A while ago I published Millionaire Interview 6.
As I often do, I shared the post on Facebook.
One person made this comment:
Honestly, not overly impressed. Yes, a millionaire with home equity and a good job, but keeping most of his money in cash the last three years??? If that was invested in the market his net worth would now be 1.75 to 2 million. Playing it way too safe.
I’ve seen this before. Someone who is willing to criticize others but is probably nowhere near their level of financial success.
So I responded as follows:
Are you doing better? If so, I’d love to interview you for this series. Interested?
He responded with:
I assume if there is a place to comment that one can do so without being attacked. I was not rude. I just stated that few, if any millionaires sit mostly in cash, thereby missing three years of a great bull market that could have bought his net worth up much higher. This guy’s fantastic income made him a millionaire, along with the basic rules that we all follow to make that number, such as living well within our means, super saving, maxing out 401k’s, driving cheaper or used cars and so forth. I am doing fine financially.
I do give him credit for responding since my experience is that most people won’t.
I replied with the following:
First of all, you were kinda rude. You were “not overly impressed.” That sounds rude to me, but it doesn’t really matter.
Second, you were not attacked in any way. I simply asked if you were doing better. I assumed you were since you were critical of a millionaire. Why be critical unless you’re doing better? I can’t imagine anyone doing that.
So since you’d be doing better, I wanted to interview you since you’d be a millionaire too.
None of that sounds attacking to me…
I got no response from there.
A Million Dollars is Nothing
This sort of person is a money critic. They criticize others, their net worths, how they manage money, and the like.
And in 99.9% of the cases, the critics have very little wealth personally. I know because I’ve engaged this sort of person for years.
My former blog had tons of them as commenters. They especially liked the mantra that “one million dollars isn’t that much” or “one million is easy to have these days” or some other comment along these lines.
Being the person I am, I can’t let things like this go. So I’d always ask if they had a million or more themselves (if they did, I wanted to interview them).
I can’t remember a single instance where the person responded that they had a net worth over one million dollars.
I thought not.
A Million Is Not Worth What It Used to Be
That’s not to say that one million dollars makes people fabulously wealthy like it did a couple centuries ago when the term was first used. In fact, depending on how it is calculated, a million US dollars in 1900 is equivalent to $28.8 million in 2016.
But it is not too shabby either. It’s hard to tell how many millionaires there are because there are various definitions of millionaires ($1 million in assets, $1 million in net worth, $1 million in net worth excluding primary residence, $1 million in investable assets, etc.) but Wikipedia comes up with this: “Millionaire households thus constituted roughly seven percent of all American households.” Given that America is the wealthiest nation on earth, it’s probably safe to assume that the world’s percentage of millionaires is below 7%.
So looked at another way, millionaires are better off than at least 93% of the world’s population.
This is what caused me to write a post several years ago titled “$1 Million Isn’t What It Used To Be, But It’s More Than Most People Have.” It was addressing those critics who poo-poo others who are far wealthier than they are.
Relatives Can Be Money Critics Too
Do you know who I get the most financial “advice” from? Relatives.
And these are relatives who have far less than we do (as they share that too) and yet feel compelled to tell me what we’re doing wrong and how it should be done.
I want to reply with something like, “One of us is wealthy, and it’s not you, so you may want to reconsider your thoughts.” But that would not be kind.
They pontificate on everything from how to make more money to how to invest to how to retire. Uh, I’m already retired — I don’t need your advice on how to do it.
I usually let them go on with an “uh-huh” now and then and they eventually move on to another topic.
Makes Them Feel Better About Themselves
I think people who make snarky money-related comments and offer their unwanted advice to those who have far more assets than they do is that it makes them feel better about themselves.
What else could it be? They aren’t being helpful, they are just criticizing what someone else is doing. In the first case above, someone is criticizing another person who likely has way more wealth than he has. Yes, perhaps there are moves that could be made to make things better, but he’s doing better than most (including the commenter). And there’s a nice way of saying “hey, you might want to consider this.”
Or maybe it’s just the anonymous Internet effect. I like how it’s summarized by the graphic here. 🙂
It’s Not the Critic Who Counts
These various episodes always make me think of this quote from Teddy Roosevelt:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.
The critics do exist. But they do not count. That benefits goes to the person who actually does something and achieves the results.
So consider this a reminder not to pay attention to the money critics. Keep on your path, making some progress every day, and you’ll do quite well in the end — well enough to eventually say, “One of us is wealthy, and it’s not you, so you may want to reconsider your thoughts.”
