Repeat after me: If you think it's only about the money, you're missing the point.

And even if it is all about the money, most 25 year olds would jump at a 1% chance to make $10 million over a $100% chance to make $200K. Not mathematically rational, but if everyone was rational there would be no outliers.

Most entrepreneurs (generally, not just tech) are in fact in their 40s-50s. Well established professionals with good relationships and skills. Thing is they are usually doing it with Other People's Money, not their nest egg.

But prescient market timing greatly skews the odds in your favor and gives you a huge edge too -- I think that's apparent in all the startup successes that started off with a small hand.

In the end, the hits I had were more or less luck, though. And on microscopic levels of investment, so I didn't get rich.

Except when you're not. I can't count how many times people I've met have been suckered into taking substantial pay cuts for not a lot of equity.

It's a real facepalm moment - what do you mean you're giving up $40K+ a year in salary. Did you know that even if your startup hits all of its wildest dreams you'll cash out for $80-100K after about 5 years? How in the world did that math ever make sense?!

I flat out refuse to talk to any founders that try to swindle people like this. Either put more equity on the table or pay me market. Quit relying on a tired lie.

I assume your "making 100K" is the salary. The pre-tax salary. Taxes will chop that pretty much in half. So if you save $40K/year, you get to live off of $10k in the second most expensive MSA in the US. Good luck.

And this ignores tax-advantaged savings

Wikipedia says federal tax for those making between $83,600 and $174,400 is a fixed $17,025 + 28% of the amount over $83,600.

ftb.ca.gov says that California state tax for those making between $48,942 and $250k is a fixed $2,154.83 + 9.3% of the amount over $48,942.

This gives

California: $6,903. Federal: $21,617.

Then there's about $6600 in SS+Medicare+SDI and approximately $5500 standard federal deduction for a grand total of about $30k in taxes.

http://www.investopedia.com/terms/i/independent_401k.asp

  Annual Gross Pay	$100,000.00
  Federal Withholding	$19,794.50
  Social Security	$4,200.00
  Medicare	$1,450.00
  California	$7,257.14
  SDI	$955.85

  Net Pay $66,342.51

Annual Gross Pay $100,000.00 Federal Withholding $ 15,292.50 Social Security $ 4,200.00 Medicare $ 1,450.00 California $ 5,518.04 SDI $ 955.85

401k $ 17,000.00

Net Pay $ 55,583.6

That is unless you're talking about the city of Detroit (which is flirting with bankruptcy) that pays 7% plus and is riskier imho than doing a startup.

http://blogs.marketwatch.com/fundmastery/2010/03/12/goldman-...

http://massachusetts.municipalbonds.com/bonds/issue/914440KJ....

Also can also buy some REITs with annual high-dividend yield of 17% such as AGNC or NLY. These are a bit riskier due to fluctuating principal out on the open equity market. However, can mitigate this risk by owning ITM calls prior to ex-dividend dates and capture also run-up profits.

http://www.usgovernmentspending.com/state_debt_rank

http://www.forbes.com/sites/rickferri/2012/07/19/the-yield-t...

Also, are you speaking from experience with your hypothetical? If so, I'd be interested in discussing some other things further.

Don't forget to mention that those calls aren't cheap.

Personally I have a diversified portfolio that yields about 6%, with corporate junk bonds (US and emerging market), emerging market sovereign bonds, business development companies, REITs, mREITs, and international high dividend stocks.

http://www.businessinsider.com/t-rowe-price-us-equity-outloo...

That doesn't apply to most depression, that being often a serious biological problem. No amount of success will cure that. That requires psychiatric help.

It does alleviate a certain gnawing unhappiness that most ambitious people experience (unless the definition of success is raised, which it often is).

If you think Muni Bonds will stay at 6% for a lifetime, you're misinformed. 1) Government owned consumer debt is up nearly 5x in 5 years 2) Lately Muni Bonds have been swinging more than stocks themselves 3) Take Pimco Municipal Income Fund (NYSE: PMF) as an example. It's price has appreciated 7% over 10 years, TOTAL. Even with dividends you're looking at best 3% and at that point you've successfully managed to do nothing more than keep up with inflation.

If you can cut your cost of living down $12K, then only $200K is needed.

If you're happy with a $30k return on a $3m portfolio, you need to get a 2.8% return in today's inflation environment.

-- You should never be happy with this. IMHO.

Edit: I assume you mean that over time interest bearing account rates rise with inflation. That's true in general, but as the current situation shows, there's no guarantee they're actually even above the inflation level at any point.