How to Build Wealth as a Career Person | Hacker News Reader

How to Build Wealth as a Career Person

asheradeniyi.com

160 pointsdoppp167 comments

I've more or less followed this advice, and it's worked out for me. For the most part, I used my salary to pay for expenses and stock compensation to build up wealth.

The tricky part is that a lot of this advice is situation-dependent. Should you switch to a riskier company that offers a higher compensation? Sometimes yes, sometimes no. Should you work late to accomplish goals hoping to get a promotion? It depends.

So how are we supposed to know what to do?

The answer, in my opinion, is people. You have to trust people who are trustworthy and avoid people who are not. As an employee, your success depends on the people who hired you--they are the ones who can promote you or cheat you. The best leaders are the ones who realize that helping you advance is going to help them advance. Help your boss accomplish their corporate goals and they will promote you--not as a reward, but as a bet that you will help them on the next goal.

Bad leaders are either too selfish (fail to promote you) or too incompetent (unable to rise, even with your help). You need to learn to avoid them.

Therefore, my advice is this: Look at the leaders in your company--people who could plausibly hire you. Which ones are the best bets? Which ones have both the talent and the integrity to succeed? If you're lucky there's more than one and you can work to get on their team. If you're unlucky, there are none and you need to find a different company.

Do you sell your stocks immediately and reinvest in SPY?

I put half in a basket of tech stock (QQQ, etc.) the other half in buying a house. I am not an expert, so don't take my investment advice--do your own research.

Disclaimer: I am not qualified to give investment advice, I’m just an average tech worker who spent some amount of time on bogleheads forums.

I personally don’t invest more in tech than I need to via broad index funds (and I certainly never keep my RSUs in the company stock, I always sell immediately). Otherwise, if there is a sector-wide downturn, I’d be triple exposed - my paycheck, my tech investments, and my company stock. That seems like a lot of risk to take on.

I’m open to other opinions here.

Which game would you rather play:

   A. Guaranteed $1,000 each month
   B. Every month, flip a coin. Heads gains $5,000, tails you lose $1,000.

Obviously B has greater expected return, but losing $1,000 hurts. What if you can't pay the rent that month?

To me, that's SPY vs. QQQ. Tech in general has higher expected return, but more volatility. If you can handle the volatility, then QQQ is better. If not, then not.

Ultimately, I'm taking a bet on tech because I believe tech has the greatest chance of improving the economy/world.

[I'm also not qualified, so do your own research]

For other's interested in leveraged ETFs please see this excellent piece from Ben Felix: https://youtu.be/E7pl0tqzIUQ?si=py-3Uy1wb_yG3e5U

Neither QQQ nor SPY is a leveraged fund.

Avoid leverage unless you really, really can't.

It's hard to go bankrupt without it. It makes sense for money you can afford to lose and for a house, but that's it.

Note: I am very conservative with investments.

Problem with this is that this can get you to 1-5 million in net worth (declining fast, someone joining a FANG now certainly won't make it as a single contributor to 5 million, unless they're truly exceptional) (of course 5 million effectively pays you a relatively high level FANG salary just from 4% safe investments ...)

Maybe you can get to 50 million with a reasonable management career.

But let's say you're on this path and you have 3 million or so, at 35/40 years ... then what? Management at all costs? No reasonable job at a FANG will get you to even just double what you have at that point.

4% of 5m is 200k; not a high level FAANG TC

200k is very high L4 at Google, medium L5, not out of the question for L6, and 300k is definitely L6 level (2% or so are your odds of getting there)

Also different tax rates for investment vs income: 200k taxed at 30% is easily L6 level compensation. And if you're comparing to L6 anywhere outside of US it's easily L7.

Also: these amounts are declining. Except perhaps in AI.

> 200k is very high L4 at Google, medium L5, not out of the question for L6, and 300k is definitely L6 level

In my experience, those numbers are low for the US. This is about accurate: https://www.levels.fyi/companies/google/salaries/software-en...

Is that taking the tax into account 200k while paying 30% tax on it instead of 50%?

200k investment income * 0.7 * 2 = 280k income from labor.

300k investment income exceeds what you get on a 400k wage.

And you can probably get the tax on investment income down from that 30%, even to 10% sometimes, if you're willing to move (which you would have to do for a 400k job even if you're CEO at a large company anyway)

Ah, my numbers were pretax. I agree investing has better tax treatment (close to zero if you "buy, borrow, die"!)

Also a squarely middle class income in a vhcol area like the Bay Area. But a super luxurious lifestyle.

I think you can make it to 5 million in maybe about 12 years at FAANG. Maybe quicker if you're frugal. More if you raise the ranks quickly.

I'm not sure that's quite feasible. 2-2.5M in 10 years is about the best I've seen excluding getting reasonably lucky with major stock jumps. You could juice that a bit further with really aggressive savings, but for most people, you're looking at 4-5M in income pre tax over that 10-12 year period (maybe a bit higher), weighted mostly toward the end, so without a ton of time for market gains to help.

I don't think your math is mathing. To end up with $5,000,000 after 12 years at, let's say, a constant 5% annual interest rate, you will need to invest over $25K per month over that time, or $300K per year of disposable income, after taxes, living expenses and so on. You would have to be very high level even in a FAANG to be able to do that.

I know, I know, everyone on HN says entry level FAANG makes $600K/year and drives a brand new Porsche, but it's not reality.

Staff working remotely in LCOL area can easily manage that if their lifestyle doesn't explode.

Heh, it's much easier to drive a brand new Porsche than make 600K or save 5M bucks from a 9-to-5.

It was much much easier ten years ago, too.

