I expected a better article to be honest. Some of the ideas are correct, but I think the perspective is overall wrong. For one he is probably ten times richer than the average tech worker.
But you don't want to be rich as much as you want to be wealthy. And that isn't just about money. My friends in other industries didn't make as much in their twenties, but the are relatively wealthy in their thirties. Their career, prospects and family life is generally better than my friends in the tech industry.
The whole article is basically all the other things you should do and manage to try to become successful. Most of it unrelated to technology. That isn't wealth in my book, nor is it happiness.
I agree. I respect Troy enormously on the subject of security (and making that subject more accessible) but I saw one of his "Hack your career" talks last year and found it to be much too focused on money, along with a big dollop of survivorship bias.
Yes. Being wealthy is a feeling, the feeling of abundance. That feeling can be achieved at many income levels. It depends on the person's character.
A person with modest material desires can feel very wealthy with only a modest amount of money. It is more than they ever need to be happy. They may be inspired to donate the excess to help others.
Another person can be making silly amounts of money but it is never enough, never feels like an abundance to them. They grasp for more, become ever greedier, needier. Despite having vast amounts of material things they are actually the opposite of weathy.
> Which leads me to the "but money can't buy happiness" position so many people have repeated over the years. Bull. Shit. Anyone who has ever said that simply doesn't know where to shop.
If happiness for you is about things you buy in shops, then you are a shallow person, and you are missing out. A lot. In fact you are poor, but in a spiritual sense. The next statement: "money spent on physical items can bring people a huge amount of pleasure" reinforces the impression that you have some concepts confused.
It's great to have cool stuff, and thanks for the probably sound advice on how to achieve that. You don't have to try to convince (yourself?) that this equates happiness.
Eh, to each their own. If Troy enjoys expensive cars, what the hell. It's his money. I'm not into expensive toys either but I don't judge other people for "materialism" and feel superior about my woo-woo individuality / spirituality.
I would agree with Troy's conclusion that "money buys happiness," but take a different tack. Money buys financial security, and financial security buys avoiding many kinds of hardship and grief.
You can have money and be unhappy, and you can be evicted because you can't meet rent and be happy, but it's probably easier to be happy when you aren't worried about paying the bills.
Money buys the ability to follow expensive hobbies. e.g. skiing, travel, anything that requires lessons to pick-up as a skill.
Money affords the ability to travel at convenient times instead of cheaper off-peak schedules, so that you ultimately spend more time with your family and friends.
Capital investment can help creative pursuits, such as a well-stocked kitchen greatly increasing the amount of joy you can have when cooking, or the benefits of being able to relax with a home cinema/gaming/sound system that you can be truly immersed in.
Most importantly, it brings peace of mind. In my opinion one of the greatest freedoms is not having to worry about the future. Something you don't appreciate until you gain it, and something you could never imagine giving up once you've experienced it.
Don't kid yourself that you can't buy happiness. It won't dig you out of a hole if you have deeper issues, but it's definitely a significant platform to stand upon.
He is not saying all hapiness can be bought with money, but it's quite obvious that many things that make one unhappy can be solved with money, as also many things that make people happy are bought with money.
And I'm not even talking about objects. For most people having something good to eat and a warm cozy place to live is already happiness. A happiness most people in the world can't afford BTW.
I went from being very poor to above average thanks to the tech industry and at first it really seems that money solve all problems and bring happiness. Now I like to think about it as money make you live comfortable, healthy life but these things have nothing to do with happiness. They are important but you can be very comfortable and still unhappy. What makes you happy are good relationships with people and family, and achieving your goals (which might not be related to building wealth but more like helping your community or discovering the purpose of the universe...)
Troy is talking about using money to get more choices on health and helping people. That doesn’t sound like shallow stuff. But being unable to help yourself or others sounds like a place of despair.
It doesn’t take a lot of creativity to imagine how money connects to important things in life, such as buying opportunity and safety for children. Or having someone who spent years in medical training and debt hover over your loved ones (does anyone have a prerogative to a doctor’s time?).
