Idea behind investing is NOT to get rich...

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doknek
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Idea behind investing is NOT to get rich...

Post by doknek »

Found this quote from "The Little Book of Main Street Money" http://www.amazon.com/Little-Book-Main- ... 0470473231:

Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.

What do you all think?
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bob90245
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Re: Idea behind investing is NOT to get rich...

Post by bob90245 »

doknek wrote:Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.

What do you all think?
I agree with the quote. For someone just starting out, $1,000,000 may seem like a HUGE amount of money. A millionaire; a rich person.

But the sad truth is that if you apply that 4% initial withdrawal rate, you only get to spend $40,000 a year. And that doesn't seem very rich at all.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Dan Moroboshi
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Post by Dan Moroboshi »

Image

"He who knows he has enough, is rich" - Lao Tzu

Image

"You remember lesson about balance? Lesson not just karate only. Lesson for whole life. Whole life have a balance. Everything be better. Understand?" - Mr. Miyagi
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Post by Len33 »

Rich is obviously a relative concept. Rich compared to what/whom? I suppose my definition of 'rich' will be reached when I have accumulated enough money to afford the things I enjoy without ever having to worry about running out of money. By that definition, a person can certainly become 'rich' by following the Boglehead philosophy, assuming they make more than they spend during the majority of their working lives.

Regardless, knowing that indexers will be richER than those who practice active management should provide some comfort.
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Post by Adrian Nenu »

In order not to end up poor, investors should limit their potential losses to the degree they can recover from them.

Adrian
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Post by NYCPete »

Another good quote; also a cautionary tale.

"There are those who gain from their wealth only the fear of losing it"
Antoine Rivaroli

Best,
Peter
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simplesimon
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Re: Idea behind investing is NOT to get rich...

Post by simplesimon »

bob90245 wrote:
doknek wrote:Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.

What do you all think?
I agree with the quote. For someone just starting out, $1,000,000 may seem like a HUGE amount of money. A millionaire; a rich person.

But the sad truth is that if you apply that 4% initial withdrawal rate, you only get to spend $40,000 a year. And that doesn't seem very rich at all.
Well, the fact that historically you've been able to spend $40k without doing anything for at least 30 years would make me feel rich.
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Post by neverknow »

..
Last edited by neverknow on Mon Jan 17, 2011 6:56 am, edited 1 time in total.
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Post by Beagler »

Someone once told me that his definition of "rich" was "the money is coming in faster than you can spend it." Alas, I've never been in that position.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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Post by Ron »

neverknow wrote:It is a relative term. What does "rich" mean to you?
neverknow
Since you asked, we don't consider ourselves rich, but we do consider ourselves "financially independent".

Financially independent means that we can live life in the manner we wish, without having to hold any kind of employment that requires us to trade "our time, our life" for money.

For me, the term "rich" (in a financial sense, not in a chocolate cake sense :lol: ), means that I could call up my private pilot and have him make arrangements to have our Gulfstream G650 fueled and ready to go in an hour to fly us to one of our several homes we have located around the world, to spend the weekend.

And no, that level of affluence is obtained with our own money, not by running a Ponzi scheme.

No, I don't ever think we will be financially rich, but that's OK. Life is still good 8) ...

- Ron
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Post by AzRunner »

aleonard wrote:Rich is obviously a relative concept. Rich compared to what/whom?
Exactly. We are financially independent, in that we can live a reasonable life style without worrying about running out of money. But, we are definitely restrained, given that we have a long retirement in front of us (both 59).

When you look around and see expensive cars and expensive shops, then we feel, we are not rich, even though many of the people that buy from these shops have fewer assets than we. Also, as a long-time Boglehead, I was never a conspicuous consumer.

I like the cliche', "You can only spend money once."

Norm
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Taylor Larimore
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The secret of financial happiness

Post by Taylor Larimore »

Bogleheads:

Spend less than income = happiness.
Spend more than income = misery.
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Idea behind investing is NOT to get rich...

Post by bob90245 »

simplesimon wrote:
bob90245 wrote:For someone just starting out, $1,000,000 may seem like a HUGE amount of money. A millionaire; a rich person.

But the sad truth is that if you apply that 4% initial withdrawal rate, you only get to spend $40,000 a year. And that doesn't seem very rich at all.
Well, the fact that historically you've been able to spend $40k without doing anything for at least 30 years would make me feel rich.
Seems like a low bar to me. Especially considering that I don't expect to be as healthy and active in the latter half of those 30 years before I die.