That's one of the clearest examples of the difference between income-vs-wealth and the difference between "high cost of living" and "every expense is higher." If your higher salary offsets your higher cost of essentials of SV plus goes beyond that, a Porsche is much more relatively affordable to you than someome making the "inflation adjusted" amount in Ohio. (Or if you're looking to retire earlier, you can put more away for that too.)

In the last few decades the part you're missing in your math is that the trick is NOT to take 5% gains. Instead, keep it in the company. The wealth people have gotten from working BigTech hasn't been higher base comp or even TC, it's been specifically stock in BigTech.

In the last 15 years there have been several significant Big Tech valuation-jumps that have helped people save $$$$ too, but won't necessarily help the next round of folks. Amazon, Google, Meta are both up 10x since 2014. Apple is 20x+. So if you started then with an equity package worth 500k... 2022 was also a great time to start at Meta, and a decent (2x+) one at Amazon. 2020 even was a great time to start at Apple, up 6x since then. And before then, 2002-2014 was also a wildly good time to be at Amazon or Meta or Apple or Google. Better, even, for some of them!

So that's a good 25-years of wild gains. The "regular" employees who benefited from that timing are somewhat-understandably now saying just everyone can do that and have great results. I'm not sure if I'd make that bet myself in 2026 with the changes to things from AI. Though none of them are pure-SAAS that's easy to duplicate, so... maybe still go for it!

I think I'd be way too bored, though. Last time I considered a job offer from one of them, I just decided to throw a bunch into stock in the company instead and took a startup offer. It worked out ok as a hedge, if not AS good as taking the offer would've been.

Yea, the problem with the "go work for the next FAANG" advice is that you need a crystal ball. For every person who got in early and held their stocks for a 20X gain, how many other people got in early at some other company that went nowhere, and they should have sold their stocks immediately? How do you know which kind of company you are at? You can't know until it happens.

I have always believed that stocks go up and down mostly randomly or at least non-deterministically, and anyone who tells you they can simply look at a company and know whether the equity will 20X or 1/20X is full of shit. Nobody has a crystal ball. Some people guessed right and some people guessed wrong.

The real “secret” to accumulating wealth in the past 10-20 years was timing. Getting the right job at a company with equity before the equity went up, then putting it into the stock market and real estate before those went up.

Some of those doors have gotten much harder to get through. The days of falling into a FAANG job by being willing to relocate to the right city and know enough to practice LeetCode for a few weeks have passed. It’s possible that the days of putting modest money into the S&P 500 and getting 8-9% year after year have also passed, but I don’t predict the future as well as I’d like.

If you have $5 million USD wealth you're in the top 5% of the US (and top 0.5% of the world).

If you cannot have a happy life on that, well...

But I get it--if your goal is to accumulate more wealth (no judgement--that's a legit goal) then it gets harder. When I was at Microsoft, partner-level engineers were making $1 million per year; now it's probably $2 million. Staff-engineer at FAANG is probably similar, I bet, to say nothing of the AI labs. I bet you could reach $25 million after 10 years with the right investment strategy. And $25 million throws off at least $1.25 million per year if you invest right.

Beyond that, you probably do need a startup or some other significant ownership stake.

> Beyond that, you probably do need a startup or some other significant ownership stake.

That would be what I'm trying to avoid.

I know these are just spit-balled numbers but getting to $25M in 10 years even with $2M annual comp would require pretty risky investment I think. Assuming you spent $300K per year and paid US taxes you’d have about $900K left over. 7% average returns would mean you’d have about $13M saved after 10 years. Getting more than 7% on the whole portfolio is going to require significant risk.

Fair enough--I didn't do the math. Looks like you'd hit $25M after 15 years or so. And I grant that 7% is aggressive.

Still, if you reach staff-level at 40 years old, you could have $25M at 55. That's pretty amazing. But that requires lots of luck. Most people never make it to staff-level. I never did.

It is incredible. Sustaining 15 years at staff level will cost you a lot in other ways though!

Yup! Depends on the company and the person, of course.

Another thing: People at FAANGs usually ride the stock up and get way more than 7% per year. I'm embarrassed to say that I sold a lot of MSFT stock at $30 in 2011. Today (~15 years later) it is trading at $530.

Never be embarrassed about diversification. In 2012 Microsoft could have been found to be cooking the books and $30 would be a lot. Or they could have hit a hard patch, lost stock value and laid you off and you'd be out income and savings.

You're right about that! Remember that in 2011, Microsoft was considered a zombie-company. No one expected it to grow in value.

Most helpful way I know to think about this is: if you’d been given that stock as cash would you have bought the stock. Breaks the cognitive bias of already holding the stock.

Sustaining 15 years at staff level is near-impossible and will extract a heavy toll for the vast majority of people. Plus at 55? Not saying you'll be dinged purely for your age but it's not like it has no influence ...

That’s not at all what I’ve seen. If someone’s properly leveled at Staff, it tends to be a bit easier to sustain than Senior in the same company, but you do have to be selective about new roles at new companies. Age shouldn’t be an issue for someone with Staff+ skills except in the most dysfunctional, unprofitable companies.

Hindsight is perfect in stock markets,but with 100k in initial investment in 2010 in VUG, and a 40k/mo recurring investment until now (little more than half the savings), it would be worth 33M+ now.

Obviously this means one has to be earning that much for 15+ years.

> When I was at Microsoft, partner-level engineers were making $1 million per year; now it's probably $2 million.

This seems...high. The levels.fyi data for 68/69 shows them maybe crossing 1M, and the highest available data point at a bit under 1.5 mil. Staff engineers at FAANG are not making 1M a year except in cases of significant stock growth. 700-800K is more reasonable. The AI labs pay a significant premium, yes (2-3x!).