Opportunity isn’t shallow. Choice and freedom aren’t shallow. Will your loved ones never experience tragedy or malady?
> If happiness for you is about things you buy in shops, then you are a shallow person, and you are missing out. A lot. In fact you are poor, but in a spiritual sense.
That's a fair point. From my understanding he was talking about "buying happiness" in a broad sense. Sure he did mention material goods. But also the ability take out time out and being with family and friends and not having to worry about making ends meet.
I strongly encourage Technology professionals (and everyone else) to learn some basic personal finance and how to effectively (1) set aside some cash for emergencies, (2) pay off and keep off high interest debt, and (3) invest for the long term, i.e., retirement. But this rambling post which is heavily focused on Troy's personal experiences and anecdotes isn't a particularly great resource for teaching anyone personal finance; nor is it especially interesting.
You're right in the anecdotal nature of Troy's trajectory in life. In fairness to him I think he did acknowledge several slices of luck that he enjoyed. I'd regard him as an outlier and as some have point out there is an element of survivorship bias with respects to his outcomes and the narrative he's built around out. But I think you highlight the benefit of learning some basic personal finance principles and simply just taking the time and thinking 5, 10, 20 years into the future. Generally I think the key is about taking responsibility for my life and taking steps that might lead me to a better future regardless of the starting point.
I respect his work and contributions to the field but the message of this post has kind of been lost in the Tony Robbins style motivation fluff. Most of us, for example, didn't/wont have the capital to buy multiple investment properties at the age of 25.
The real takeaway: don't waste your money, don't get into too much debt, invest your money and invest in yourself. Every motivational speaker/guru/life coach will say the same thing.
The best piece of financial advice I can give people just starting out (e.g. early 20s), especially if they are working in startups, is this: make sure you have enough cash savings so that you can afford to be unemployed for at least 2-3 months. Besides the obvious safety net to ensure you aren't out on the streets in the event you leave/lose your job, the more important reason for this is so that you can afford to be picky about where you work next.
The opportunity cost of making a sub-optimal choice when it comes to employment is huge, both financially and in terms of your career. Taking a hit on a few months pay is a complete no-brainer if it means you can take a job that you find intellectually stimulating, gets you out of bed in the morning, and offers better long term compensation.
Seems he would have done very well out of property as Australia hasn't been affected by 2008 GFC. There are young people that would have invested in property in Ireland before GFC and would have dug themselves a financial hole. This guy doesn't like calling it luck but I don't know what you call different outcomes for investors between the two countries. We are living in the time of quantitative easing, cheap credit and this seems to result in speculative asset bubbles and busts. Dow Jones is over 200% up in last 10 years. I think outcome of central banks printing money at this scale is unknown and puts a big question mark on long term investing and the 'time in the market' advice.
DJIA-30 has risen from ~9000 in early Jan of 2009 to ~24000 now, a gain of ~167%.
That is a CAGR of only 10.3%, which is fairly inline with historical price appreciation of the S&P-500 index (10% total return and ~8% price appreciation). To damp out some of the short-term gyrations, taking the same index and average close prices for all of 2018 vs all of 2008, implies a CAGR of 10.9%.
The S&P-500 index is more representative of the overall large cap market than the DJIA-30, IMO. That index is up ~200% in 10 years, for a CAGR of 11.5%.
These returns are not stratospherically higher than historic norms.
In a printing money environment (which I am similarly concerned about), you want to be invested in something other than money. Real estate and equities are hedges against deflating money. (Gold bugs would argue that precious metals are as well.)
It's at best just another "solid" save and invest advice, buried under bragging, overused motivational quotes and videos and a huge underestimation of personal luck and purely being a straight white smart male in a market that us is booming for decades...
>> just take one simple truth away from a glance at it: investments grow over time
This statement is false. The truth is that "investments have grown over time".