To me, "rich" would have that annual inflation-adjusted $40K without doing anything to spend right now when I'm young (I'm in my 40's) and healthy enough to really enjoy it.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Re: The secret of financial happiness

Post by Dan Moroboshi »

Taylor Larimore wrote:Bogleheads:

Spend less than income = happiness.
Spend more than income = misery.
Paging nisiprius... boglehead nisiprius, please pick up the nearest courtesy phone.

Your sig quote is required in thread #45364...
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Post by Quasimodo »

When I read about most of the people on the planet, I believe I've always been rich because I was born and raised in the USA. Hope my grandkids feel the same way when they grow up.

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Re: The secret of financial happiness

Post by norookie »

:D
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Post by mr.ajandkj »

happiness = wanting what you already have
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Post by nisiprius »

In 'David Copperfield,' Charles Dickens wrote:'My other piece of advice, Copperfield,' said Mr. Micawber, 'you know. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and - and in short you are for ever floored. As I am!'

To make his example the more impressive, Mr. Micawber drank a glass of punch with an air of great enjoyment and satisfaction, and whistled the College Hornpipe.
:P
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Post by Patchy Groundfog »

When you reread the book after seeing the movie, you hear W.C. Fields speaking every Micawber line, especially that one.
The best things in life aren't things.
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Re: The secret of financial happiness

Post by bob90245 »

Spend less than income = happiness.
Spend more than income = misery.
I can understand that is only figuratively speaking. But some people's income is such that the most that they can afford while living within their means is renting a tiny apartment or living with roommates. I bet they would be happier to be rich enough to afford owning a house in a nice neighborhood (not the fanciest).
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Post by pjstack »

I thought the original quote was aimed at the fact (well, I think it's a fact) that ,unless you are a successful market timer (or a crook), you will not get rich via the stock market.

Maybe get rich by hard work, a terriffic invention, and/or great athletic/entertainment talent.

Try to get rich in the stock market and you may end up like Jesse Livermore; very rich, and then a broke suicide.
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Post by TJAJ9 »

My goal is to be financially independent. I don't need to be "rich."
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Post by Stuart01 »

Bill Bernstein, on p. 48 of his latest book "The Investor's Manifesto" notes that the heart of investing "is not to maximize the chances of getting rich, but rather to simultaneously allow for a comfortable retirement and to minimize the odds of dying poor." <p>

My wife and I are lucky enough to be enjoying retirement without worrying about money and Bill's statement sure makes a lot of sense to me. By the way, I found Bill's new book pulled together a lot of concepts in a way that reminded me why I'm such a fan of the Bogleheads approach! :D
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Investment gems from "The Investor's Manifesto'

Post by Taylor Larimore »

Stuart01 wrote:By the way, I found Bill's new book pulled together a lot of concepts in a way that reminded me why I'm such a fan of the Bogleheads approach! :D
Stuart:

I took THESE valuable excerpts from Bill's new book.
"Simplicity is the master key to financial success." -- Jack Bogle
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relative

Post by SpaceCommander »

In the land of the blind, the one eyed man is king...

In other words, it's all relative. Who or what are you comparing to? Often, it's an arbitrary standard. Compare to your peers; that should put it in perspective.

Until recently I compared myself to an artificial standard I set for myself (the magic 1 million number, anyone?). But then I had an eye opening experience when I came across some research that indicated that for my age and net worth, I'm in the top 2% of the nation. That was a mind-blower. I always considered myself an average middle class guy with some small means. But now, my attitude is, "Rich?... Yeah I guess. If you consider the top 2% rich..."

If I compare to the uber-wealthy, I'll always be discontent. But when I compare to my peers, I realize, "Hey, I'm doin alright..."
I honor my personality flaws, for without them I would have no personality at all.
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Re: relative

Post by bob90245 »

SpaceCommander wrote:Until recently I compared myself to an artificial standard I set for myself (the magic 1 million number, anyone?). But then I had an eye opening experience when I came across some research that indicated that for my age and net worth, I'm in the top 2% of the nation. That was a mind-blower. I always considered myself an average middle class guy with some small means. But now, my attitude is, "Rich?... Yeah I guess. If you consider the top 2% rich..."

If I compare to the uber-wealthy, I'll always be discontent. But when I compare to my peers, I realize, "Hey, I'm doin alright..."
I've seen those surveys, too. They put me in the top 10% of my peers (if I recall correctly).