My math on it was basically "I can work for 10-15 more years and retire meeting my financial goals, or work until my 4 year grant at an AI lab finishes and meet all the same goals, with more interesting work".

You probably mean a level or three above Staff at FAANG.

You're right--my level knowledge is 15 years out of date.

For Google I meant L8, which I guess is Principal Engineer now?

If you're at 5 million you're already well past wealthy and should probably not be stressing about this.

This forum has completely skewed sense of income and wealth. Not surprising given the origins.

I took the article’s “building wealth” more to mean “get to very comfy retirement and maybe pass a bit to family” not “find a 7 figure salary and save more then I can ever spend”

You don’t need a FAANG salary, that just makes it easier. My net worth is nearing $1M after saving for 8 years, making less than $100,000 a year. If I exclude the ESOP equity I have, it’s still over $500,000 and that’s just maxing out 401K and Roth each year for 8 years with the market return.

2.5 million is enough for a lifetime in nearly any country on earth. 5 million, with some good wealth management and planning, is enough for your family to live in reasonable comfort in perpetuity. You won't be upper class, but you will live better lives than the vast majority of humans ever have, alive and dead.

When i saw this is immediately wondered if FAANG now is heading to Microsoft territory, once it was a sue fire way to become wealthy, then it was a good strong income, now it's a thing of the past.

See also IBM

> But let's say you're on this path and you have 3 million or so, at 35/40 years ... then what? Management at all costs? No reasonable job at a FANG will get you to even just double what you have at that point.

If you have $3 million at 35 years old then all you have to do is invest it, keep your expenses manageable, and find a comfortable job that pays the bills for the rest of your career.

If you’re setting your sights on either very high net worths like $50 million or very early retirement targets like $5-10 million in your mid 30s, even high-normal IC career paths like working at FAANG aren’t going to get you there without some extreme luck. You either need to be grinding hard at TC maximized overall career paths or getting very lucky with equity at risky early stage startups.

I am going to judge, because people need to hear it. Anyone with $5M in invested assets who still thinks of making money as their top career priority needs to learn to think bigger. That’s your safety net, not your score in life. Now you can focus on what you find it rewarding to be doing, and how you can provide the most value to others.

Maybe you can get to 50 million with a reasonable management career.

LOLWUT.

First, 2-5 million net worth is plenty to retire in the middle class and probably leave some wealth for your kids (or donate to a charity, whatever). And it's very achievable by an average white-collar professional. Easier yet if you're half of a couple. For most, it critical to save some early and regularly, but also increase the savings as you move into high-earning later career years.

But the jump from that to tens-of-millions is a literal order of magnitude more money and a figurative order of magnitude harder to achieve. You don't get there from any salary-based savings, even if you save well and get lucky on timing market swings over a 20-30 year career. It just doesn't happen for most professionals, even in management. Hell, I'd guess most C-suite don't get there either.

Even after years of browsing this forum, I'm still baffled by the financial bubble many y'all exist within.

100% agreed

Warren Buffet also made the point that investing in a company (this applies whether its your capital or your time as an employer) that it was the calibre of the people that determined whether the investment was worthwhile, or not.

And that's why interviews, as a potential employee are so important, you want to know who you will be working for/ with, so you should be asking questions that determine what sort of people you are getting involved with.

What's weird about this article is none of it is technically wrong: "Become a cheetah(super at ___)", "Aspire and engage to be better", "Build 6 types of capital". They are not bad things to do, if you can: and that is what it misses, if you can.

But don't feel bad if you have not been able to do any of them, e.g. Most People with kids can often do very little than job and take care of kids and that's it. What is more important is to not beat yourself up about it, give yourself grace and do one or two things that make you and your near and dear people/pets happy.

On the other hand most of this stuff is much less work than you think.

Again, its less work for people who can. Consider 3 something billion people in China and India. A conservative estimate is that at least 1/2 of them are living hand to mouth — could be tech workers, other service jobs, manufacturing jobs, farm jobs but all of these 1/2 are living paycheck to paycheck.

Most of these people cannot do most of these things, but it's not they can't or don't want to. The key IMHO is psychological/cognitive load to get past the day. A good example that OECD country readers can relate to is homeless people - an extreme but relatable example because you can see it. When you become homeless the first thing to go are dignity, self-confidence and in short order mind's ability to think beyond the short term(next 3 hours and today). And Living hand to mouth(just beyond the edge) is the same proverbial frog(the mind) in boiling water(circumstances), just slower and acceptable to one to not completely break one but deform the mind enough that it's not always possible to recover.

Except India and China are places where the 'american dream' are taking place in droves today.

> When you become homeless the first thing to go are dignity, self-confidence and in short order

The data on American homelessness are actually exceptionally good and the support network means that the vast majority of people who avail themselves of help are back in a home in a year or so.

Agree, be kind to your self. Its ok to slowdown if need be depending on life circumstances.

To be honest, I'm really surprised this blog post of nothing but platitudes is on the front page of HN. Yes, you want to do well in school so you can get a good first job, make yourself excellent at something, don't inflate your lifestyle. I mean, yeah, duh.

The much more valuable and harder advice is what to do in a particular situation or when things go awry. For example, most career paths where you really end up at higher earnings require that you eventually manage large groups or many teams. The thing is, a lot of people hate managing people, and setting them up for a career path where they have to move into management is a recipe for misery. Much more valuable for these folks is to know what a good IC path looks like, and which careers can be particularly lucrative even if you don't need to manage people.

> Much more valuable for these folks is to know what a good IC path looks like, and which careers can be particularly lucrative even if you don't need to manage people.