Am I the only one that faces money critics? Maybe it’s just a big part of blogging? If you’ve had similar experiences, please share them in the comments below.
M7 says
Millionaire 7 checking in.
Thanks for this article! You handled the responder perfectly.
It’s easier to be critical on the sidelines but more fun to get in the game.
I’m grateful the comments on my post were very supportive. I may not be doing everything 100 percent correct but that doesn’t prevent me from continuing down the path to financial freedom!
Lance @ My Strategic Dollar says
Agree with these points here. Personal finance is so specific to that person that it’s not worth criticising. Sure, we all have our own ways of forging our path, but at the end of the day you’re going to do what you want.
Alex C says
Hi,
I am a regular reader, sometimes poster. Reading the critics comment he asserts 3 things which I are worth discussion.
“Honestly, not overly impressed…
1. Nobody but ourselves care how much money we have. An outside opinion is just that.
“… A millionaire with home equity and a good job, but keeping most of his money in cash the last three years???
2. Personal finances / NW is always unique to that person.
“… If that was invested in the market his net worth would now be 1.75 to 2 million. Playing it way too safe.
3. That’s my opinion too but I would reserve my right to hold a cash position. In any case he appears to deviate from a balanced financial allocation. Possibly with good reason.
Food for thought
Ps. Am happy for a millionaire NW interview. I’m fairly young so my ‘millionaire’ status is contestable
Ember @ An Intentional Lifestyle says
Yes, I think we all have money critics. We’re not wealthy, but we choose to be frugal with our money and time. And are always being told to loosen up and have fun. By people who make much less than us and have a pile of debt. I do not think I need advice from someone in that situation.
My husband always like to use this example, ” You wouldn’t take weight loss advice from a fat person, so why would you take financial advice from a broke person?”
Whether broke, or just being a critic like this guy, I think it’s right. We know who we look up to in situations, whether it’s marriage, parenting, money, health/fitness or whatever. And if you’re not someone who is excelling in those areas, I really don’t care what you think.
Thanks for this reminder 🙂
Ember @ An Intentional Lifestyle says
Yes, I think we all have money critics. We’re not wealthy, but we choose to be frugal with our money and time. And are always being told to loosen up and have fun. By people who make much less than us and have a pile of debt. I do not think I need advice from someone in that situation.
My husband always like to use this example, ” You wouldn’t take weight loss advice from a fat person, so why would you take financial advice from a broke person?”
Whether broke, or just being a critic like this guy, I think it’s right. We know who we look up to in situations, whether it’s marriage, parenting, money, health/fitness or whatever. And if you’re not someone who is excelling in those areas, I really don’t care what you think.
Thanks for this reminder 🙂
Coopersmith says
Totally agree and I have been on both sides of both receiving and giving. I now just try keep my mouth shut and let my actions speak. I do what I do because it is comfortable for me and that is all that matters.
A funny observation is when you hit a major milestone you want to tell everyone about it but you can’t because you will get judge in other ways. Send in the critic. When my wife and I paid off our house she said not to tell anyone especially her parents because they will then think ” well now you can afford….”, or a friend said ” that is stupid in that is money you could have invested in the market”. The last 3 cars I bought I paid cash for and a friend said “so you are just keeping that car payment going… good move”. I even stopped at saying my goal is to retire at 59 1/2, ” you can’t do that you will run out of money”, ” I will never be able to retire”. ” well I am hoping to retire at 65 IF I have enough money”.
I could go into critic mode but I have stopped in most cases. Primarily because those people even if you gave them the most sound advise, they will not listen.
Your actions will speak louder than your words.
JimCalf says
I agree with you Coopersmith. In my mid 50s I have about 2.5M NW, but absolutely nobody knows but my wife.
As I interact with others and listen to their plans, schemes, triumphs of deal making that generate tremendous dept, I just nod and say “that’s awesome”. What else can I say? It’s not my place to judge them or tell them how to live. I have been approached several times for loans or requests for investment. When I ask about the plan details, I’ve never received anything close to what I would consider a viable plan, even after some coaching, so I politely decline a gently as I can. If they knew my actual net worth, I fear that idea of “he has money, why won’t he help me” would impact relationships in a negative way. So, better to just not discuss and be generous in quiet ways that don’t draw attention but still help my loved ones.
I have offered advice to my young nieces and nephews as we talk about their plans, but I’ve yet to see it followed. People are who they are, and we all have our priorities. Mine is FI and early retirement, as I want freedom to enjoy my life before I’m too old, and I don’t really care about stuff. Others have different priorities, like living every day to the fullest, having luxury goods and living with the debt that generates. To each their own. I’ll just continue quietly (secretly?) live the ESI path as my preferred way.
