My wife and I were just having a conversation about wealth over coffee at breakfast this morning. She mentioned reading something about Sergey Brin and Larry Page stepping down from Google and it lead to a discussion of personal wealth and what creates a person's ideal wealth. What is your ideal wealth level Hubski?
Will we all converge on a similar value, or at least a value that brings us a certain sense of security and ability to take action?
My wife and I posited that there must be a u-shaped curve for personal wealth. At a certain point, being a billionaire for example, comes with all sorts of personal responsibility (noblesse oblige) , and/or interlopers constantly looking for a piece of the action or funding for their next business venture.
What do you think Hubski?
One of the best and worse times of my life was when I was so broke, it was scary. I was in such despair, every little moment of happiness was like brushing against the clouds of heaven. A six pack of beer. Fresh vegetables. Cooking rice and beans and discount ground beef with friends and enjoying it. D&D sessions. Sitting outside and just listening to music. All of it was sublime, it was worth the moments of empty fridges, worrying about how to pay bills, getting angry over deadbeat roommates and free loader friends. Like Ying and Yang, every moment of hardship brought every moment of happiness into stark focus. But the despair and the happiness both were tangible, easily identified and embraced. People talk about wealth like its dollars and sense. Material wealth just turns the world into a grey blob. No color. No contrast. No texture. Wealth isn't about having things. Wealth is about knowing who we are, what makes us happy and why, what hurts us and why, and becoming comfortable with those moments of despair just as much as we enjoy those moments of happiness. We can want good things, and they may never come, and that'll make us feel unfulfilled. We can want to end pain, for ourselves, for others, and that too may never happen, and that unfulfilled want just makes the suffering that much worse. Wealth isn't about having. Wealth is about being. Be happy. Be sad. Be here. Be there. But above all, be you. Be really, truthfully, you and you'll have a wealth no law, no thief, no disease, and no calamity can ever take from you. Today was an awful day, but it was also beautiful, and I'm thankful for it all.
I think you pose a very empowering viewpoint. Monetary wealth can definitely insulate us from many, but certainly not all, of life's hardships. I agree that a large part of wealth is a state of mind. Your reply reminded me of "Pain is inevitable, suffering is optional". Our ability to reframe our life experiences and recognize our good fortune and over our shortcomings is definitely a path to wealth.
What an amazing experience for your parents... I can imagine how full their hearts were! I did a similar thing a couple months ago. Family (4 + my wife) plus extended family (3 more) all went to a 'nice place' for dinner that my parents particularly like. We all had a lovely long meal... wine, appetizers, main courses, desert, etc., and like two hours of conversation and laughing. I'd slipped our server my card before desert even hit the table, so when my Mom inevitably went to pay (as she and my Dad had planned/assumed they would), their card was refused because the bill was already covered. They looked down the table and saw me signing the check and handing it back to our server. The total was something like $525, all in, with a generous tip. I paused for a moment when I got the bill, thinking "woah... I figured we were in the $380-450 range". Then I realized the difference between my guesstimate and the actual total was around 2-3 hours of work... and I had to pause a moment and think about that again... it put zero stress on my finances to throw another $150 on a restaurant tab. I've spent the majority of my life living pretty much paycheck to paycheck. It's only the last 4 years or so where I have finally had a safety net and four-digit balance in my checking account. It's nice to be reminded of the privilege I have had, and to share that with the ones I love. And yeah ... my parents got misty-eyed at me picking up the bill, too. They are also proud parents.
That sounds like a fantastic night. Topped off, we had wonderful service all throughout the night. The place started off really busy but our server was on the ball the entire time - remembered everything, even the smaller requests and weird drinks we were trying and who ordered what. You know how sometimes the staff will come along with meals and say the name so whoever ordered it can indicate it was theirs? No need for her, she just scooted by and popped them down without having to double check - spot on. At the end, I mentioned to her at the counter that it felt odd not being able to tip (it's not done here in NZ) for such awesome service and all she said was: "Just come back and eat here again, that's our mark of great service". So we did!
