Oh, absolutely. Moreover, a million dollars is not enough to live like you are rich once you’ve accumulated it - well, you can live like you are rich for a bit, but not long term. And I don’t think one should live off rice and beans their entire life so they can take a trip to Hawaii when they are 70. But the math to accumulate a million dollars - that isn’t insurmountable - with a DECENT income (by which I mean in the top half and probably the top quartile, but not necessarily the top 10%).
Lot of not knowing much about economics going on in this thread.
The real reason, which I don’t think anyone has really touched upon, is the only money-making asset most people have is their labor. Most people only have economic value, such that they are willing to perform a job someone else can’t or won’t do. And since there are typically plenty of people who can perform such a job, they get paid a relatively low market wage.
Even lawyers, consultants, accountants and other high income people are still only paid for their labor. It might be a bit higher due to their skill set. But ultimately their income is capped at the market rate for their work x the number of hours they can work in a day.
Investment bankers, hedge fund guys and certain lawyers and management consultants can make a lot more money because they either take an equity stake in the deal they are part of or they are just in the business of generating large amounts of wealth in the market.
People become billionaires or mega-millionaires because they own assets that generate wealth even when they aren’t doing anything. Although it typically requires building something of value, like a company. And I mean a real company, not some 1099 “single with a shingle” consultant.
Most people never become wealthy because they think more or less like slaves or indentured servants. That is to say, if they do everything right according to what their boss tells them, maybe someday they’ll get a raise or token promotion. Now most of us don’t have the wherewithal to start a billion dollar company or develop a mean jump shot and we have to work. So most of us are content to find jobs that provide enough income with as little aggravation as possible.
Sam Walton was a billionaire because he built Walmart, not because he shops there.
Yep, and nowadays almost anyone can start an internet based business if they have a good idea and a little bit of capital. I started an internet based business while freelance contracting and eventually the internet based business grew to where it employs me and four other people. I needed very little capital to do this because I started it part time and my contracting paid the bills. I’m not a multi-millionaire but might be if I get bought out one day, and certainly I have more chance of that than any salary earner.
I made my point poorly ??
I admit I was a little rude and I am sorry about that but you gotta be kidding me.
Your basic argument is that you can be a millionaire with a " middle class income and some frugality ".
Wow …!!!.
I haven’t seen such unprecedented insights into the modern capitalist economy possibly ever. What a riveting argument. I think you just singlehandedly raised the I.Q of everyone on this thread by a few points. Thank you so much.:rolleyes:
And you continue to insult. Is this your debate style? “I’m sorry I’m a little rude, let me continue to be rude?”
You can be a millionaire with a middle class income and some frugality.
“Middle class income” includes a broad range, though. Someone making $40,000 a year is not going to become a millionaire with ‘some frugality.’
Someone who retired at the end of CY2015 after 30 or 40 years of investing in the S&P 500 saw a CAGR of greater than 7%. So we’re not even talking about heroic levels of frugality here.
ETA: That’s after inflation.
Yep, which is why I said decent and clarified that to be within the top quintile. And its going to depend on things like if you have a partner who stays home or one that works or none at all (i.e. two $40k incomes is twice as much money without twice the expenses), if you have no children or eight of them, if you live in Fargo or in San Francisco, if you work from the time you are 18 to 60 or if you have periods of not working.
Yep. My spreadsheet tells me that savings of $5000/year at 7% for 40 years results in over a million dollars.
Even for a $40k salary, that is less than a common recommendation of 15% savings. It is a smaller contribution than IRA limits and far less than 401k limits.
I am firmly convinced that a retirement plan (invested in a low cost index fund) that starts at $100/week and is increased as ones wages increase will make you a multi-millionaire in 40 years or less.
The power of compound interest is amazing - a single $70k investment at 7% over 40 years will give you a million.
It takes discipline and the strength to stick to a 40 year plan regardless of what the market is doing.
I know people with pretty big websites with several rounds of funding who really aren’t worth anything.
My business has a good demand and my product has a reputation, but I’m having a hell of a time trying to scale it.
There are many middle-class (or lower) web entrepreneurs. I have some friends who’ve hit 7 figures on a sale, but the 9 figure deals aren’t that common.
Also, there are many services with millions of users that failed or in danger of failing because they couldn’t figure out how to monetize.
Just curious, does your business have a scalable product/service or is it based on the labor of your 5 employees?
I don’t know where you get that idea. I joined Facebook nearly six years ago, and I’m still just squeaking by.
Thats 2010, when Facebook started in 2004. If you had joined in the first two years and were one of the first 50 employees I would bet you’d be doing pretty well.
And actualliberalnotoneofthose, we sell digital products, so it’s scalable in that there is almost no additional overhead for extra sales once the product is created.
Oh, I’m not an employee; I just have a page.
But you said joining facebook or google now would make me well off (even if not $2 million net worth rich). I joined six years ago, though, and I’m not particularly well off.
Did I join too soon? Should I delete my page and start over?
Will they even LET me?
Though if you only have a single $40k salary, and you have to pay for your own living expenses, saving $5k a year off of that will be unpleasant for most people. Its just hard to stretch $40k. You’ll lose $5k off the top in Social Security taxes, leaving you with $35k. You’ll pay a minor amount in income taxes, because you are well above the poverty threshold. You’ll have another $5k a year in health insurance. You need a place to live, and a form of transportation - a bus pass in the Twin Cities will set you back $1500 a year, but with $40k unless you live in one of the few U.S. cities where public transportation is superior to car ownership, you’ll probably have a car. A cell phone and an internet connection. Food. Then you’ll still want beer money and to go out once in a while.
Possible - with frugality, for a single person with no kids. But probably not pleasant for most of us. Add in a partner who stays at home with a kid because daycare is unaffordable at a minimum wage salary, and a high cost of living area, and you’ll be lucky if you aren’t digging yourself a hole.
The point I’m trying to make and apparently failing to is that although you can be a millionaire on a middle class income ( however you define it ) by careful and disciplined investing over a long term BUT most people don’t.
Statistically , a millionaire household is a rarity compared to the number of people that earn middle class and above incomes.
Your personal story might be an exception but overall , it is not the norm.
If you read my original post again , I never said you cannot accumulate a million $ net worth on a middle class income but that requires a skill set that most americans do not have. End of story.
People are posting on this thread things like saving " 5k over a period of 40 years at 7 % will get you your million ". Of course it will , that’s the Math. of compound interest . That will never change. Most people do not do that. I cannot be more clear than this.
I am done.
I hear you can earn more over at POF.
But thats probably just a rumor.
Often because they choose not to. Perhaps because many people have a very high personal discount rate that even approaches infinite; any future value quickly diminishes to zero, no matter the returns.