It's not necessarily true that they will continue to grow over time.
The efficiency benefits of corporate growth have been reached long ago and are on the decline.
Corporate growth today relies on crooked government policies, stock buybacks and other methods of wealth concentration without value creation - There is no guarantee that it will stay like this; people are already wising up to this.
I don't understand the ire against share buybacks. They're just a more tax efficient and flexible form of dividends to shareholders than traditional cash dividends.
Dividends (broadly construed) are the original reason an investor placed money into a firm. If you outlaw all forms of dividends, you end arms-length investing, which surely harms people more, IMO.
Not the best article I've read on finance, and far too consumerist for my liking but the basics are correct. If you are in your 20s in tech then the advice to get a retirement plan and to aggressively save and invest now (in said plan or not) is solid.
Not really for tech professionals exclusively. His reasoning should really be replaced by: 0. Get a well paid job.
Theres also this "Bad debt is the likes you have on a credit card. It's almost always accrued on a depreciating asset (for example, a new TV) and it's very often at a high interest rate"
Why is depreciation always mentioned as a problem of bad debt? My house will depreciate if I don't maintain it.
Surely bad debt is a combination of interest rate, and whether you actually need, and can afford the thing you're buying on credit.
Housing debt is a little special because you have an obligation to provide yourself and your family shelter, so your best alternative is rent instead of going without or delaying the purchase until you can save enough money to buy it free and clear.
In general, debt is good if having it is cheaper than the alternative. The way that often happens is if the asset you buy with the debt is worth more, in income or appreciation, than the cost of the debt service. If the alternative also requires you to spend time or money, though, that alone can make debt worthwhile.
The problem with the distinction between good and bad debt is that money is fungible. If you have some amount of "good" debt, then every penny you spend on "bad" depreciating assets is money that could have gone to pay down the good debt.
Conversely, if you have bad debt, every penny that goes towards paying it back could instead go towards the kinds of purchases he endorses using "good" debt for.
There's no principled distinction between the two.
While I’m sure this has worked for Troy his approach is way to high risk for my comfort zone. Dave Ramsey has a great approach that is no doubt slower but more suited to people like me that want a bit more security. Get debt free as fast as you can, get a good emergency fund. Then start saving / investing in low risk funds.
I'm in my (very) early 30s and I found it very interesting. I don't necessarily agree with the entire mindset, but overall is one of the "I should have read it 7 years ago" articles.
Most of the "lessons" are not groundbreaking, they are rather things that are obvious and most of us know about. The value for me came from having them all written down in an organized way. It's much easier to refer to something more tangible than your memory.
One thing that bugs me and puts me off is the financial literacy that Troy mentions. I try to translate some terms to my mother tongue only to find that, even then, I still don't really understand them.
Does anyone has any pointers on how you can start improving on this like finances 101 or something?
* the other useful discovery, which wasn't a book, was randomly finding out that i could double my annual revenue for doing the same or easier (but more frustrating) development work by switching to contract work for large orgs rather than being a permanent employee at a small business. this will be very location / market dependent i guess, but perhaps the general lesson might be something like "consider if you could sell your skills in a slightly different market" & being open to exploring opportunities
> Most of the "lessons" are not groundbreaking, they are rather things that are obvious and most of us know about.
Possibly. Looking at figures for unsecured household debt where I live I'd say these things are not that obvious. The other point is that fundamental truths don't always seem groundbreaking. E.g. spend less than you earn. Not groundbreaking...but I wonder how many people violate that principle...
There is some great advice here, and it simply echoes what is available elsewhere. Saving and investing a small portion of your income will make you rich over time.
Especially for those working in tech, there are ways to put the odds of becoming wealthy greatly in your favor. It's our choice to act on it or ignore it.
> "As we began planning [a child], we literally went to a quiet spot in a local restaurant with a laptop and drew up a spreadsheet of what having a baby would mean. We did this together and planned everything from loss of income due to maternity leave, government parental benefits, the taxation implications of both and even medical expenses and the maintenance cost of a child."