You know what? I don't have an answer. I managed to scrape together $20k and a $50k loan from family to get a $300k loan from a bank to build a business and now we're providing the livelihood of seven people directly. Our biller went from a staff of one to a staff of five. I've got three different support groups meeting in there every week. My biggest worry is that I'm not providing them a good enough livelihood. I want to be able to provide benefits. I want to be able to provide retirement. There's two women that I know of whose ability to raise children out of poverty depends on my ability to market my business. When Ethereum was fuckin' riding high? That was great. I could see a future in which I was providing jobs for six or seven watchmakers I know that are currently hand-to-mouth. I could see jobs for three or four machinist friends. This is the thing about capital - it enables labor, so that labor can support capital. I went to Hawaii and envisioned a future in which I invested in converting the agriculture there from conglomerate-owned low-yield crops to native-owned chocolate. It ain't even a very high point. I've been able to fund my retirement one year out of the past three and the money I see is pretty much a lever to help others. It's safe to say there's three quarters of a million dollars worth of student loan debt on my payroll. Let's say we wipe all that away. Let's say I stand up a watch manufactory. Will there ever be a point where I go "you know what? I can't find anything useful to do with more money"? I can't think of one. Some wag on Twitter pointed out that Michael Bloomberg has already spent more on advertising a losing presidential bid than the US Government spends on NOAA in a year. Think of that. A vanity project costs more than protecting the entire fucking country from tornadoes, hurricanes, blizzards and flooding. Do I think I could come up with something useful to do with a hundred million dollars? Yer damn skippy I could. I allowed myself to buy a $25k car only after I spent $2k on someone's kidneys. Could I see myself in a $125k car? I mean, sure, I'd love one but there's so much more I could do with that money. And I have a sneaking suspicion that's where Republicanism comes from.At a certain point, being a billionaire for example, comes with all sorts of personal responsibility (noblesse oblige)
You know what? I don't have an answer
You don’t have an answer? Whoa. As you are the most prolific Hubski contributor, (am I right?) just seeing that statement, by it’s rarity, makes it pretty damn valuable. You provide quite a wealth of information and thoughtful responses to all Hubskiers, don’t forget. Thanks.
"People see money three ways: as blood, to nourish; as semen, to create; and as shit, to be thrown away." - Julia Philips, You'll Never Eat Lunch in this Town Again Ms. Philips claimed that was an old Yiddish saying. I'm neither old nor Yiddish so what do I know. She pissed off a lot of people with that book, which was the point. Thing is though? Take it at face value. Suppose money is something that's supposed to enrich your life. Will you reach a point where your life can be enriched no further? Certainly. I've done work for billionaires. I've seen what kind of music studio you can build when money is no object. Front yards full of Chihuly. Waterfalls under glass. In the words of Bill Gates, no matter how much money you have, a burger is still a burger. So sure, there's a limit there. Suppose money is something that's supposed to challenge you. How big a party can you throw? Goldman Sachs is currently settling with the DOJ for their involvement in a scam that basically used the Malaysian Sovereign Wealth Fund to find the answer to that question. Could Jho Low have spent more money? Probably. I mean, they spent it all. What do you do when you've determined how much it costs to get Paris Hilton to go on a date with you? You determine how much it costs to get Paris Hilton and all her friends on your boat. Then you shoot Wolf of Wall Street. that there is a function that asymptotically approaches infinity. Ahh - but what if money is the lever you move the universe with? I got in a big fight with a buddy once over art vs. commerce. He loves goofy little indie movies. I pointed out that goofy little indie movies kill the careers of their creators unless they have bottomless phat stax to burn. He turned to me outraged and said "If you could make ONE MOVIE - just ONE - what movie would you make?" "The movie that gets me another movie," I said. He stormed away. Sure 'nuff, those movies are gone - what you have are "passion pieces" paid for by someone's parents and the Marvel Comic Universe. Someone walks up to you. Says "here's a hundred trillion dollars. We think it's enough to eliminate war, hunger or inequality but not all three. What do you want to do?" I wanna turn it into three hundred trillion dollars and we still haven't eradicated malaria.
