This is a commonly recited myth about lottery winners[1].
[1]: https://www.forbes.com/sites/johnjennings/2023/08/29/debunki...
https://www.reddit.com/r/AskReddit/comments/24vo34/comment/c...
https://www.nefe.org/news/2018/01/research-statistic-on-fina...
https://www.reddit.com/r/PetPeeves/comments/18xqcbw/70_of_lo...
AKA “the house always wins” philosophy
I expected something like a Snopes link. Ah well.
> 2019 by researchers at the University of Warwick and the University of Zurich, used a considerable dataset — fifteen years of the “German Socio-Economic Panel” (or SOEP). The SOEP has been surveying 15,000 German households since 1984.
> The second study, from 2020 by researchers from Stockholm University, Stockholm School of Economics, and New York University, surveyed 3,000 Swedish lottery winners
See this comprehensive list:
https://old.reddit.com/r/LotteryLaws/comments/v78hhy/anonymi...
>EuroJackpot Countries (Croatia, Czechia, Denmark, Estonia, Finland, Germany, Hungary, Iceland, Italy, Latvia, Lithuania, Netherlands*, Norway, Poland, Slovakia, Slovenia, Spain, and Sweden): 100% Anonymous if requested by the winner.
Compare it to:
>California: Not Anonymous/Only individuals can claim. “ The name and location of the retailer who sold you the winning ticket, the date you won and the amount of your winnings are also matters of public record and are subject to disclosure. You can form a trust prior to claiming your prize, but our regulations do not allow a trust to claim a prize. Understand that your name is still public and reportable”.
As far as I know, jwz was never a CEO, but he did the same thing.
"Sure it costs me a few hundred every month to keep the lights on, but it makes me happy."
Honestly, I wish more rich people did stuff like this instead of obsessing over making more money on the stock market or speculating on homes or whatnot. Learn to say enough is enough and switch to adding back to the world instead of leeching off of it.
This always stymies me. If I were to make it big, I’d want to go on to do other very useful things. But so commonly that doesn’t happen. Is it because they lost the fire? Because they were really lucky exactly once? Or perhaps their talents were suited only to that one thing?
This is most often a problem with traders and investors who made a good bet. Less so with something that took a lot of effort to make work.
I know a married couple who blew through an amount in eight figures and had to get low level jobs. Lost their house.
Few people achieve something big. Even fewer can achieve another big thing. Even less can continue achieving.
https://refhide.com/?https://www.jwz.org/blog/
(routing through refhide because otherwise you'll get a testicle in an egg cup; jwz is a principled man of strong opinions and one of many things he loathes is HN)
I have looked into this and found out that lottery winners are fine, that the viral meme about two thirds of them going bankrupt is not true.
https://www.nefe.org/news/2018/01/research-statistic-on-fina...
Most of the claims about lottery winners going bankrupt are uncited and unsourced. A few claims I was able to find pointed at this paper: https://eml.berkeley.edu/~cle/laborlunch/hoekstra.pdf
This paper shows people winning less than $150k having bankruptcy rates drop for the first 2 years, and then return to normal 3-5 years later. Like, duh, a small amount of money will run out. This paper has been widely and wildly mis-quoted as bankruptcy rates going up after a few years, but everyone seems to leave out the part where bankruptcy rates went down first.
The percent of people in this study who had declared bankruptcy after 5 years was slightly over 5%, which is the same bankruptcy rate as the study cohort had 2 years before winning money. 95% of lottery winners did not go bankrupt, and no multi-million dollar jackpot winners are involved in this study.
But there's no need for it in your investment portfolio. Pick a mixture between 20/80 and 80/20 stocks/bonds, buy index funds and you're good. Easy and scalable... This works for normal money too, but you probably want a meaningful amount of cash and you may want to more carefully choose your stock/bond ratio. Maybe if you've got tens of billions you might need something else, but it'll probably work for that too.
General comments:
- Most people who make a lot of money all at once blow it within seven years. Check out what happens to lottery winners, jocks, and rappers. As a rule of thumb, you can safely spend 4% of your net worth per year. Pay yourself some fixed amount each quarter.
- You don't have to get into complex investments. Half in some bond funds, half in some diversified stock funds will work out OK.
- Any investment where they call you is probably not very good.
Useful reading, although dated: "The Challenges of Wealth", by Domini et. al.
What to do with your life? No idea. What are you good at?
- I was a visiting scholar at Stanford for a while. But it was the "AI Winter" and not much was happening. Did robotics in the 1990s. Held patents on legged running on rough terrain, ragdoll physics. Ran a DARPA Grand Challenge team. Didn't really lead anywhere. Too early. Still programming. A metaverse client I'm writing in Rust is running on another screen.
- Horses have been good for me. Every day, I go out and spend time with a pushy alpha mare who keeps me in shape. "Riding is the only art which princes learn truly". Horses are not impressed by money. Neither are most riders.
- I've known a few ex-CEOs. One did a lot of reasonable little stuff but never did anything with much impact again. One founded a charity. Another was really into sailboats, and he just kept on with sailboats, crossing the Atlantic and such. He's lucky in having a wife who is also very into sailboats. One guy bought a nightclub, but it loses money year after year.