If you don't want to manage, then you probably need to be either an expert in something valuable (ideally a bunch of things) and contract. I hope you like sales and business development though.

Management is probably the easiest (not easy for lots of us) way to get this kind of money, but management requires eating loads of crap over a sustained period of time, so it's definitely not easy.

You have to be an expert in something, but you don't necessarily need to contract. There are plenty of medical specialists in the US who make north of $500k as employees or partners. Sure, becoming a medical specialist is not easy, and I'm not arguing there are really any $500k+ jobs that are easy, but it's certainly doable.

Yeah, perhaps. It's tricky to build a domain specific career in larger organizations (I.e. the ones with money), as you'll be very specialized.

It's much easier to get a similar amount through contracting, if you're in something that saves or makes companies a bunch of money.

I skipped most of the stuff described in the article and just invested most of my salary into index ETFs. Mostly because I hate work much more than I like buying stuff.

>I hate work much more than I like buying stuff.

Me too. What a funny way to express it!

The most important number for FIRE is saving percentage, not income.

https://networthify.com/calculator/earlyretirement

I've come across co-workers who make +$250K in salary who live paycheck-to-paycheck...

1. Alimony

2. Child support

From Buffett: Keep your first house and your first wife.

And work on paying your first house off early. The rest comes and can go. Stable home attenuated the unpredictable ups and downs.

What if you have a mortgage with 2.5% interest? Even if I had enough liquid assets to pay it off, I wouldn’t with the current market.

It's about individual tolerance for risk and ability to sleep at night knowing that the bank still holds the title to your house.

What is the issue with the bank holding the title? Sure, you lose the house if you can't make the payments to the bank, but you also lose the house if you can't make the tax payments to the government. In both situations (with or without a mortgage), you never truly own it.

In general your tax payment is much lower than your house payment, and so if you can pay the house off, you will have or should have no problem paying the taxes. Watch the local politics because everyone saw this does fail but it is pretty rare overall. Meanwhile people do lose their job and the payment portion of the house is a lot of money and so you can lose your job just because bad luck and in turn you lost your house.

Or to put it a different way, if my house was paid for, it would hurt, but I could make all ends meet just working fast food jobs. It wouldn't be an easy life, I'd end up walking a few miles to the nearest fast food place because I couldn't afford a car, but I could at least keep my house.

> knowing that the bank still holds the title to your house.

While the bank holds the title on a financed car, they don't actually hold title on your house. They will have a recorded lien, of course. But you hold the title, which should help you sleep ;p.

That's why a house is foreclosed, and a car is repossessed. Repo is lender calls the tow peeps and they pick up your car; foreclosure requires notice and often court and plenty of bureaucracy.

Neither option is fun, of course.

On topic, I was paying a little extra on my mortgage (mostly as I rate adjusted down, I would tend to keep paying the old payment), but when savings interest is more than mortgage interest, it was just as easy to sleep with a savings balance equal to the mortgage balacne as with no mortgage.

The math may not be optimal but your sleep will be.

Well that would depend on your interest rate, presumably. Especially since interest is tax deductible in some places.

If you _do_ break up, this also makes it harder for one person to keep the house, which might be bad if there's kids in a local school, etc. If you have 100k in equity it's easier to buy out your ex than if you have 1 million in equity.

Mathematically, yes, it depends on the interest rate. Over the reality of how humans work is people who pay their house off early are the type of people who tend to make other good financial decisions. And so paying off your house early is good advice even though it seems like it shouldn't be by any mathematical means. If you are the exception that actually has the discipline to invest in things that are better than a house Again, assuming common interest rates and other investments available - you are better off, but the reality is that type of person doesn't exist.

Claiming they simply don’t exist is a bit bold is it not?

Yes, but I haven't found an exception. Either people are risk adverse and so they prioritized paying off the low interest rate loans; or they don't apply it to their own life.

Fwiw I have an automatic transfer of 25% of my take home in to IBKR every month… I actually mostly regret being too financially conservative in the past. Should never have sold off bitcoin to pay student loans…

I'm a "career person" and expect to retire soon in my late forties. The blog's advice is generally on point, but IMHO places too much emphasis on busting ass to play the career game. There are easier ways to win, and here's my secret sauce:

* Get a job at a successful listed tech company (not a startup) that issues RSUs.

* Get promoted to senior level but no higher (too much responsibility, poor work life balance, exposure to office politics)

* Move to a low tax jurisdiction like Dubai, Hong Kong or Singapore, at least long enough to build a serious nest egg (several million).

* Live significantly below your means: I aimed to save & invest half my income. You'll still live a good life because these countries have vast income inequality and services are cheap.

* Find a partner who shares your values.

Not saying this is easy or even possible for many, but it worked for me.

The important parts are to find good management that will help you grow early in your career and will ensure you are well compensated. Prioritize hitting investment amounts that really allows for wealth growth (a few hundred thousand).

I think startup or smaller growth companies are better for this (but I'm biased since that was my path), as you can get more responsibility and rise through the ranks quickly to that critical senior or staff level where you start getting the real RSUs even if it means moving to a different company.

Startups are a gamble and nearly always you lose compared to working at a FAANG or equivalent. My first job was at one, and while the experience was invaluable, financially it was terrible because my options got diluted to basically nothing by the time they sold.

I probably should have specified later stage startup. Somewhere where people still need to wear many hats, but the profitability and growth questions are answered.

I've never worked for a FAANG and don't intend on it, but are there realistic pathways to getting promoted into the more senior engineering roles within a few years and getting decent RSUs each year? At least from my experience from working for a Fortune 500 company, they path to getting RSUs and the title are not that quick.

