoy the money, yet still have a substantial chunk of it saved.
Building generational wealth for your progeny.
GP said their grandfather died a multimillionaire. That money can go to his children; managed well over their lifetime it will double several times over. And learned frugality on their part means they have an even greater sum to hand to any children they have (like GP!)
And if a catastrophe struck - be it a local one like joblessness or divorce, or a global financial crisis, whatever - grandfather knows that his austerity guaranteed his children shelter, food, and education in the future. That's a powerful reason to make decisions. Hell, in our animal brains, that's probably one of the most powerful drivers of decisions: what should I do to benefit my family?
The point is, is it worth it if you do not get to enjoy even a part of that at all? What if you don't have children? Assuming there is nothing after death, the personal result of being a penny pinching millionaire vs. just not having that much money at all would be the same.
Presumably he had a good family/friends, which is what matters, no?
Investing in your family's future is an incredibly noble/selfless thing to do, it takes real character.
Edit: I'm getting the impression that a large subset of people replying ignored my parenthetical comment.
The amount you can create via saving is minuscule compared to starting a business, investment banking, being a lawyer etc. Work creates wealth.
Side note, many of the people I know who are wealthy enjoy spending it which is the antithesis of penny pinching.
1. Have wealth given to you.
2. Live beneath your means (aka save part of your income)
I get "penny pinching" can mean being cheap or something. But ultimately, saving is what makes you wealthy. And it's a much more accessible and in your control than winning the lottery of life by starting a successful business, or being some hotshot lawyer.
Side note: Warren Buffet enjoys not spending his wealth, which is exactly penny pinching ;-)
https://www.scmp.com/magazines/style/people-events/article/2...
This is where your premise breaks down. There are millions of people who do this who are not “wealthy”. They’re just “retired”. Acquiring real wealth requiring vastly more then your means to the point where the ratio of income to expenses doesn’t really mean much.
Even if you consider Buffet a penny pincher that’s not how he created his wealth.
Funny enough, though, Buffet got started working a pretty regular job, saving over a million in inflation adjusted dollars before starting his business.
As to why this myth persists, I guess it goes well with American puritanical roots. Many possibly don't belief in a strict correlation, if not causality, of everyone's financial situation and their individual moral character, but still promote the idea. See also: prosperity gospel, Ayn Rand.
https://money.usnews.com/money/blogs/on-retirement/articles/...
It says that most people are rich because their parents are rich. Not because they inherited their wealth. Stable home life, good schools, good network, good attitude and a financial backstop in the event of disaster (which allows a higher risk appetite) are all things that correlate positively with becoming rich. Your parents can give these without a penny of inherited wealth.
Fair enough. It's an astute observation, but it's misleading to say the first sentence, yet not imply the second, since most people aren't going to read into it that deeply. You'd just say: "Most people who are wealthy are so due to their stable home life, good schools, good network, good attitude and a financial backstop in the event of disaster". Why would you lead with parent wealth? It pre-supposes inheritance without additional context.
You can pay for someone's top university education (~$250k) and pay their food and rent for the first 10 years since they graduate (another ~$240k).
Notice how there's no direct contribution to their net-worth.
i.e. if there is no / limited value then it should be cheap...
Is value synonymous with ROI in this case?
In America, we pretty much all agree that wealth originates in labor. The crucial open question is, 'Whose labor?'
If you're rich, you're an marked target for every Tom, Dick and Harry out there looking for a quasi-free ride (not even counting the outright criminals).
For example, wire transfers in the US are fixed price regardless of the amount, ACH transfers are practically free, mortgage rates cannot go lower than treasury notes, etc. Or maybe I am misinterpreting who you consider as "normal people".
"Fitzgerald: The rich are different from you and me.
Hemingway: Yes, they have more money."
"Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different." (The Rich Boy, 1926)
All of the information normal people--like you and me--use to price transactions like this is completely irrelevant. Rich people have access to many services and price structures that are completely different than normal people. Any guess about what it costs to make a transaction like this via normal channels is likely completely wrong (other than "free", assuming they are doing business with the bank in question).