Bryan says
Great article! I always found it irritating to read articles stating $1 million is not a lot of money and you can’t retire with just $1 million. These comment sections aren’t the only place to read this garbage. So called financial experts also spew this stuff. Of course $1 million has less value than in past but that’s not the point. The world top 1% has less than $1 million. So obviously if you have that much money you are doing better than 99% of the world and over 90% of Americans. Once you achieve $1 million in net worth it does give you financial freedom to some extent. It gives you freedom to take job risks, etc. knowing you have a cushion.
Rob Tosti says
It has been about a month or so since I started getting your emails and reading your posts. I don’t have anything specific to say or personal experiences to share about money critics, but I do want to say that I very much enjoy everything you write. Thank you.
Amy @ Life Zemplified says
While I probably do indeed have money critics, I’ve not yet had one speak out about it. I’ll be sure and reread this article if and when I do.
Love Teddy Roosevelt’s quote.
WealthyDoc says
So true.
I try to be polite and not obnoxious when people are giving me financial advise. If an “advisor” is being particularly aggressive or condescending though I sometimes tell them I have some basic requirements in an advisor before I heed their advice: They have to earn more income than I do and they have to have a larger portfolio than I do. Otherwise I will follow the advise of those who have met those criteria. That usually silences them.
Apathy Ends says
I haven’t dealt with too many personally outside of the one-off advice from family members (that I know we are in a better financial position than).
I see a lot of these types of comments when someone from the PF community gets featured in a main stream place. Lots of negativity (that I assume comes from jealousy) and almost no value.
I don’t get why people take the time to comment without pushing the discussion – instead of being rude why not simply ask what is the reason behind the cash balance and see if something can be learned
Gopi says
Great post! Your point about relatives giving the most financial “advise” is definitely true. Everyone has their own goals and priorities which is important to remember when someone else gives advice. If they don’t understand your goals, it’s best not to take their advice. If they do understand your goals, then it’s worth a listen.
JWS says
Thanks for sharing this post. Hindsight is awesome isn’t it? I was a lot more aggressive with what little money I had when I was in my 20s, thinking the market could only move in one direction (mid-90s) and had a 40-50 year investment horizon! Twenty years later and I’m sitting on a lot of cash, worried about this 8-year bull run, and hoping for a pullback in both the market and real estate. Am I missing out? Well, yes, I have been. But I’m also participating with the part of my nest egg that has been in the market all along. As my horizon gets smaller and my nest egg gets bigger, the pain of going through another ’00-’03-like dip (Nasdaq 5,000 to 1,200) is all too real.
JerryC says
I think anyone in the group you interview has obviously done something right. How one gets there and continues is highly individual and could always be second guessed if you’re outside looking in. I personally started this journey much too late but now at 65 can work HT and in six months will totally retire without difficulty or radical lifestyle changes. If I had a mentor such as yourself decades ago I’d already be there but thank the Lord I’ll make it despite my errors. Not a millionaire but not hurting either – a position most of my younger co-workers don’t think they’ll ever reach.
Dads Dollars Debts says
Often the quite man is the wise man…not sure if it is an old proverb but it sure seems like it can be.
Great post. I try not to talk about these things with others or give advice unless asked. At most I may say, consider a fee only advisor if a colleague or friend has an appointment with a financial advisor. Often they don’t listen and our conversation moves on.
There will always be critics, but ignore the noise and we can all achieve something greater.
Apex says
Old Proverbs indeed :
Proverbs 11:12 : “Whoever belittles his neighbor lacks sense, but a man of understanding remains silent.”
Proverbs 29:11 : “A fool gives full vent to his spirit, but a wise man quietly holds it back.”
Proverbs 17:27-28 : “Whoever restrains his words has knowledge, and he who has a cool spirit is a man of understanding. Even a fool who keeps silent is considered wise; when he closes his lips, he is deemed intelligent.
Mrs. Adventure Rich says
I think you actually hit on a huge issue with money these days. With so many emotions and stigmas tied to money, it becomes either an uncomfortable or taboo topic to discuss with others. I even find myself hesitating to talk about money with friends/family due to:
A.) not wanting to sound condescending
B.) not wanting to sound like I am “bragging”
C.) not wanting to get the unsolicited feedback that I am doing something wrong…
Good job handling the comments in an appropriate manner 🙂 Keep the Millionaire Interviews coming! I really enjoy hearing about their wealth building tactics and the motivation that comes from realizing reaching that benchmark is possible.