RSUs are a part of the comp package for everybody in a FAANG, although the number you get rises steeply as you climb the ladder. Promotion pathways are also well defined, so if you're competent and on the right teams, new grad to senior is possible in five years.

It takes over two thirds of the article to get to the actually relevant advice: spend less, invest the difference.

Kissing ass at work might help you but not nearly as much as this two ideas.

It's a prerequisite to having an investable level of wealth though. If you're working minimum wage and you can only invest $10/week, compound interest won't get you anywhere. (Which is one reason why gambling with shitcoins promising 1000x returns is/was so popular.)

Yes sure, some kind of middle class job is worth it. But most of the article it about how to get minor gains inside that middle class job

every minimum wage job is looking for managers who make middle class incomes and then you'll have something. You end up tying yourself to the job, sometimes that means you have to move to a different part of the city or even a different city. But if you go to a different minimum wage job somewhere in your city, you'll find someone who says, yes, I need someone to be a manager.

One thing - your expenses will ALWAYS somewhow expand to your income. We see our current income as somehow the steady state long term norm. I would do your absolute best to hide extra income from your day to day self and invisibly invest it in a way you don’t even think about

And when you get a windfall (stock grants, acquisitions, etc) unless it’s truly life changing money where you never have to work again, find a good investor (CFP) to manage so you’re not even thinking about it. Or invest it in some future liability like college expenses, home down payment, retirement, etc.

I used to think this and then it stopped expanding. I have very low needs. Just enough for healthy food and some tennis equipment and I'm happy. It got to the point where I was earning much more than I could justify spending so I decided to change careers for something that optimised for lifestyle over money and now I'm much happier. People think that more money = more happiness, but I'd say that you need more money when you're unhappy. Money buys comfort but not happiness. Ironically when you're happier you need less money.

Most people do eventually reach that point. However, for most people that point is significantly above where they are. There are plenty of things I would like to buy that I don't have the money for. I have a nice life. I had my staff engineer income, but there are things that I can't afford to buy that I really would like.

I'm sure if I was a multi-billionaire, I would have no clue what to spend a large portion of my money on. An Expensive cruise would be fun once, but I don't think I'd want to do that more than maybe once a year.

> There are plenty of things I would like to buy that I don't have the money for

That will always be true, no matter how much you have. Those who realize this early have an opportunity to retire earlier than those who don't.

It's a personality thing. I literally don't need anything and hate spending money and am miserly as a hobby.

Personality and habit. For me, being a graduate student for 7 years (masters then PhD) forced me to live simply. Those habits stuck with me through the next decade of good salaries. My spending went up from graduate student poverty, but I still saved and invested 50% to 70% of gross income. Now I probably have more than a lot of peers who started working well before me, but didn't save as much.

To your point, pay yourself first. Set up automatic investments. Find a fiduciary advisor if you must, but it's really not rocket science.

Advice I got at an early job: every time you get a raise, set up auto transfer to savings/investment for the net new and keep the same lifestyle (thank you Ramit Sethi)

> your expenses will ALWAYS somewhow expand to your income

No they don't. This may be true for some people but many people do not have this compulsion. I know many people who have zero issues saving money because they are largely satisfied with their lifestyle.

The lifestyle doesn't even have to be austere. You can eat out every night at nice restaurants and rent a very nice place on a budget of a couple hundred thousand per year. There is a natural limit on the amount of money you can spend unless you are blowing it on lots of expensive "stuff" that contributes relatively little to quality of life.

People are downvoting you but there are whole communities of people who are exactly as you describe. E.g /r/fire+financialindependence

>One thing - your expenses will ALWAYS somewhow expand to your income.

Not necessarily. If the savings deduction comes straight off the paycheque then it doesn't take all that much mental fortitude to pretend what you get is the salary.

Eh, expenses tend to rise, but for me, it didn't take too many good raises until I had 'enough' pay that an increase in income didn't lead to unlocking supressed spending.

Sure, sometimes I'd be like 'hey toast0, you make good money, you can buy a drink and a snack at the movies'... But I still watch most of the movies I watch at home.

I didn't move all my dining out to the Brazillian Steakhouse or anything. I didn't join NetJets, although I did join NetFlix. Rather than having my own boat and a car on either side, I drive my car onto the public ferry. Ok, I may actually have a car problem, but they all park at home and most of them are inexpensive, and doesn't everyone need a nice 3-row vehicle, a phev for efficiency, a pickup truck, and a minivan for cargo in the rain?

Someone elsewhere suggests banking all of your raises, which works when you can. Even if you're really tight, you can usually bank at least some of your raises. A nice bonus of a high savings rate is people often think in terms of salary replacement... But if you're saving 15-20% of your salary, 80-85% salary replacement matches your spending ... you don't have to shoot for 100% salary replacement.

I'd add or emphasize being strategic about which roles within an organization are rewarded. These are usually roles with very clearly attributable impact to top-line or bottom-line metrics.

Much enablement, unblocking, capability-based, or risk reduction work is very difficult to interpret for the business decision-makers.

A lot of words to say “save money”. Remove the wealth aspect from this and it’s a good article for people early in their career though

Woah, you can't do that. It only requires only no effort to save money when you have tech salaries.

I've got to admit, the most difficult part of saving money is that first you need to be able to comfortably afford your basic expenses, in particular, housing.

It's not that difficult.

If you live anywhere in the developed world, and you are reasonably able bodied, you can certainly save sufficient money for your long term needs.

there is maybe 1% of the population who can't do it, for everyone else it's a choice.

