Hacker News Reader

Comment by joss82 | Hacker News Reader

I disagree with this advice for young, healthy, not-having-kid-right-now people.

To save means keeping money in a low interest rate account, which lowers your short term risk and increases your long-term risk (you are not enjoying the higher returns of high-risk, high-return, investments such as stocks over the long term).

As young people, you should think long term.

If you want to minimize short-term risk in your life, then please, by all mean, save!

But be aware that there is no free lunch, and reducing risk right now will most probably reduce your opportunities in the long term.

Please take into account that I am reasoning with averages and averages are just a massive simplification of real life.

Adjust according to your own assessment of your context and situation. Don't follow random advice from strangers on the internet.

View on HN

I wouldn't interpret save as keep it in a low-risk low-rate vehicle, but to not spend it. Investing is a form of savings. That said, keeping a certain amount of money in a liquid safe vehicle is also a good idea so you have f–ck you money/what if the economy crashes or there's a global pandemic and I lose my job money. In your twenties you should, at the very least, max out your 401(k) and/or IRA options and have that all or mostly in index funds (I can remember analysis paralysis when I first saw the investment options in the 401(k) when I was young and ended up not investing at all. None of the information in the literature was helpful at all. My short-form advice: look for a low-cost index fund. You're not going to beat the market unless you're lucky and even if you are lucky and you're not going to be consistently lucky. People whose job it is to figure this out never consistently beat the market (and most underperform index funds in the long run), and neither will you.

Yes, by all means invest your savings, my point was just not to spend it and allow lifestyle inflation to put you in an untenable position when the good times inevitably come to an end.

"But be aware that there is no free lunch, and reducing risk right now will most probably reduce your opportunities in the long term."

I would buy this t-shirt. This is so true. At certain points in your life you can take wild risks - eg. work for a company that has 4 months of runway and live on the co founders couch. This type of opportunity can teach you more in 4 months than 4 years at other positions. Small companies having difficulties can be a fun place to lead, fix and build. You will have plenty of years to do: 2 hour code reviews, long sprint planning sessions and write endless unit tests.

In my mind the risk is to be heavily concentrated in tech (or even in a subspecialty of tech). Investing in diversified stocks is somewhat risky, but way less than putting all your eggs into the basket "tech jobs will always pay me $200k+ no matter what".

Reply on news.ycombinator.com