Growing up in San Francisco and being a part of the 80's-90's computer boom there, and the rise of the internet and IPO's, I know quite a few super-rich people. Or, I USED to. The problem when you are a wimpy little geek who whips up a piece of software, and then sells it for $100m to Google, is that now everyone "knows" you have $100m in cash in your pocket, and you were living fine on $75k/year, so you have "extra" money to give to them for their loony project. So you stop reading emails. And returning calls. And get a private cell number. And isolate. Because you still are, at your core, an introvert who thinks an ideal week is sleeping during the day, ordering a pizza, and sitting up in your living room all night coding, or playing games. And avoiding all human contact. The balance in the bank account doesn't change that part of your personality. Unless... you become a colossal dick, and abuse the large number of extraordinarily hot women who suddenly find you attractive, after you have had zero game your ENTIRE life. And you become "entitled" to this type of treatment by women, and expect it from ALL women... including the ones that work for you. Because you have never managed another person before, and now you are the CEO of a huge corporation and have to give interviews and fend off hot women and drugs and your senses get dulled from the constant stimulation and really all you wanna do is order a pizza and sit in your living room and have a 15-hour CoD session... So yeah... After a tipping point, it's not about the quantity of money, it's about the quality of what you do with that money. I'm at that tipping point of comfort, simply because my house is paid off. That's $1800-2500 a month that is NOT going out to a mortgage company. That is a LIFE-CHANGING amount of money for something like 97% of the American population. Saturday I went to this fantastic block in the Georgetown neighborhood of Seattle, where a friend of mine has bought ALL of the warehouses on the street and converted the entire street into artists studios. Blacksmiths. Painters. Sculptors. Ceramicists. Woodworkers. Sound artists. Fire arts. Everything. I was able to buy each of the pieces that really spoke to me, and support a local artist. I have these things in my home now - along with others I have acquired over my lifetime - and will cherish these items, not just for their beauty/utility/whatever, but because I was able to use my money to support a local artist... who uses local materials... who pays rent to a friend of mine... who is creating a vibrant arts community in my city... which is being swallowed by Amazon and Google and Expedia and and and... And the kicker is, that I make about 10% over the median income in my city. I am not "rich". I am not "wealthy". But I am comfortable (barring any health issues that come up), and I'm good with that.
I will write more on this once able; however, I think that free from debt, and free from the fear of debt, is what wealth is all about. updated: I believe that wealth is a state of mind, and that it has little to do with what you have, but more to do with how you view what you don’t have. Personally, I want for very little. I don’t need more money to have things that I want. What I do want, is to be free from the risk of losing what my family has. I know that the biggest risk to that is our health. For that reason, I want enough wealth that I can go to the mat when it comes to medical bills for anyone in my family, and for us to be able to survive that financially. My parents were teachers, and my father broke his neck when he was in his early 40’s. Due to their healthcare, my parents were able to keep their jobs, keep their home, and keep their retirement. Teachers aren’t wealthy in the traditional sense, but my parents had wealth. It wasn’t in their bank account, however. I believe that most teachers today do not have that kind of wealth. I have mixed feelings about generational wealth. From the limited experience I have with beneficiaries of generational wealth, it doesn’t seem like a healthy thing. I can honestly say that, I am glad that I didn’t have generational wealth. I don’t’ think I’d be a very interesting or fulfilled person if I did. I have a feeling that if passed on generational wealth declined by at least 50% per generation, it would be a good thing; not for the sake of society, but for those that are beneficiaries of it.