No, the most difficult part is it's so easy to want to live beyond your means. Take a look around your city. If it's anything like mine, you will find people who are working fast food jobs and you'll find other people who are both are doctors making over half a million dollars a year and yet, at the end of the month, both are having troubles finding enough money to pay all the bills. Unless you are at the very bottom of that, you are already living beyond what need. I don't blame you for wanting more, but be honest, you are spending more money than you need to.

It requires relatively no effort just discipline for anyone to save money and live within their means. yet, most don’t most always have an excuse. Within the design and engineering department that I worked in more than half of the people did not save always had an excuse even before they were married and had kids.

Just setting aside 25% over time adds up to a sizable amount.

Most people don't have that discipline. If you asked the average person to "just" save 25% of their earnings, they'd look at you like you had two heads.

A fairly easy method is, when you get a pay-rise, setup an automatic payment that pulls out the extra money you now get, and auto invest it.

Otherwise you end up with what's called lifestyle creep, if you leave it into your bank account you will always find something to spend it on.

It does depend a bit on how much money you were making, but I'd guess it applies to most here.

most people don’t have the discipline to floss their teeth

25% is a huge amount. Yes, it adds up. Over time, you don't get me wrong. But you need to ask, should you do that much?

Everyone will die, despite great medical advances over the past century. Someone who lives past 5 and doesn't die in childbirth, or an accident - only got a couple years of life expectancy. You should be thinking of saving money as this is something we're going to spend in the future. The goal is not to get the most money on paper. The goal is to... Well, you figure out your own goals. I don't know the right answer for you, but to try and enjoy life with the money you make.

Alternatively, since we are all going to die, would you rather not spend fewer of your years slogging away at work? And would you rather not be able to give your children a financial springboard so that they don't need to struggle as much during their early career?

Possibly, but why would you be saving up to millions of dollars? I mean, if you save 25% until you're, say, 40, 45, and then retire, that's fine. But people are talking about saving 25% until they're worth tens of millions or even hundreds of millions.

And not all jobs are a slog. There are bad parts about every job, but there are a lot of jobs that people enjoy, at least on the good days. People also often find that they enjoy talking to other people and a job gives them lots of reasons to talk to other people.

Retiring could be good but there are also a lot of people who don't know how to keep their life busy and they end up dying of boredom not long after they retire.

The early retirees I know seem satisfied. None of them appear to be dying of boredom, either.

The mindset of people seeking early retirement is not compatible with the mindset of a person who wants to accumulate wealth endlessly; saving until you have enough is the whole point.

80%+ of the article is not 'save money'. It's nuanced.

Step 1 - don't buy a boat.

Better to a friend with a boat, than a boat.

Yeah, if you find a friend with a boat keep that friend.

I took the most boring approach: twenty five years of steady index fund investing allowed me to retire early.

Be sure to talk about your achievements. As important as making things work is making sure the right people know you did that.

Understand when you’re in a meritocracy versus a plutocracy. Outshining the favorite son can be harmful.

This is one of the best, boiled down, to-the-point, common sense articles I've read on this topic that everyone should understand but so many don't. I'm going to have my kids read this.

I’m going to go against most of the comments here (negative) and say that there are a ton of wise nuggets in this article.

Specifically pieces about how to be valuable in a pragmatic and honest way.

That's more of a "build a career", than "build wealth".

This sounds too gimmicky and motivational. You need to be good at something that pays. I am not sure you need to be a cheetah specifically. Then you need to spend less than you make. I feel like this style of article is actually not conducive to that. Spending less is usually not flashy.

Basically you would do what FIRE people do, except you won't quit if your goal is wealth. In fact fire forums occasionally get a post like "hey I'm 61 I have 10m do you think I can retire?"

You don't need stock based comps, insane salaries and selling your soul to your employer to build wealth. You just need to live within your means and invest your money.

The premise of this article initially appears to be that counter to common opinion, work is profitable and it's not all about investment / entrepreneurship.

But then through the course of tedious and somewhat pompous paragraphs (I only read 5 before I started skimming so let me know if I missed something) the point seems to bend towards "work hard to get a foothold so you can own stuff and then you'll make real money" .

It did nothing to change my opinion of our system where labor earns a pittance and all real wealth comes from the lottery of birthright, corruption, picking the right stock, or getting lucky in entrepreneurship.

(What's all this stuff about grades??? Does somebody think grades matter??? Maybe I'm out of touch because I got my PhD before really starting the career grind.)

> It did nothing to change my opinion of our system where labor earns a pittance and all real wealth comes from the lottery of birthright, corruption, picking the right stock, or getting lucky in entrepreneurship.

What is real wealth in this scenario? I had no birthright, involvement in government corruption, nor did I pick the right stock or start a company. Just boring old S&P 500 and not blowing money on really dumb stuff or making mistakes. Which is harder than it looks, but if your perception is real wealth = multi-digit millions then yes sure you have to get lucky. What is surprising or interesting about that? Rare thing is rare, else it wouldn’t be of value.

What's interesting is that 50 years ago, we had a system where if you worked hard for 30 years, your career would make you wealthy. Now, that is impossible, because structural inequality (stock buybacks etc) give all of the profits to the CEO, board, and shareholders rather than to the employees. You have to play the stock lottery and get lucky if you want to afford a house in an HCOL area.

In short, careers used to be inherently profitable, but now we have a system where only gambling is truly profitable.

It’s not impossible - I did it. Who cares about affording a house in a place where houses are expensive? Relocate. It’s not up to society to babysit your life. I want a giant house in San Francisco or in Monterrey. I’m not entitled to that and neither is anyone else.

Your premise about the stock lottery doesn’t make sense. First just buy index funds. Second the CEO and board and shareholders (that’s you) rise or sink with the fortunes of the company. If the company goes bankrupt you lose your money but so do those groups.

