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JDiculous

> will make you a millionare in a few years if you play it right.

This is a pretty steep exaggeration.

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No, it really isn't: https://danluu.com/startup-tradeoffs/

Ok let's say you make $300k/yr at a FAANG. Lose 40% to taxes and you're looking at $180k/yr.

Living in SV your expenses will roughly be at least $45k/yr.

So you save $135k/yr (180 - 45). That's great, but a far cry from being a millionaire in just a few years.

Of course as you get promoted your comp increases, hitting $500k gross at L5, but that takes more than a couple years to achieve.

Yes, hence why I used "few" - doable in 7-10 years timeframe. Still something unthinkable for most professions.

I guess the contention here is the definition of the word "few". When I think of "a few years", I think 2-4, not 7-10.

So using your numbers it took roughly 7 years to be a millionaire. Damn crazy good to me.

That's not counting the actual compound interest on your money. Even if you don't re-invest the stock they give you, which is a significant part of your compensation, the stock at most of these companies goes up 20% YoY, so you will easily become a millionaire 5 years in with a little investing.

If you're losing 40% to taxes you're doing it wrong.

Also, stock appreciation. A $500k grant last year is worth $640k this year.

Can you expand on that? How do you get out of paying taxes?

I think the 40% number is the point of contention. The highest tax bracket for 2019 is 37%, and that's a marginal rate, so no one is going to be paying 37% of ALL of their income. More likely it'll be in the range of 20-25% of all income.

You forgot about state tax in addition to federal taxes.

right, but federal, state, and FICA is still less than 40%

Not really. That's about what I paid last year.

It's about 38% last year on that gross, as I noted elsewhere (including FICA and state). But assuming no 401(k) or match isn't realistic either so it's actually lower.

I'm not really sure why you keep pushing back on all of this. It's just how the math works.

The short version is, if you make $300k year if you are careful with the money you can have 1 million in savings in (conservatively) 6-8 years just by doing the obvious things, assuming reasonably similar market conditions.

I paid 20% federal (effective) and something like 6% state (effective).

Good tax planning make best use of 401k and other tax advantaged plans there are these Roth planes for example.

A FANG developer in London has even more opportunities

Max out your pension (Tax relief at 40%) plus presumably an employer match around 5-8%

Put £20k a year into a Stocks and Shares ISA - which puts that beyond tax for income and CGT (apart from stamp duty on share purchases)

Put £30k into premium bonds and than start thinking about VCT's and EIS

This is ignoring any shares scheme you are in

On average, the top quintile of earners pay 22.9% effective federal rate [1]. Take a look at your effective rates for 2019, I bet you pay less as a percent than you think.

[1] https://www.pgpf.org/sites/default/files/All-income-groups-p...

> Lose 40% to taxes and you're looking at $180k/yr.

Who's paying 40% taxes on $300k/year? Your math is wrong straight off the bat. Including 401k and match, this hypothetical person is making at least $200k after taxes. Even more if they're married or have a dependent or two.

And as others have noted, $135k/year will make you a millionaire in 7 years even if it's cash under your mattress. You'll make it there even faster if you invest it in an index fund like most people would do.

> Who's paying 40% taxes on $300k/year?

People in California.

> $135k/year will make you a millionaire in 7 years

Yea if you are a person who somehow has 0 expenses over the course of those 7 years. Again, all but impossible in California.

You've read both of these things incorrectly. First off, 40% all in is too high for california (but not by a huge amount, it's like 38% but that matters). Secondly, they allowed for living expenses, the 135 was what was left after (from the 180 take home). Can argue about the amount, but they allowed for it.

Realistically you're going to do 401(k) and match so you're probably taking home a bit over 200k. Allow 50k/yr living expenses and you'll have another 150/yr or so. Quite plausible to bank 1 million in 5 or 6 years with these numbers.

> People in California.

The only way you'll end up with a tax bill that large is if you contribute $0 to tax-advantaged retirement accounts. And that's taking into account state taxes, SSI/Medicare. You don't have to believe me, try it out yourself. https://smartasset.com/taxes/california-tax-calculator. Putting in $300k of income for a single person, it gave me $175k take-home pay + $19k in a 401k, which is an effective rate of 35%. Keep in mind, I'm not including the 401k match, which is pretty darned generous at the BigCos. If we assume the max allowed IRS match ($9.5k or thereabouts) the effective rate falls to 32% and this hypothetical person is banking $145k/year after living expenses.

Lots of people (especially young, healthy people) also opt for health plans with HSAs, which give you more deductions.

> a person who somehow has 0 expenses

Where did you get 0 expenses from? GP stated pretty clearly expenses of $45k/year - on the modest side (probably assumes living with a housemate, or not eating out too much). I was going with $60k/year expenses on $195k/year after taxes.

$45k/year is an absurd estimate of expenses especially in silicon valley.

I pretty clearly stated $60k/year. $45k/year was someone else's suggestion. But $45k/year isn't "absurd" at all if you live with a housemate.

Heck assume spending $70k/year on $205k/year after taxes and 401k + match. It's still $135k/year. I don't know why you're arguing against arithmetic.

I think my overall expenses are less than that and I spend an exorbitant sum on food (almost as much as I spend on rent). I just don't have crazy expensive hobbies.

There are people I know who live in the bay area on less than 45K/yr in wages, so no its not at all absurd.

$45k/yr is a little bit more than the mortgage principal and interest on a million dollar house, at today's interest rates assuming a normal 20% down payment. If you rent you a normal apartment you would spend less. If you rent a luxury apartment you'll spend more but you don't need to.

I've lived in Silicon Valley my entire life, except for when I was in college, and I don't think my living expenses ever got close to $45k/yr until I bought a house, which was an entirely optional decision on my part.

I work at a FAANG-type company.

My effective tax rate is much closer to 30% than 40%, but I'm married so I get a bit of a break vs. being single since there's a big gap between my income and my wife's income.

Even so, $135k per year post-tax, post-expenses is a fantastic amount of savings.

This is much more than I made pre-tax, pre-expenses earlier in my career.

Just having access to $135k means you're more or less a millionaire if you invest it and never need to dip into your investments.

The S&P 500 has averaged around 10% or so over the last 90+ years. Over 30 years, at a 7% growth rate, you'd have $1 million in savings with no additional contributions, assuming I didn't screw up my math.

With such a high income sustained for just a few years, it'd be hard to screw up later in life so long as you avoid the hedonistic treadmill.

Few is probably 6 at faang, if you're investing and budgeting and getting promoted. Even if you start at the bottom.

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