Money is important. But I hope I never get to the point where my mind is as anxious and clinical as this.
That Kerry Packer clip is terrible. In summary he says (and I'm trying to neutrally paraphrase his words):
"Since I was a boy, 10,000 new laws have been passed, and the country isn't any better. The new laws that have been passed are just for the sake of it, and you take away someone's freedom every time you pass a new law"
This sounds a lot like the Trumpian:
"If there’s a new regulation, they have to knock out two. But it goes far beyond that, we’re cutting regulations massively for small business and for large business"
Yes, there exists duplicitous and over-zealous legislation, but most of it is written to protect the rights of people. Since Mr Packer was a boy, Australia has new rights for gay people, aboriginal people, a great deal more environmental protection, and so on and so on.
The "rich person appeals to common sense by saying they shouldn't be regulated" meme needs to die a death.
Just gotta love how this white, Australian born cis-male was educated in a public school, going there every day over public roads, in a town kept safe by public police, in a house that never burned down because of public firefighters, never fearing saying the wrong thing in a free constitutional democracy protected by judges, politicians and a military — lecturing everyone about that TAXES ARE THEFT, BADLY SPENT and he did it ALL BY HIMSELF.
Smart boy, bravo you combined the vulnerabilities of three dozen international laws to get down to 1,3% combined tax rate.
hoaw|7 years ago
But you don't want to be rich as much as you want to be wealthy. And that isn't just about money. My friends in other industries didn't make as much in their twenties, but the are relatively wealthy in their thirties. Their career, prospects and family life is generally better than my friends in the tech industry.
The whole article is basically all the other things you should do and manage to try to become successful. Most of it unrelated to technology. That isn't wealth in my book, nor is it happiness.
IneffablePigeon|7 years ago
geomark|7 years ago
A person with modest material desires can feel very wealthy with only a modest amount of money. It is more than they ever need to be happy. They may be inspired to donate the excess to help others.
Another person can be making silly amounts of money but it is never enough, never feels like an abundance to them. They grasp for more, become ever greedier, needier. Despite having vast amounts of material things they are actually the opposite of weathy.
ck425|7 years ago
unknown|7 years ago
[deleted]
aedron|7 years ago
> Which leads me to the "but money can't buy happiness" position so many people have repeated over the years. Bull. Shit. Anyone who has ever said that simply doesn't know where to shop.
If happiness for you is about things you buy in shops, then you are a shallow person, and you are missing out. A lot. In fact you are poor, but in a spiritual sense. The next statement: "money spent on physical items can bring people a huge amount of pleasure" reinforces the impression that you have some concepts confused.
It's great to have cool stuff, and thanks for the probably sound advice on how to achieve that. You don't have to try to convince (yourself?) that this equates happiness.
loeg|7 years ago
I would agree with Troy's conclusion that "money buys happiness," but take a different tack. Money buys financial security, and financial security buys avoiding many kinds of hardship and grief.
You can have money and be unhappy, and you can be evicted because you can't meet rent and be happy, but it's probably easier to be happy when you aren't worried about paying the bills.
cronin101|7 years ago
Money buys the ability to follow expensive hobbies. e.g. skiing, travel, anything that requires lessons to pick-up as a skill.
Money affords the ability to travel at convenient times instead of cheaper off-peak schedules, so that you ultimately spend more time with your family and friends.
Capital investment can help creative pursuits, such as a well-stocked kitchen greatly increasing the amount of joy you can have when cooking, or the benefits of being able to relax with a home cinema/gaming/sound system that you can be truly immersed in.
Most importantly, it brings peace of mind. In my opinion one of the greatest freedoms is not having to worry about the future. Something you don't appreciate until you gain it, and something you could never imagine giving up once you've experienced it.
Don't kid yourself that you can't buy happiness. It won't dig you out of a hole if you have deeper issues, but it's definitely a significant platform to stand upon.
