Ask HN: What are fastest paths to financial success?

[alienlid]

> At Digg, one mentor gave me the savvy advice that the fastest path to financial success was working for four years at three different just-about-to-IPO companies. A surefire way to retire by forty. (This is, for the record, pretty good advice.)

https://lethain.com/forty-year-career/

What are other fastest paths to financial success? Currently am a software engineer, so looking for advice in this career choice.

[livingpunchbag]

Don't have kids.

Study algorithms for interviews for Big Corps.

Know where you're spending money on. What % goes to food, what % goes to hobbies, etc.

Have low-cost hobbies.

[iordachej]

Die in sadness and alone

[go2broker]

Man, your comment made my day.

[anm89]

You do not want to take the fastest paths to financial success.

The fastest path to financial success is going to be dumping all your money into some kind of short term leveraged bet. This will come with a huge risk of losing everything.

A core element of finance is that risk and return are not just related to each other, they are sort of like inverse sides of the same underlying thing. Reward is always a premium for risk, because if something had a reward with no risk it would be consumed infinitely until there was none of it left. If something had risk with no reward why would you do it?

So the only real answer to this question is to figure out what risks you are willing to take in life that reach the maximum level of reward. This could be career risk like being an employee in a startup, this could be financial risk like buying a bunch of bitcoin or even just general life risk like saying the whole thing isn't worth it and going to travel.

The only advice I can give you generally is that financial reward comes to those who make themselves valuable to people solving problems with high financial stakes, that could be as an employee or owner themselves. If you figure out the biggest problem you can solve in the area with the most money at stake you are likely to benefit monetarily.

Also I disagree that statistically, shuffling between startups is a good bet and it has a large number of outcomes where you do really poorly.

[kratom_sandwich]

"The fastest path to financial success is going to be dumping all your money into some kind of short term leveraged bet. This will come with a huge risk of losing everything."

Betting everything on a single number in Roulette is certainly not what OP had in mind ...

[dmfdmf]

As a software engineer your best bet would be start or join and build a software startup that looks promising as a principle owner or vested employee. The problem is picking what problem to solve and also getting the resources ($$) to do the job. Also, the skill set for software engineer doesn't necessarily overlap with the skill set necessary to build a company. Beware that you can sink 5-10 years in such ventures with nothing but (sub-market) salary in the end. Most people can't afford to do this more than once.

I once knew a guy who was an HP engineer who bailed on HP and went through two different startups that failed. He said the problem with engineers is they think that success is about the technology but the lesson he learned is that it also about marketing and strategy which the failed startups didn't budget enough for and had poor execution plans.

FWIW, many of the people on the "richest people" lists like Fortune, made their money through real estate. The main reason is because real estate is inherently leveraged via the mortgage so if you make some good moves your return is multiplied. But of course with leverage comes risk and those lists suffer from survivor bias -- meaning they are the people that never flamed out in a bad market and lost everything because they could not pay the mortgage, which is common.

[1ba9115454]

Take a look at what you already have.

Compare it with people who have less than you.

Declare yourself successful.

Done.

[Slightofhand]

Be thankful for what you have should be somewhere in there.

[decafninja]

At this point in history, as a SWE, probably doing everything damned possible to get a FAANG job.

There are probably even faster ways, but they are significantly even more riskier and/or unreliable.

[ck425]

Spend less, save more, invest. It's boring but it works, regardless of how much you're earning.

[justaguyhere]

I am doing the first two, but no clue about the third. Any tips on where I should start?

[hatboxreappoint]

Vanguard FTSE Global All Cap Index Fund

https://www.mrmoneymustache.com/2011/04/10/post-4-what-am-i-...

[marketgod]

Look up Bogleheads and Lazy Portfolio.

[kratom_sandwich]

I think if you have a genuine interest in this topic and some basic understanding of maths (probability, etc.), textbooks can be quite accessible. Read, for example, "Coporate Finance" by Berk and DeMarzo or have a look at the CFA study material.

[jagannathtech]

FAANG and FIRE

[fardo]

Any work in big tech or finance companies that would pay at least 100k per year.

This is because on what you've written, you've defined financial success for yourself as "a surefire way to retire by forty". Retirements, however, given a large and stable income, become primarily expense driven, when you run the numbers: reducing the amount you spend and consume when your salary exceeds most of your material needs is a far more reliable route and speedy path to retirement than making more.

This is because if you're already pulling 100k or more, are saving at least 30-40% of that (which for most people should be doable, as the median single person income is about $35,000, and the median family income, in total, is $75,062 [1]), and do that for 20 years, the interest on the 600k principal will exceed a 3% withdrawal rate and inflation for 30 years with 90% certainty [2], meaning if you can live on $18,000 (fairly doable in cheaper parts of the country), then you can retire at 40, if you so choose.

I would argue the above retirement plan is far more surefire than the startup-based one, because it only requires a single, disinterested employer willing to pay you at least that much for those 20 years, rather than getting repeated possibly-not-going-to-happen payouts from successful IPOs. Additionally, it assumes somewhat meager, defensive positions: The 3% withdrawal rate is aggressively low to account for bad downturns, and this plan assumes you never get a raise, never get awarded stock, never save more, never accrue interest on your deposited principal before you begin retirement, and never develop any income streams besides your job, despite being a programmer for over 20 years.

Additionally, Dan Luu argues with several salary increases programmers regularly get, you could pull this off in 8 years with my 30% estimate [3]. If you can, for example, increase your savings rate in my setup to 50%, you can have the above 600k based retirement within 12 years, in your mid 30s.

Families make this analysis more complicated, because of housing and the possibility of new income streams and drains, but assuming a two income family, I still would assert the fundamentals of the above situation haven't changed.

So for financial success defined as "able to retire", I would advocate for aggressive savings and living below your means - they're the surest route for high earners, and have comparable speeds and timetables as riskier options

[1] https://www.bloomberg.com/news/articles/2017-09-12/u-s-house...

[2] http://time.com/money/4689984/safe-withdrawal-rate-retiremen...

[3] https://danluu.com/startup-tradeoffs/

[whb07]

except if inflation jumps to above 5% which is back to the trendline, all this goes up in flames.

[hatboxreappoint]

* If you are in the US.