M15 says
This is a great article. I remember one time a person scoffed when I mentioned that I was paying off my mortgage with a similar comment that I could be making more money somewhere else.
He made me feel insecure and dumb and I seriously reconsidered going forward with my strategy. Later I found out he had a no-money down mortgage on his home and was struggling to make the payments.
Money critics should be ignored.
Sloan Ranger says
As I was reading your commentary, I thought of Abraham Lincoln and all he went through throughout his career. His perspective is insightful:
“If I were to try to read, much less answer, all the attacks made on me, this shop might as well be closed for any other business. I do the very best I know how – the very best I can; and I mean to keep doing so until the end. If the end brings me out all right, what’s said against me won’t amount to anything. If the end brings me out wrong, ten angels swearing I was right would make no difference.”
Paper Tiger says
There is an old saying that if you want to be good at something, you need to hang around people who have already achieved it. In other words, if you want to be a millionaire, you should hang around and listen to folks who already are.
As far as any others, I may or may not politely listen to what they have to say, but either way, I rarely hear them 😉
JayCeezy says
ESI, really enjoyed this post for several reasons: 1) the Socratic way you exposed ‘the Critic’, and his (it is almost always a ‘he’) triggered response; 2) the linked graphic (you stretched a little there! Am I wrong to like it when you get naughty?:-)); and 3) the inclusion of TR’s ‘Man In The Arena’ quote from his ‘Citizenship in a Republic’ speech. Will be re-reading this post, thanks!
John says
I think this is a pretty healthy attitude toward criticism, but you do want to be careful about shutting down even this type of criticism completely. (disclosure: My NW $3.5M excluding primary residence, retired this year at 49 … also made my living as a writer, so it’s part of my profession to deal with and accept all criticism, welcome or unwelcome)
I’ve definitely developed “filters” to make sure I keep on track and not pay too much attention to naysayers. But you also have to remember the old saying that “even a broken clock is right twice a day” (which made a lot more sense when clocks weren’t digital). I still listen to people that say somewhat ridiculous things, and oddly enough, it helps to make sure I’m keeping my ego in check and make sure I’m not in a bubble of anti-criticism.
German says
There is an old saying that goes something like this… it is much in life to be a critic then to be an author….
I appreciate your ESI blog so let’s not bother with this critical person!
Anon. Accredited Investor says
I’m going to be contrarian here and agree with the original poster that was “not that impressed” with M6 but I’ll try to do so in a way that will not come across as so “offensive”.
Context is important here. When comparing M6 to the others in the Millionaire Interview series I don’t find his story very impressive for reasons I will detail below. However, I don’t think there is any shame at all in being “Worst of the Best”. Say what you will able someone who graduates last in their class at Harvard they still have a degree that says “Harvard”. Similarly, M6 absolutely deserves props for joining the M-club. That’s definitely not a small accomplishment.
But let’s examine M6’s story within criteria espoused by this site (which I am absolutely a fan of):
Earn – M6 claims $400k in past year and average of $200k over past 16 years. I didn’t go back and look through all 20 other interviews to see where this falls, but I think it’s near the top. I give M6 an “A” here.
Save – M6 claims a net worth of $1.6M. We know that M6 has earned $200k * 16 = $3.2M That gives us roughly a 50% savings rate. I think that’s pretty good but not excellent, especially when you compare the most recent single year of $400k. The total net worth is only 4x the most recent single year. There’s a chart in “The Millionaire Next Door” comparing current income to net worth to determine savings class and although I’m too lazy to look it up for an internet comment, I think 4x is low on that chart if memory serves. For that, I’m inclined to give M6 a “B-“.
Invest – This is where M6 really fails. Cash and home equity (which generates 0% returns outside of inflation hedge) is $1.0M of M6’s $1.6M net worth. M6 says he doesn’t know how he wants to invest yet. Let’s recall that he has 16 years of $200k income. At what point will M6 decide to learn the basics of investing? His time horizon is getting shorter every year. Investing can be as simple or as complicated as you want to make it. You can’t wait until you feel like you are an expert in an area before you invest your first $1 anymore than you can blindly make investments into areas you know nothing about. Do *something*. If it doesn’t work, change it. But for Pete’s sake, don’t do nothing! Inflation is killer! I give M6 an “F” here.
Anyway, those are my opinions. I really love the Millionaire Interview series though. When the M6 interview originally came up, I really took it to be an example of a “poor millionaire”. Yes, M6 is in the M-club, but I think he probably has many years to go before he truly hits financial freedom. Personally, I took this story as an example of how you can’t quit just because you made the M-club. I think there’s great value in M6’s example.