> If the company goes bankrupt you lose your money but so do those groups.

No, generally speaking, the CEO gets a golden parachute. E.g. Adam Neumann got 1.7 billion severance for being a douchebag cult leader and bankrupting wework.

I'm not complaining about my situation-- I'm doing really well. Making $207k / yr and living at the beach in LA. I'm just sad that we've switched from a system where normal workers can make actual money to a system where hyperfinancialization means a leisure class at the top, selected by lottery, has all of the real wealth and power.

Donate money to workers and be the change you want to see in the world. Leave extra large tips? Change starts with you. Stop complaining and being a baby and saying nobody can get rich while you live in what many consider to be a literal paradise with an income that correspondingly allows you quite a bit of freedom and high quality life. If you don’t want to do that move to Nebraska and buy a house and prove to yourself you can buy a house. You’re not entitled to buy an “affordable” house in the place almost everyone in the world wants to live.

The example you gave isn’t a good one. And second the CEO is often paid in shares to avoid taxes on income. If the shares are worthless, well you can do the math.

Like I said, I'm privileged and happy. It's my teacher friends, service industry friends, and factory workers I feel bad for. I just wish the USA was still a country where workers were well compensated, like they were from 1950 through about 1990.

Well you can voluntarily pay them more. Nothing stopping you. Buy American made only products or buy products only from American companies and pay more like I do. Put your money where your beliefs are. Where do your pots and pans come from? Lodge? Smithy? Duparquet? I do. You won’t catch me dead buying shit from non-American companies unless there are no realistic replacements. I’m not kidding, by the change you want to see in the world.

The 1950s - 1990s (not sure the time period is exactly correct) primarily corresponds with the post-war boom in which the US has 25% or so of global production and GDP. Those days aren’t coming back. We can work on tax policy of course, but there are too many people and too much competition for resources. In addition to tax policy reform we need governments to get back to basics, stop hiring dotards, and reduce the NGO and non-profit complex siphoning money away with crappy results. We can do better. Let’s do it. But let’s do it across the board and both put our money where our mouth is.

https://youtu.be/Wxdo4UpHBn4?is=DfljtOwP5kLP1eCm shows some evidence of the structural changes I'm talking about.

Not sure there’s really anything useful in here for building wealth? I get to grind the corporate ladder and hope I get paid more?

A tale of two friends from engineering school in 1988:

One earned C’s, but liked to set up token ring and Ethernet networks and code network games. Nice guy, kind of a shlub but not a genius.

Another got straight A’s while mostly drunk, long hair, liked sports but still a metalhead. Breezed through any new concept as if he was born with the knowledge of complex math and advanced physics.

First guy became a VP at Google. Has multiple houses and fancy cars. Doesn’t need to work anymore but loves it.

Second guy became fellow and major CPu/gpu company. Money falling out his ass.

Me: worked hard, got B’s mostly, followed the path but never got promoted too far. Got a few mil in the 401k, but never got a big break.

I’m totally satisfied with where I’m at but these friends just hit the effing centimillionaire jackpot through stocks and weird luck.

Wish there was some consistency in my peer group. We (about 12 friends) all did well with EE degrees in the 80s. Some just did 10-100x better than others for no obvious reason.

"but these friends just hit the effing centimillionaire jackpot through stocks and weird luck" I fall into the same bucket of looking across my peer group, and naturally picking out the ones who are tracking well above me. Something something survivorship obviously. However, it certainly still feels unfair for me benchmark against the Median, Average, etc of my immediate or n'th-removed class.

I'm still early career so there is time for me yet. B's, C's, videogames- I've hit a satisfying spot where I feel I'm on the green front edge. Still waiting on my huge sparkly opportunity to fall into my lap; I feel tee'd up to drain my brain into some big machine and get hosed down with money for it- but that feels like a factor of luck, to your point.

I imagine this is where people start saying things regarding taking risks.

Comparison is the thief of joy

You missed the part where I said I was satisfied. It’s just a strange observation.

Invest 10-20% of your pay.

The dollars you invest in your 20s will be worth a lot in your 60s.

P.S. Equities do better than real estate.

In the capitalist economy one of the most important job is to build ones financial wealth and stability.

The employer doesn't do it.

Doing the day job is priority #2. Many do not fully understand this late into their career.

By then it is too late and late stage health problems start due to stress.

Damn, brutally true. If you've seen it, you've seen it, it plays out exactly as written here. Taking it as advice doesn't put you on their level though, their gift is incredible instinct hence why they do everything here without it.

The downside of following this kind of advice is that you have to spend a lot of time thinking and strategizing about stuff that is generally pretty boring.

Taking that personal finance class the last year of high school or your first year of college isn’t boring. It’s a necessity.

It will save you a lot of grief later on…

No matter what job you have thru life. When you are young, compounding assets is your friend when you have the time and energy.

The personal finance class was very valuable and interesting.

If you want a boring class, Econ 1A now that was boring and one of the hardest classes that I took in college, it was mind numbing, boring.

What an insulting article.

> There is a popular idea that substantial wealth belongs mainly to entrepreneurs.

This is probably because 24yo college dropouts are achieving billion dollar valuations after 12 months of work. Their secondary sales are worth more than following all the advice in this article will be for your entire life.

(To say nothing of NVDA, SpaceX, or other big tech acquiring them and making their billions liquid, despite no moat or profitability, just because they have so much money and need to spend it on something.)

No matter how much “grit” you have, you’re still at the mercy of such people, as e.g. the engineers at Windsurf were, who worked super hard but their founders sold to Google, walked away with hundreds of millions, and gave the employees nothing.

