(FWIW, I maybe should at some point buy a car--as I currently waste money on renting one; pre-pandemic I was using a combination of ZipCar and Lyft, but both services suck now--but I can't imagine myself buying a pointlessly extravagant car; and, sadly, now is a bad time to buy a car anyway... which I think is related to the ZipCar issue: I imagine they might have sold their fleet? Maybe ZipCar will return in force when prices rebalance.)
It's about winning the lottery but still applicable to some extent, and shows how people's lives go horribly wrong.
I'm not sure this is a sound analogy, but imagine someone picking up cigarettes for the first time and building up tolerance over time as they go from one cig a day to two, three, four and so on. Now, compare that to someone suddenly smoking 10 cigs per day. The latter person is more likely to get wrecked from the side effects.
Edit: I checked your profile and saw that you're the co-founder of Industry Dive, damn. I love your newsletters and websites!...especially Payments and Banking Dive.
Not sure if that's true by number of gamblers, but my gut says it's mostly true weighed by the amount of money gambled away. I say mostly, because we don't count rich kids / oligarchs wasting money for fun, who might dominate the value chart.
Suppose another ape and I are out enjoying the State of Nature, and we both should have a round troy ounce of silver in our pockets, with heads and tails as an agreed convention. Suppose I were to say to the other ape, "on whose face does Fortune shine her rays?" and we were to flip both rounds, such that whomever showed heads had the better of it: were it both of us, we would exchange, but one head and one tails, well, one ape will leave the gamble richer and the other skint.
Tell me toolz, how should you prevent this encounter without committing a human rights violation? Show your work, please.
All I've said is that you, nor I, should be responsible for making this behavior possible - you seem to have misinterpreted my intent completely if you think the absence of a right is the same as a mandate against someones ability to participate freely as they wish with other consenting adults.
Like without getting into nits, you can actually directly effect the direction and value of a company, but you can't affect the roll of dice or the output of a random number generators.
Risk in and of itself doesn't imply the entire thing is gambling; that said, investing by itself would be way closer to gambling in that context, imo
I'm saying the opposite of what you seem to be implying. I'm saying anyone can gamble or start a business, but it's no ones responsibility to make sure they have the option to do so.
Most people who are the poorest are usually the ones who know exactly where their dollars are going. They can tell you exactly how much a carton of eggs and milk are.
You're making the assumption that everyone plays the lottery because they think it is a smart financial decision.
On an individual level, gambling is roughly breaking even in the long run (say, 95% retention of the resources).
Yes, it is.
> It is a transfer of resources from one entity to another. It's a zero-sum game.
All real gambling consumes as well as transfers resources, and is, therefore, negative sum.
By your definition it seems literally everything is a "waste of resources"
Most activities use resources.
Many produce value and are not a waste of resources.
No it's not.
Are we "debating" like in first grade or what is this?
It's easy to say "well, lotteries have a negative expected payoff". And that's true, but it can still have a less negative payoff than a payday loan or having your car repossessed.
The utility of $2*X is not exactly twice $X. It can be more or less, and that can differ between different people.
That said, it's more likely that someone whose life ended in poverty is not as smart as someone who can live comfortably. IQ generally correlates with income (you can google a few studies).
There are surely tons of reasons that can push smart people into poverty (bad health, poor environment leading to poor choices) but that shouldn't obscure the general trend.
That said, I think over a certain IQ, other traits of your personality or the environment will have the predominant effect in determining whether you'll end up poor or not.
Similarly, over a certain amount of money, I'm sure there will be more variance. Making 5k more than your peers doesn't mean you're smarter than them - and the fact that you're all able to earn a living and save some money means you're all smart.
That Reddit comment is not about 'poor people', though it's true the scale is a bit different.
There are plenty of horror stories that are below $10 million.
Assuming that was unintentional, now might be a good opportunity to reflect on unconscious bias.
I was in jail with a guy who was a total mess. Nice, but seemed pretty mentally-disabled.
One day a new guy came on the block. "Wow, what is George doing in here?" "You know him?" "Yeah, I know him. He is one of the greatest musicians I ever met. He can play any instrument like a savant. I knew him a few years ago, just after he inherited $4m when his father passed. He ended up getting in drugs and everyone would hang out at his house." "Wow, who was his dealer?" "Who was his dealer?! EVERYONE was his dealer!"
I'd been keeping George in coffee, because he didn't have a single cent on his commissary account (which is rare in jail, even the worst criminals usually have someone out there). Poor George had snorted or injected $4m of drugs and everyone had sold them to him and partied with him until all the money was gone and George's brain was cooked and he went around shaking his fist at the sky until he was arrested. And not one of his hundreds of "friends" would put a cent on his account.
https://news.yahoo.com/zappos-founder-tony-hsieh-didnt-17410...