PurpleRamen|7 years ago
And I'm not even talking about objects. For most people having something good to eat and a warm cozy place to live is already happiness. A happiness most people in the world can't afford BTW.
bump64|7 years ago
solarkraft|7 years ago
Money doesn't lead to happiness, but no money can quickly lead to unhappiness.
heinrichhartman|7 years ago
Dunn, Gilbert, Wilson - If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right
https://scholar.harvard.edu/files/danielgilbert/files/if-mon...
TL;DR:
1. Buy experiences instead of things
2. Help others instead of yourself
3. Buy many small pleasures instead of a few big ones
4. Buy insurance that's worthwhile
5. Pay now and consume later
6. Think about what you're not thinking about
7. Follow the herd instead of your head (sometimes)
8. Beware of comparison shopping
threatofrain|7 years ago
It doesn’t take a lot of creativity to imagine how money connects to important things in life, such as buying opportunity and safety for children. Or having someone who spent years in medical training and debt hover over your loved ones (does anyone have a prerogative to a doctor’s time?).
Opportunity isn’t shallow. Choice and freedom aren’t shallow. Will your loved ones never experience tragedy or malady?
chosenbreed37|7 years ago
That's a fair point. From my understanding he was talking about "buying happiness" in a broad sense. Sure he did mention material goods. But also the ability take out time out and being with family and friends and not having to worry about making ends meet.
loeg|7 years ago
chosenbreed37|7 years ago
robjan|7 years ago
The real takeaway: don't waste your money, don't get into too much debt, invest your money and invest in yourself. Every motivational speaker/guru/life coach will say the same thing.
ganonm|7 years ago
The opportunity cost of making a sub-optimal choice when it comes to employment is huge, both financially and in terms of your career. Taking a hit on a few months pay is a complete no-brainer if it means you can take a job that you find intellectually stimulating, gets you out of bed in the morning, and offers better long term compensation.
jb827|7 years ago
sokoloff|7 years ago
DJIA-30 has risen from ~9000 in early Jan of 2009 to ~24000 now, a gain of ~167%.
That is a CAGR of only 10.3%, which is fairly inline with historical price appreciation of the S&P-500 index (10% total return and ~8% price appreciation). To damp out some of the short-term gyrations, taking the same index and average close prices for all of 2018 vs all of 2008, implies a CAGR of 10.9%.
The S&P-500 index is more representative of the overall large cap market than the DJIA-30, IMO. That index is up ~200% in 10 years, for a CAGR of 11.5%.
These returns are not stratospherically higher than historic norms.
In a printing money environment (which I am similarly concerned about), you want to be invested in something other than money. Real estate and equities are hedges against deflating money. (Gold bugs would argue that precious metals are as well.)
humanbeinc|7 years ago
No other takeaways for the general public here.
jondubois|7 years ago
This statement is false. The truth is that "investments have grown over time". It's not necessarily true that they will continue to grow over time. The efficiency benefits of corporate growth have been reached long ago and are on the decline. Corporate growth today relies on crooked government policies, stock buybacks and other methods of wealth concentration without value creation - There is no guarantee that it will stay like this; people are already wising up to this.
sokoloff|7 years ago
Dividends (broadly construed) are the original reason an investor placed money into a firm. If you outlaw all forms of dividends, you end arms-length investing, which surely harms people more, IMO.
jstewartmobile|7 years ago
What have we become?
robjan|7 years ago
ck425|7 years ago
sbmthakur|7 years ago
1: Money Buys Choices
2: The Money You Earn Young is the Most Valuable Money You'll Ever Earn
3: Invest in Financial Literacy
4: Learn the Tax System
5: Know Good Debt from Bad Debt
6: Diversify Earning Potential and Risk
7: Prepare for Luck
8: Put a Price on Your Time - and Your Family
9: Have a Goal
10: Financial Prosperity is a Partnership
benj111|7 years ago
Theres also this "Bad debt is the likes you have on a credit card. It's almost always accrued on a depreciating asset (for example, a new TV) and it's very often at a high interest rate"
Why is depreciation always mentioned as a problem of bad debt? My house will depreciate if I don't maintain it.