Of course, it depends on your meaning of “substantial”. Successful engineers have great wealth too, enough that they can be very happy and buy anything they want. But pretending the two levels are comparable is silly.

Does this perspective come from a founder or a rank and file engineer?

I do agree with this, but also, being an entrepreneur is a high risk venture, and most people fail at it. You only hear about the success stories.

Most fail. You only hear about the winners, for every winner there are thousands of losers. Don’t forget that. Most people do and it is also the reason why most people are willing to put aside their interest for the sake of that one winner they falsely believe/fantasize they are going to be the one to strike gold.

This is all good advice... but just browsing X, the salaries folks are pulling down give me incredible FOMO.. early 20s already achieving generational wealth just spending 1-2 years in the right startup or frontier lab.

..and this doesn't include hustlers in Dubai or some other tax haven earning six figures a month doing various schemes.

Why am I wasting my life?

Why do you think your life is wasted if some computer has a smaller number next to your name?

If you have generational wealth you can spend all your time traveling, hanging out with people no matter where they are in the world, having new experiences and just generally encounter way more there is to the world than you ever could working 60 hours a week for minimum wage in your hometown. You never have to worry about expenses for anything, you can hire maids and other professionals to take care of other things that would otherwise take up your time. Almost every single woman you ever meet likely will try to get in on it so if you want to casually have a lot of sex with beautiful women you can do that too. You are given a strong preference socially in any setting you meet others. If you have a health problem you can see your genius concierge physician who will personally try to help you the best you can be helped. You don't have to wait 6 weeks for an x-ray or CT scan on a cancerous tumor that can switch from stage 3 to 4 right in that time period.

It's really not even comparable to the life that normal people have. It's really sad.

I don’t think it’s a sad life if you don’t have these things

If you're poor or otherwise lack good health insurance it's very likely you will endure negative health consequences as a result.

If you don't have money it's very likely that you'll have a poor diet and have negative health consequences, be dumber, be able to do less, and just generally have a life filled with more suffering.

Sure but there’s a wide band between not having money and having generational wealth.

they are aggressively trying to obliterate that and have been quite successful already

They represent the ~99%+ of income. X is large enough that extremes are represented. Don't be fooled by the extremes.

Go after the achievable P75-P90 that's within your power.

There’s always been lottery tickets. If this causes you to lose sleep you need to take a step back and reconsider some things. Either learn to cope or become more risk tolerant. I mean this in the most genuine and whole hearted way possible as an engineer on the second half of a career.

These are glorified exceptions and not the norm. Hell, there's no telling what the reality is vs some randos post. But I hear ya, it's hard not to feel the fomo. I do too as a 40y/o that's been in tech obsessively my entire life and hardly have the monetary worth to show for the effort by comparison.

I know two engineers who worked their way to becoming centi-millionaires. One worked for the same company his entire life. Another looked at every job as feeding a 'system' of a) co-workers; b) clients; c) the economy.

Probably the single best take-away from the article is to never stop learning. I also like the tip about keep networking and building relationships.

> centi-millionaires

Don’t you mean hecto-millionaires? Otherwise it’s not so impressive. ;)

Nah, they're right:

> A centi-millionaire (or hundred millionaire) is an individual with a net worth or liquid investable assets of USD $100 million or greater.

I thought they might be a centillionaire, but that's a 1 followed by 303 or 600 zeroes (?!), depending on the numeric system used.

I know, the emoticon was to indicate that my comment was tongue-in-cheek.

An excellent article. I suspected it would be when I saw Morgan Housel cited.

Would be even better with a pointer to the Bogleheads community.

I’ve been able to save 3.5 million from mid tier tech companies and a couple start ups. It’s hard to stay motivated to work.

Conversely, how to build a carreer as a wealthy person?

psyop, nobody is falling for it

but I think there is a crowd that rejects too many of the basics at their own detriment. yes, getting work, highly valued work, still helps and helps waaay more reliably for a broader population than other methods, but its just a step. So you still need to do that, You also need to parlay earnings into wealth producing assets, assets that also have their own independent value that is intended to grow.

Yes, and that’s where young people usually fail when they’re a young adult unless you’re making stupid money, but most are not so getting organized financially and career wise in those first 10-12 years are critical in today’s climate and all that’s on top of your personal life.

It helps to be in the U.S., too.

The marxists are correct there is the wage earning class and also the ownership class

They are incorrect in that there is no strict separation of the two.

Anyone in tech can easily enter the ownership class. American assets are exceptionally cheap for what they are. It's very easy to purchase asset producing goods, whether that be businesses or real estate.

The ownership class matter because a worker exchanges time for money. Time is finite. Ownership is not.

A career is a quick and low volatility way towards ownership. You owe no loyalty to any company or any manager. Only owe loyalty to your friends, family, and the financial assets you own. These things reflect on you. Your job is just a distraction.

> American assets are exceptionally cheap for what they are. It's very easy to purchase asset producing goods, whether that be businesses or real estate.

I agree with a lot of your post, but I don't think this is true anymore. Real-estate is pretty much at the maximum price the population can pay for it. We'll never see a rise like we did from the boomer generation until now in real-estate again. I also think most businesses don't make much money, at least small businesses.

Not really. Real estate is exceptionally easy because of how ridiculous mortgage terms are. I'm a bit of a heterodox in my thinking. If people want to do it then it is definitely made easy. I mean a 600-800k duplex can be had for 19k - 25k if you'll live in it and rent the rest out.

It is extraordinarily easy to enter the ownership class in America which is why Marxism rarely takes root here.

Okay :)

Yeah right.

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