I have three kids and hobbies. If I knew I didn’t have to work another day and could take care of my wife and kids and pursue my hobbies, all while leaving behind a nice inheritance for my children and grandchildren, I’d feel wealthy. That’s probably somewhere in the $50-100m range. Rich? I feel rich now. I’m a fortunate person. I have a wife that makes a lot of money, I make a decent living working at something I am passionate about. I own shares in my company that are increasing in value. So no complaints. But.. what I’m after ultimately is generational wealth. I want my future great-grandkids to be appreciative that great grandpa Clausnitzer started Forever Labs. I want my kids and grandkids to be a part of a dynasty of innovation. Having financial freedom, if coupled with drive, creativity and intelligence can lead to good things, I think. I want my kids to have those things. And, I want my wife to have her dream house and me to have my dream music studio. Once I’m wealthy I’m going to contract kleinbl00 to help me set it up and design it :)
My local optimum is between not feeling constrained by lack of money and not having the stress of pretending to enjoy competition or give a shit about business. That was high five figures, when I didn't need to check my bank account before buying a book/hardware/whatever and still ended the month with a larger savings account than I started with. Anything offering a higher salary since has looked like more trouble than it's worth.
After tax, $1m turns in to $700k. Let’s say you can get 8% a year returns from it. That’s $56k a year. So, if you don’t want to diminish your wealth, you have to live on $56k a year. Not shabby if you’re a single person, but also not terribly lavish.
You're going to be taxed on that $56k a year, too - that's capital gains. So you're going to lose 15% of that - you're at $47,6. 8% is also kicking ass in this investment climate. Unless you're throwing it all at an index fund, and never move it, you're averaging 3% over the past 15 years. But let's say instead of 8% a year you have a 7% year. You're at $49k. This year you make $41k. Ohh, shit - we have a down year and we're down 10% (2008 was down 37%). That one...million dollars you've been keeping flat, which is actually 700,000, has just become $630k. Let's presume you're going to live lean that year - you can get buy on $20k (which sucks for a "millionaire" but there it is). You used to have a million dollars; now you've got $610k. And suppose it goes up 20% next year - you're back up to $732k. But you only get to pull $32k of that because you're trying to rebuild your nugget. This is the life of a pension fund. Of an endowment. Of every municipal worker's retirement, of every teacher's retirement, of every school's operating fund. And remember - they were planning on 8%, too. And they've been running 3.
You roll up to the gas'n'sip with a million dollars and you will become a target. But you roll up to Doral with a million dollars and no one will give a FUCK. Take your million dollars to Columbia or Venezuela and things are awesome... so long as nobody knows you have it. I know a girl whose first husband was kidnapped twice in Mexico City. For like $10k ransom. I know a guy who spent $10k on a muffler. - “A man's satisfaction with his salary depends on whether he makes more than his wife's sister's husband.” - H. L. Mencken
People discount the fact that we tend to roll in cohorts. It's unlikely that you'll be vastly more successful than your friends; what tends to happen is we self-select for our level of achievement as we age. Robert Caro said "power doesn't corrupt, it reveals." I think the same could be said about money. It's certainly a lot easier to be magnanimous and generous when you have enough; I think that's one of the reasons Trump won. All the people who used to be generous can't be anymore.
I guess you have to deal in upper and lower bounds for this type of question. The upper bound is hard to answer and likely doesn't have an answer other than "the maximum I could reasonably own without people finding out". I would pay a lot of money to keep my anonymity. I have a feeling this would be far less than 1 billion euro. The lower bound is easier and more interesting, I would say take a lump sum that would pay off my mortgage with enough left over such that when it is invested in a mutual index fund would pay around 100K euro per year after tax at 3% return. I believe that would allow the main fund to grow slightly faster than inflation (so i am not losing value). So around 3 million give or take? Obviously you need more if you aim for a 2 or 1% payout rate per year. The goal would be to fund my current or slightly improved lifestyle without needing to work for a living. Freeing me to do what is most meaningful to me, rather than working 40+ hours a week. I like my job, but not working 40 hours per week for the next 30 years is like being gifted 10 years of do-what-you-want-to-do time. And time is all you have when you get right down to it.
There is so much to do but sadly a lot of the stuff I want to do is not really lucrative. I wish I had loads of money so I could pay my friends to do all kind of awesome stuff like build shit and make art. I don’t make lots of money right now - but I have loads of free time and have so much fun that I don’t mind! But I do want to have kids someday so I should figure out something at some point. I feel as long as I can afford food, rent and drinks I don’t really need anything else right now :)