Can You Handle the Truth?
- Admin
- Sep 12, 2018
- 2 min read
Time to get edgy and risk offending some people. Here’s a slightly edited comment I made on a New York Times article entitled “The Recovery Threw the Middle-Class Dream Under a Benz.”
True
1. Real wealth comes from investment portfolios, not salaries. 2. Getting ahead by going to work every day isn’t enough. 3. People who possess tradable assets (equities), have an advantage over Americans dependent on their weekly paychecks. 4. A wealthy person who loses a job can afford to be more choosy. False 5. Fortunes are made only through an initial public offering …. or a liquidity event. 6. owning a home is always a good idea because prices only move up New “Right Thing” (keep the true, eliminate the false, add the following) 7. half of American families could a accumulate a portfolio over a couple decades time sufficient to insulate themselves from a job loss and lead to financial independence. 8. Index equity funds are the best long-term investments to accumulate wealth, 9. You have to spend substantially less than your salary and invest the rest, 40%, 60% or even 75% to accumulate roughly 25 times your annual expenditures as soon as possible in your life. We live in one of the richest countries on earth; it requires getting off the hedonic treadmill. How • Buy the least house you can live with, maybe rent in some localities. • Never buy a new car, any SUV, any “premium” vehicle or one that gets less than 35 mpg. • Eliminate cable TV • Eliminate restaurant meals and prepared foods (or reduce by a factor of five or ten) • Never buy designer anything and consider thrift shops and Craig's List for routine shopping (you’d be surprised what people sell or give away) • Don’t buy other unnecessary stuff
You may ask about the other half of American families, and so do I, but there’s no reason to despair if you’re “only” in the top 50% income bracket of American households.
To challenge your thinking about the limits of frugality, check out this popular blog:
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