However, I'm a single guy who can afford to max out on my 401k and Roth IRA. On the other hand, my peers are spending nearly all their income in order to house, feed and clothe their children. So it's no wonder that my peers have difficulty building their net worth.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Post by ziggy29 »

Or to put it another way, I don't invest in a way that will most likely maximize my portfolio value. I invest in a way that minimizes my chances of falling short of my goals.
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Post by greg24 »

We have a nice 2k sq foot house and all the material goods you could ask for, despite living below our means. We have it better off than 99.999% of all humans that have ever lived.

We are rich.
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Something to consider

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greg24 wrote:We have a nice 2k sq foot house and all the material goods you could ask for, despite living below our means. We have it better off than 99.999% of all humans that have ever lived.

We are rich.
Hi Greg:

Your post is worth repeating.

Thank you.
"Simplicity is the master key to financial success." -- Jack Bogle
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Post by mlebuf »

As it has already been pointed out, rich is a relative term. To most people living in third world nations, all Americans seem rich. To a Middle Eastern oil sheik, most Americans probably seem poor.

What investing can do over time is make and keep us financially independent. How quickly we become financially independent depends on our income, how much of it we manage to save, how prudently we invest it and how much time we have for the magic of compounding to do its work. It's pretty simple stuff to understand; yet only about 5 percent of Americans ever achieve genuine financial independence.

Why so few? IMO, it's one part financial illiteracy and one part not having the self-discipline to save. Inasmuch as we don't teach the simple basics of personal finance and investing in our schools, many people simply don't know what to do. And many who know what to do allow their emotions to control their wallets. There's nothing wrong with enjoying money. Why have it if you can't enjoy it? Just don't spend it all on today's pleasures.

All success begins with the ability to delay gratification. Maturity is the ability to relate today's actions to tomorrow's results.
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Re: Something to consider

Post by greg24 »

Taylor Larimore wrote: Hi Greg:

Your post is worth repeating.

Thank you.
Thanks Taylor! :D
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Post by retcaveman »

mlebuf, good post.

I have always said I wanted to be, "independently wealthy." By that I mean wealthy enough to do what I want (within reason) without having to do anything I don't want eg work at a job I hate or for a boss I loathe. I retired at 51 and 10+ years later am still financially independent.

I'll repeat a quote I've posted before by Thoreau, "the cost of a thing is the amount of life it takes to pay for it." Is driving a Porsche for example worth another 2-3 years of work? (more if you consider you probably can't apply your total annual income to it) For me, being out of debt and free to do what I want (don't need to work) means more.

But it's a personal choice. To each his own.

Thanks.
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Post by RadAudit »

Greg24's post is dead on.

But back to the original post - the idea is ... not to get poor. So, the operative definition of investing is what? Maximize the probability of a stream of income that will meet projected future needs?
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Re: Idea behind investing is NOT to get rich...

Post by stonerolled »

doknek wrote:Found this quote from "The Little Book of Main Street Money" http://www.amazon.com/Little-Book-Main- ... 0470473231:

Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.

What do you all think?
Thanks much for what I think is the proper perspective and also a great answer when someone comments that you are going to be rich one day.
This is similar to an answer I give for going to the gym regularly that its not about big muscles but maintaining ability to do daily activities in old age such as dressing, bathing, getting in and out of the car, etc.
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Re:

Post by rob »

mr.ajandkj wrote:happiness = wanting what you already have
As the Sheryl Crow song goes... It's not having what you want it's wanting what you've got...
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
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Re:

Post by KlangFool »

Dan Moroboshi wrote:
"He who knows he has enough, is rich" - Lao Tzu
+1.

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Re: Idea behind investing is NOT to get rich...

Post by White Coat Investor »

bob90245 wrote:But the sad truth is that if you apply that 4% initial withdrawal rate, you only get to spend $40,000 a year. And that doesn't seem very rich at all.
The idea that you can eat without working reflects a significant change in perspective from previous generations on this planet. The vast majority of people who have lived on this planet would consider never having to work again and still having a roof over your head and food on the table as quite rich.

