[hn_throwaway_99]

I'd just like to point out the irony of the bolded, all caps statement in this article, "You’ll NEVER get rich by working for someone else", the recent HN frontpage article about how Tim Cook got a $750 million payout working for Apple, and that the title of this post is "All Personal Finance Experts Are Liars".

[gonehome]

It’s totally false even ignoring extreme outliers like Tim Cook. The reason there are so many angel investors in the Bay Area is because of the feedback loop of ipos giving regular employees 1-5M pretty often (and 5-50M+ less often). It’s also part of the reason a pretty unremarkable and small home on the peninsula costs $3M.

[rchaud]

You don't have to be Tim Cook for the usual "save/invest x% of your take-home income" advice to pay dividends. A 22-year starting a job in investment banking or Big 4 management consulting will do just fine without needing to start their own business.

[ryandrake]

I wouldn't call a top engineer at a top company a "regular employee". Anyone with $1M+/yr in stock from their company is also a fringe outlier. Top talent at medium-sized companies are not making that, and regular rank-and-file at FAANG is not making that. I think the "NEVER" in the article is really a "statistically never". Yes, you can be pedantic (welcome to HN) and point out a few outliers, but it's still "never," in the sense of I'll Never hit the lottery.

[md_]

But by definition everyone who’s rich is an outlier. :)

The question is, are more of them rich from salary, from capital ownership, or from inherited wealth?

In the US, the broad “rich”—about the top 1% by income—overwhelmingly make their income from salaries and wages (https://www.cnbc.com/2015/04/09/where-the-rich-make-their-in...). However, the ultrarich—say, the top 0.1%—tend to make it from capital and inheritance.

Assuming financial gurus are trying to give feasible advice for how to become comfortably rich, the safest bet with the highest expected value is probably something like “get an elite professional education and find a spot in the elite managerial/professional class.” I.e., banker, MBA, corporate lawyer, or (for all the HN readers) FAANG engineer.

[divbzero]

If you get rich from incentive stock options you have technically been working for yourself.

The underlying gist of “You’ll NEVER get rich by working for someone else” is that you should look for opportunities to build wealth that’s not tied to hour-by-hour labor. You can do this by owning your own business, or by looking for ways to own equity in valuable assets beyond your regular job.

[hn_throwaway_99]

I agree with your main point that you want a job where your compensation is not directly correlated to hours worked. I'd still argue that that's a very different argument than "you can't work for someone else and get rich" or that getting paid in stock options, as an employee with a boss, is really "working for yourself".

I mean, enterprise software sales folks can get rich being paid on commission, "influencers" can get rich being paid by affiliate links, and none of them have any ownership in the business.

[moltenguardian]

Considering the majority of CEO pay is in company equity, they are working for themselves.

[carnitine]

That’s a fair point, what about traders then? There are people working for eg. RenTec who have earned tens of millions despite being regular employees who don’t even manage anyone. And this is not given as equity, bonuses are cash.

[MattGaiser]

One of the problems is that "rich" is relative. I was talking to a guy at an alumni event who said that managing partners are prone to fraud as they feel poor compared to their similarly ranked CEO friends.

[anigbrowl]

Is he really 'working for Apple', when he's the CEO? It'd be fairer to say he has Apple working for him.

Of course you can get rich (or at least well off) in A Job. but realistically, that almost invariably means becoming a workplace strategist and doing office politics to make sure you outpace your peers, not just performing a job you like and then checking out to focus on your domestic life.

If you are just a diligent and unselfish team member who never tries to elbow your way in front of others, you are very unlikely to become rich just from your job. Wealth tends to flow towards people who are competitive rather than cooperative.

[gruez]

> Is he really 'working for Apple', when he's the CEO? It'd be fairer to say he has Apple working for him.

Apple's employees are managed by him, but both him and the other employees are working for the apple's shareholders.

[anigbrowl]

Time Cook owns about 800k shares of AAPL. Of course he is technically employed as a top level manager, but it's naive to think CEOs and other senior executives don't make decisions in their own interests as well as those of their nominal employers (many of whom never even vote on company business).

I'm not singling Cook out here, he seems like a nice person. But i think you understand that there's a big difference between being a regular worker bee and CEO of a large corporation.

[zffr]

Yes and several members of professional sports leagues like the NBA/NFL are also very rich too. While it is possible to become very rich working for someone else, I think the author's point is that it is extremely unlikely.

[hn_throwaway_99]

As others have pointed out, though, while I used an extreme example, you can take your average, middle-of-the-road yet high-quality software engineer, and if they make the right decisions (select jobs that pay well, live well below their means, invest with a standard diversified portfolio), they could easily retire in their 40s. I'm not saying this route is available to everyone, but certainly available to plenty of folks to not be considered a rare outlier.

[ghaff]

>easily retire in their 40s

That's a stretch. An average of $150K/year before taxes throughout 20s and 30s is a pretty good job in the US. Say they save $50K/year--which is a lot on that salary--that's $1million saved overall which, depending on your assumptions, will give you about median US household income annually. So possible in a sense if retiring as soon as possible is your goal but certainly not to everyone's tastes.

[jmstriegel]

I think this doesn't account for investment returns. If you assume this money is invested for the duration of your 20s and 30s, you "only" need to invest $50k/yr for the first 10 years. At an average 7% growth, you can let it ride for a decade and still have just under 1.3mm by age 40.

In your example, a high salary individual contributing $50k/yr for 20 years at 7% ends up with over $2mm by age 40. That's $80k/yr at a %4 withdrawal rate for the rest of your life.

More reasonably, a $25k/yr contribution for 20 years at %7, would pass $1mm by 40. If you let that sit for the next decade and retire just before you turn 50, that will roughly double over the decade to $2mm.

I agree that this isn't attainable for everyone, but contributing the $19.5k/yr max to a 401k pre-tax, and $5.5k/yr into a Roth IRA over your 20s and 30s, will likely make you a millionaire by 40 and a 2-millionaire by 50.

[paulpauper]

Being the ceo is sorta an exception to this.

[thefounder]

Not any CEO either.