This bankruptcy thing is a myth that seems to have been made up and won’t die. I’ve looked into this in the past and the only stats I could find that back it up are based on small winnings, not large winnings, contrary to your redditor’s claims, and the bankruptcy rates were temporary. Get this: the bankruptcy rates went down 2 years after winning between $50k-$150k, and then 3 years after that they returned back to normal. The returning back to normal from a low point was cherry-picked and reported widely as bankruptcy rates going up. Misleading, right? Here’s the Florida study this misinformation was based on: https://eml.berkeley.edu/~cle/laborlunch/hoekstra.pdf
The National Endowment for Financial Education has issued a press release about this bankruptcy misinformation: https://www.nefe.org/news/2018/01/research-statistic-on-fina...
I am grateful for this insight.
That said, I do concur that Zipcar sucks now, compared to what it was. I've still never used Lyft or Uber, so can't comment on those. Oh wait hold on, I did try once to gift some Lyft rides to someone via the website and was literally unable to successfully give Lyft money. Still, I would say it makes less sense now to buy a car (even electric) than at any other point in history.
Get a fun car that can be a hacking project :)
I was suggested a police car by a friend. They are cheap at auctions, more or less well maintained (tax payer money) and have interesting internals (check sites like https://www.dippy.org/upgrade/dipcop.html) especially for electrical circuits where a police-taxi-module lets you hook up to other functions.
And the laptop mount is a geek dream: your laptop right by you, charging, which doubles as a make-do coffee table at the drive through :)
Except that
1) a lot of them are Dodge Chargers which are terribly unreliable
2) they spend incredible amounts of time idling, which isn't good for the engine of a sports car
The problem with a car is for most people it’s their most expensive or second most expensive capital asset, yet has a very low utilization rate (often less than 5%). If interest rates rise their op ex in servicing it (fuel, insurance, loan interest) will exceed that!
A few years ago I sold all my cars. I found I only drove at all a few times a week at most (walk/bike instead). Like you I switched to ridershare/rent and it was fine. My motivation wasn’t really to save money but just eliminate the hassle of having all those cars.
Make sure to read it.
https://www.zillow.com/sunnyvale-ca-94087/luxury-homes/?sear...
Edit: Don't want to sound too negative. This is a great windfall. Simply sticking it into an investment account should pull in financial independence/retirement by 5-20 years, depending on his age.
My _kitchen_ remodel in 94087 cost over $100k
Yesterday I was reading "how to drop out", to me it seemed like a bad plan overall: https://news.ycombinator.com/item?id=30318285
Some people want to learn to live on the cheap to drop out, or to fatFIRE (which is another way to do the same). Personally, I love working and doing interesting things, and being with other people and society itself!
So my personal plan is the opposite of fatFIRE: work until I die regardless of what happens on the side, because I enjoy what I do, so stopping what I do just because something happened on the side would be like punishing myself, then waiting to die out of boredom?
Doesn't seem like such a bright idea to me. Maybe it's different (if you don't like modern society, or maybe other people, or the idea of work itself?
Currently people are pessimistic about stock market returns going forward so it could be lower (3-3.5%). And even lower if you want it to last longer than 30 years.
The market historically has been going up, so at least historically it's been reliable to get a fixed income. I don't think $2M is sufficient to retire very early, mostly because of bad years and that your initial capital loses value over the years, but it can generate a nice income and most people can have something on the side that generates some extra money as needed. With $4M I would be more comfortable retiring at 40 let's say, depending on cost of living of course.
"Fixed Income" is more about structurally reliable and consistent returns, rather than historical average returns.
An outlier bad year can easily wipe a huge percentage of capital invested in stock--but the younger you are, and the more buffer you have, the less likely this is to be a problem. But don't mistake that for fixed income!
Fixed income usually refers to interest rate products, and as mentioned above in this thread, the inflation-adjusted rates have been pretty bad. Pretty much since the start of Quantitative Easing, I believe.
You could buy an annuity from an insurance company. A quick Google search shows that $2mil should buy a 40 year old about $70k/year for the rest of their life.
Annuities really just work well if you are 80+ and want to insure against longevity risk.
- Long term vs short term
- different rates
- state capital gains taxes
In this case, with the receiver being a CA resident, he pays almost certainly more than 50% in taxes on this bounty.
Plus state income taxes.
More seriously, will you keep it in the bank and extract $100k a year the rest of your life? What are you going to do?