Surely bad debt is a combination of interest rate, and whether you actually need, and can afford the thing you're buying on credit.
kd5bjo|7 years ago
In general, debt is good if having it is cheaper than the alternative. The way that often happens is if the asset you buy with the debt is worth more, in income or appreciation, than the cost of the debt service. If the alternative also requires you to spend time or money, though, that alone can make debt worthwhile.
ikeboy|7 years ago
ikeboy|7 years ago
Conversely, if you have bad debt, every penny that goes towards paying it back could instead go towards the kinds of purchases he endorses using "good" debt for.
There's no principled distinction between the two.
xupybd|7 years ago
unknown|7 years ago
[deleted]
sakisv|7 years ago
Most of the "lessons" are not groundbreaking, they are rather things that are obvious and most of us know about. The value for me came from having them all written down in an organized way. It's much easier to refer to something more tangible than your memory.
One thing that bugs me and puts me off is the financial literacy that Troy mentions. I try to translate some terms to my mother tongue only to find that, even then, I still don't really understand them.
Does anyone has any pointers on how you can start improving on this like finances 101 or something?
shoo|7 years ago
* the concept of savings rate, and relationship with time until retirement. e.g. https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...
* good books about investment. William J Bernstein has a reading list here: http://www.efficientfrontier.com/reading.htm
* Bernstein also has some advice for a younger US audience here: "If you can", very short book, free download: http://efficientfrontier.com/ef/0adhoc/2books.htm
* the other useful discovery, which wasn't a book, was randomly finding out that i could double my annual revenue for doing the same or easier (but more frustrating) development work by switching to contract work for large orgs rather than being a permanent employee at a small business. this will be very location / market dependent i guess, but perhaps the general lesson might be something like "consider if you could sell your skills in a slightly different market" & being open to exploring opportunities
piecu|7 years ago
chosenbreed37|7 years ago
Possibly. Looking at figures for unsecured household debt where I live I'd say these things are not that obvious. The other point is that fundamental truths don't always seem groundbreaking. E.g. spend less than you earn. Not groundbreaking...but I wonder how many people violate that principle...
RickJWagner|7 years ago
Especially for those working in tech, there are ways to put the odds of becoming wealthy greatly in your favor. It's our choice to act on it or ignore it.
andydavieswork|7 years ago
Money is important. But I hope I never get to the point where my mind is as anxious and clinical as this.
peteretep|7 years ago
"Since I was a boy, 10,000 new laws have been passed, and the country isn't any better. The new laws that have been passed are just for the sake of it, and you take away someone's freedom every time you pass a new law"
This sounds a lot like the Trumpian:
"If there’s a new regulation, they have to knock out two. But it goes far beyond that, we’re cutting regulations massively for small business and for large business"
Yes, there exists duplicitous and over-zealous legislation, but most of it is written to protect the rights of people. Since Mr Packer was a boy, Australia has new rights for gay people, aboriginal people, a great deal more environmental protection, and so on and so on.
The "rich person appeals to common sense by saying they shouldn't be regulated" meme needs to die a death.
Aeolun|7 years ago
jstanley|7 years ago
endymi0n|7 years ago
Just gotta love how this white, Australian born cis-male was educated in a public school, going there every day over public roads, in a town kept safe by public police, in a house that never burned down because of public firefighters, never fearing saying the wrong thing in a free constitutional democracy protected by judges, politicians and a military — lecturing everyone about that TAXES ARE THEFT, BADLY SPENT and he did it ALL BY HIMSELF.
Smart boy, bravo you combined the vulnerabilities of three dozen international laws to get down to 1,3% combined tax rate.
I don't even have a word for people like this.
Here's my take:
youtube.com/watch?v=4K5fbQ1-zps