So yea, $1M isn't get your own private jet rich, but there were kings of the most powerful countries on Earth for millenia who couldn't even get a lousy coach ticket.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: The secret of financial happiness

Post by carofe »

bob90245 wrote:
Spend less than income = happiness.
Spend more than income = misery.
I can understand that is only figuratively speaking. But some people's income is such that the most that they can afford while living within their means is renting a tiny apartment or living with roommates. I bet they would be happier to be rich enough to afford owning a house in a nice neighborhood (not the fanciest).
I have dealt with poor people in developed countries in my life and I can tell you there are two kinds:
* The ones that got there because of life events: migrated to a new country being too old, refugees, disabled, sickness, etc...
* The ones that are poor because of an income problem because didn't want to study and become professional (blue or white collar) when they had a chance. In other words, laziness, waste, etc..., which usually brings crime.

I always hope the "unfortunate" ones are well taken care of by our government and non-profit programs for the rest of their lives. I really feel compassion for those guys. The other group, well, it is what it is: choices.
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"Enough" by Jack Bogle

Post by Taylor Larimore »

doknek wrote:
Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.

What do you all think?
doknek:

Mr. Bogle wrote a wonderful little book on the subject of "Enough." Bogleheads can read excerpts here:

ENOUGH

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Post by HomerJ »

mr.ajandkj wrote:happiness = wanting what you already have

My favorite Calvin and Hobbes comic:


Calvin: If you could have anything you wanted, what would you wish for?
Hobbes (thinking): Hmmm... A tuna sandwich.
Calvin: WHAT!? A tuna sandwich? That's stupid! I'd wish for a billion dollars and my own jet and island!!

(Later in the kitchen, Hobbes is munching on a tuna sandwich)
Hobbes: I got MY wish.
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Re: Idea behind investing is NOT to get rich...

Post by trailmk »

One of my favorite quotes:

Comparison is the killer of Joy.

I don't remember the author or where I read it. But every time I start wanting (not needing) what someone else has, I try to remember this quote. We're retired, we live a comfortable life, we have what we need AND we have financial security. We have Joy.
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Re:

Post by emanuel_v19 »

Quasimodo wrote:When I read about most of the people on the planet, I believe I've always been rich because I was born and raised in the USA. Hope my grandkids feel the same way when they grow up.

John
Born outside of the U.S and now a citizen I agree 110%. In this country, you have the privilege to build your own Utopia. It really is incredible.
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Re: Idea behind investing is NOT to get rich...

Post by MindBogler »

This was quite a thread resurrection, look at the original date!

I don't necessarily agree. The idea behind *retirement* investing is to provide for oneself during that period. If one saves sufficiently during accumulation, it is entirely possible to have income in excess of pre-retirement liabilities. For most, having the capacity to replace some large percentage of income while matching or slightly exceeding liabilities in retirement, perhaps even doing so earlier than expected, is rich indeed.
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Re: Idea behind investing is NOT to get rich...

Post by randomguy »

Working and savings made me well off. Having 2-3x because of investing has made me rich(i.e. don't need to show up to work to live how I want) by pretty much any standard. And I hope another 40 years of compounding will make me filthy rich. Obviously it depends on your definition of wealth. I think of 5 million+ as rich. But it sure isn't the level where you can routinely buy 300k cars and fly net jets. And I am sure the 50 million person who can do that complains about having to share their jet with other people.
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Re: Re:

Post by friar1610 »

emanuel_v19 wrote:
Quasimodo wrote:When I read about most of the people on the planet, I believe I've always been rich because I was born and raised in the USA. Hope my grandkids feel the same way when they grow up.

John
Born outside of the U.S and now a citizen I agree 110%. In this country, you have the privilege to build your own Utopia. It really is incredible.
Emanuel,

I sorta know what you mean. I tutor an immigrant in English. This weekend I got a phone message from her: she just learned that her green card had been approved. She was unbelievably elated, even though what she earns is minimal and she works very, very hard for that. Makes me embarrassed about the things I can sometimes find to complain about.
Friar1610
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Re: Idea behind investing is NOT to get rich...

Post by emanuel_v19 »

Not to get off topic but Good for her! That is awesome
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Re: Idea behind investing is NOT to get rich...

