[sombremesa]

> They are all multi millionaires.

Sure, but so am I — and I know for a fact they make very little, because of the way they talk about our mutual friends' job offers — I cannot even tell them my salary, to be honest. (Making less money is not a bad thing, but the pertinent point is that they work longer hours than I do, in the same industry!)

> Msft stock is up 10X in 10 years.

Here I'd like to correct you on one point — stock going up like this does not necessarily equate to outsized wealth. When you join as a new grad, you get very little stock, and as you get more grants, they are market-adjusted (not to mention vested over time). Plus the early stock inevitably gets sold to buy a home, etc.

Feel free to ignore me if you knew these things.

[ethanbond]

They’re complacent but work harder than you? I don’t get it.

[sombremesa]

I updated the wording to help you out.

[User23]

If you’re smart enough to pay the tax on your RSUs and hold them for a decade then yeah it’s a pretty straight shot to a few mil. Even Amazon with its notoriously back loaded grants minted a ton of level 5 multimillionaires.

[sombremesa]

You missed the "personal" part of "personal finance." If you live in Seattle and started working in, say 2012, that "smart" decision would be costing you a ton of money today (certainly more than a few mil all said and done) should you be in need of a home.

[User23]

Amazon was consistently averaging greater than 30% compounding annual returns from 2012 to 2021, which is far in excess of the Seattle housing market. This is obvious to anyone who knows how to read a chart. Sorry to say, but if that was you missing out on those amazing returns to fund a down payment then you’re just bad at personal finance. In a (near) ZIRP environment you obviously buy real estate by levering up not by selling equity.

[sombremesa]

I usually don't argue with people who are this out of touch, but I'll give you the benefit of the doubt.

Let's do some math. In both cases we're buying the same home for keeps, so we can ignore the value of the final asset (would be the same in, say, 2100 A.D. in both cases):

Amazon stock 13x'd from 2012 to 2023. Say you had $50k vested by year 1 (close to what you'd have in 2013 as new grad). That money would be $650k in 2023. If you invested that into a house just around then, say in a $300k home, your interest rate would be ~3.7%. That means you would be paying $415,040 over the next 30 years, including your down payment.

Now let's say you were...you...and decided to wait till today. That same home is now worth $1.3 million in 2023. Your mortgage rate is 6.5%. You have your $650k in stock, so you put 20% down ($260k). Your mortgage is $1.04M. Over the next 30 years, you will be paying...a whopping $2,341,800. But hey, congrats on your "extra" $390k in stocks. By the way, you paid (if we are VERY conservative) ~$250k in rent while living in an equivalent property in those ten years.

[User23]

I usually don't correct people twice because if they can't understand the first time they probably won't the second. But to mirror your demonstrated charitable intent I'll try.

First, Amazon stocks vests over four years on a schedule something like 5%, 5%, 10%, 80%. So comparing just the first year is borderline dishonest. It's been a while, but the typical grant you'd have expected to see as a new grad was considerably closer to 200k than 50k. And not only that, but you'd have benefited greatly from additional grants coincidentally being during downturns. But that was pure luck so we don't need to get into that. Thus in 2023 we're looking at more like 2.3 mil in the bank, not 650k.

Next, what part of in a ZIRP environment you buy real estate by levering up did you fail to understand? Anyone with even basic financial literacy knew that near zero rates mean equity inflates and leverage is cheap, so clearly you want to borrow as much as possible rather than sell, and especially not sell high return equity. The comparison isn't equity or real estate, it's equity and real estate to just real estate. At year 10, someone that was good at personal finance has the 2.3 mil from the equity plus the roughly 1 mil in home equity from appreciation, vs just the house. Which is to say a roughly 3x greater outcome. In fact it's considerably more than 3x better because liquid assets have considerably higher optionality than illiquid ones like real estate. We'll get to that in a couple paragraphs.

But hey maybe you think that's not fair or something, and we should compare the relatively financially illiterate scenarios that you propose. In that case then, over the next 20 years (30 - 10 since in this case we're supposing we start the mortgage a decade later), assuming you diversified to a 7%ish return to preserve capital, that 2.3 mil is going to double every ten years so even if you do end up paying 2.3 mil on the mortgage, you're still sitting happy with north of 9 mil in your brokerage account at year 30, which is to say 2043. Last I checked 9 - 2.3 (total mortgage cost from buying in 2023) is considerably more than 1. Indeed, it's probably considerably more than 9 - 2.3 on account of considerable home equity will have accrued over those 20 years to offset the cost of the mortgage's effect on your balance sheet.

And finally, since at this point we're invested in safe capital preserving assets, we can call our broker up, say hey match IBKR's margin rates or I'm taking my business to them. And at that point you can write checks up to about 5 mil on a whim at an interest rate something like prime + 2.9%. And that means you can get sweetheart deals on real estate from auctions if that's your jam, among many other options having access to that kind of liquidity provides. Your primary residence on the other hand doesn't count toward your financial net worth.

The game gets considerably more interesting from there, but I think I've said enough for anyone with genuine intellectual curiosity to get the point.

I assume the reason you're so defensive is because you made poor financial decisions, but that shouldn't keep you from learning, especially so as to provide better guidance to any children or other heirs you may have.