Post by msk »

Just plain vanilla BH investing is very unlikely to make one "rich". Well off, financial independence before retirement age, yes. But to get "rich" one has to take major business risks, preferably at a young age when you can still recover from a financial disaster. What is "rich" these days anyway? Somebody said $25m+ net worth. Of course it all depends on the people you mix with. If nobody in your immediate surroundings has a 7 figure net worth, then you will certainly feel rich once you have accumulated a million or two. Somehow I have a hard time feeling rich, probably because of the company I keep/grew up with. We all started with more or less a level playing field, broke in our 20s. I have a couple of close relatives, entrepreneurs in the classic sense, who are each worth 10 figures (and they have jets and yachts to match) and even a couple who I thought were more in my price bracket who seem to be either car mad or in the 9 figure range. How does one explain the purchase of $2million car?! But then again I have many more cousins who are obviously struggling. Let us be grateful for good health and what the world has enabled for us. BH investing is for the less adventurous amongst us, like yours truly.
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Re: The secret of financial happiness

Post by Engineer250 »

carofe wrote:I have dealt with poor people in developed countries in my life and I can tell you there are two kinds:
* The ones that got there because of life events: migrated to a new country being too old, refugees, disabled, sickness, etc...
* The ones that are poor because of an income problem because didn't want to study and become professional (blue or white collar) when they had a chance. In other words, laziness, waste, etc..., which usually brings crime.

I always hope the "unfortunate" ones are well taken care of by our government and non-profit programs for the rest of their lives. I really feel compassion for those guys. The other group, well, it is what it is: choices.
The older I get, the more it blows my mind how much luck / timing can have an affect. In my case I'll say I owe my success to parents who not only wanted but demanded their kids go to college and made choices that would enable that, possibly over their own material wealth. None of that has anything to do with "my" work ethic. I could compare myself to peers raised by alcoholics and single parents who are less educated and pretend I'm "smarter" and "work harder" but really I had advantages at such an early age before any of these qualities would have been formed in me.

However, I'd say we as a society have always been drawing a line between poor who deserve help and those who don't. In the 1560s during Queen Elizabeth's reign they passed a few Poor Laws. They attempted to identify the Deserving Poor, the Deserving Unemployed, and The Undeserving Poor. Due to the dissolution of the monasteries the burden of dealing with the poor was shifted from religious organizations to the government. I'm not suggesting I have any answers, I just find it interesting we have the same debates today as almost 500 years ago.
Where the tides of fortune take us, no man can know.
carofe
Posts: 386
Joined: Thu Mar 20, 2014 7:21 pm

Re: The secret of financial happiness

Post by carofe »

Engineer250 wrote:
carofe wrote:I have dealt with poor people in developed countries in my life and I can tell you there are two kinds:
* The ones that got there because of life events: migrated to a new country being too old, refugees, disabled, sickness, etc...
* The ones that are poor because of an income problem because didn't want to study and become professional (blue or white collar) when they had a chance. In other words, laziness, waste, etc..., which usually brings crime.

I always hope the "unfortunate" ones are well taken care of by our government and non-profit programs for the rest of their lives. I really feel compassion for those guys. The other group, well, it is what it is: choices.
The older I get, the more it blows my mind how much luck / timing can have an affect. In my case I'll say I owe my success to parents who not only wanted but demanded their kids go to college and made choices that would enable that, possibly over their own material wealth. None of that has anything to do with "my" work ethic. I could compare myself to peers raised by alcoholics and single parents who are less educated and pretend I'm "smarter" and "work harder" but really I had advantages at such an early age before any of these qualities would have been formed in me.

However, I'd say we as a society have always been drawing a line between poor who deserve help and those who don't. In the 1560s during Queen Elizabeth's reign they passed a few Poor Laws. They attempted to identify the Deserving Poor, the Deserving Unemployed, and The Undeserving Poor. Due to the dissolution of the monasteries the burden of dealing with the poor was shifted from religious organizations to the government. I'm not suggesting I have any answers, I just find it interesting we have the same debates today as almost 500 years ago.
I would personally think it is not a deserved/undeserved thing for those that made bad decisions. In fact it is very encouraging to see somebody that made bad decisions in the past wanting to get better (especially drug-addicts and ex-criminal). They need another chance if they are willing to correct their life. However, the other point is that resources are finite, so you have to make a priority who to help first.
US Total Stock Market + Intermediate Term Bond. That's it.
JW-Retired
Posts: 7188
Joined: Sun Dec 16, 2007 12:25 pm

Re: Idea behind investing is NOT to get rich...

Post by JW-Retired »

doknek wrote: Idea behind investing is NOT to get rich, but rather not to get poor.

This quote seems so true. It made me sad. I was pursuing investing (boglehead) thinking I will be rich one day with my investing. Well, I was expecting more.
IMO, sadness isn't justified. If you are truly investing enough to be fairly certain you will not be poor, the statistics of it say getting rich is quite possible. You might still get rich without trying to.
JW
Retired at Last
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