M says
As I read this post, I had the same thoughts and you said it incredibly well.
I value the ESI methodology and enjoy the M series to see real life examples of how well
real people are following these steps, and often their admitted mistakes or challenges. What I don’t necessarily agree with is “whoever has the most is right.”
As an extreme example, I am impressed by the teacher with $500k at 40 years old
much more than the lottery winner with $50M. And the reason is because the teacher
likely espoused the discipline of ESI that will work for everyone.
Working Optional says
I’m not famous enough to have a critic yet. 🙂
It was great that you tried to engage that commenter, and handled him commenter perfectly. One’s entitled to opinions but you don’t get to judge, period.
Joe says
TD’s quote is right on. It’s easy to be an internet critic nowadays. It takes a lot more gut to share your finance with the world. Nobody is perfect.
rcz58z says
I didn’t comment, but i was also somewhat surprised that the millionaire had so much in cash.. but whatever works… I’ll probably wish I had more in cash in the next 6 months…
Dave says
$1,000,000 is not what it once was, but it is still a ton of money for an individual to save. It took my wife and me 20 years to reach a $1M net worth. For me, I like to keep it positive with my comments. The world is full of enough negativity. I find ESI money to be a blog to read for motivation and education. IMO, Trolling does not fit in here.
Richard Ryan says
“$1,000,000 is not what it once was, but it is still a ton of money for an individual to save.”
@Dave. My thoughts exactly. While $1M does not sound like a lot when you hear athletes making tens of millions per year, or whether Jeff Bezos has more billions than Bill Gates.
But, like you said, I had to work pretty hard to reach $1M.
I think envy is what drives a lot (most) of these types of comments. I hear it in other things too. Before I really started cutting back on spending to increase retirement savings, the wife and I would take a vacation every year to the Caribbean.
Invariably, I would get comments from folks about how “lucky” I was to be able to take these vacations.
No, it wasn’t luck. It was the decision to go to school and get a degree instead of hanging around after high school and doing nothing. It was the decision get a job and start working hard. It was the decision to go back to school at night, while working a full-time job, to get an advanced degree instead of playing video games or watching sitcoms.
I’d say luck had very little to do with my professional success, just as luck had little to do with the fact that we have a net worth $1M+ net worth. // end rant 🙂 //
JimCalf says
My wife and I are frequently called “lucky” by friends and family, but just smile, as we know that what we are is focused on a plan, for everything. I guess planning makes you lucky. 😉
Millioinaire 14 says
Millionaire 14 here – like I said in my post, everyone will have their own way to get to a million. Who are we to judge another’s methods? Personally, I would not go so conservative with cash, but I know a number of people who are so risk-averse they follow that line. But knowing how difficult it is to achieve, I am impressed by anyone who reaches a million! And you are exactly right about relatives – I don’t talk about my net worth to anyone, because as the youngest of a large family who only have 2 millionaires out of 10, they will either not believe me (ha ha), think that I am bragging, or have some criticism of how I’m doing it. Well, I am doing it, so ’nuff said….
Arrgo says
…or start hitting you up for money! Stealth wealth is the way to go these days.
Jeff B. says
I plan to have $400K in cash when we retire in 3 years with a potential portfolio of $6M. Will use cash for drops in market to buy in or not to touch the portfolio, but after a few years in retirement, we probably won’t spend more than $200K a year, so it will just keep growing. Charities will be happy.
M16 says
“…and of course you can’t become, if you only say what you would have done…” – Len
The journey is decades, and every day is a decision to do (or not do) something, anything, nothing. The ones who want to ‘advise’ are actually looking for validation. And the ones claiming to ask for advisement are mostly just asking for ‘permission’ to be where they are, on the path they are on. Very rare to see someone actually take advisement and put it into action.
It would also be interesting to see these wannabe ‘advisers’ tell us all where they think the S&P500, Fed Fund interest rates, Unemployment U6, and mortgage rates will all be one year from now (let alone 20 years from now). Something tells me it would be quite revealing of the quality of their opinion.:-)
Jason says
These kinds of comments chap my hide. In particular, when there are articles promoting others who FIRE and all kinds of haters who argue they had help, it isn’t possible, etc. Ironically, my latest blog post was “Don’t Take Advice from Broke People.” I would say the same thing from the critics. Don’t take advice from someone who is critical and won’t show you how they are doing better.
Phil kaufman says
I totally agree with the original comments posted by the person who YOU were rude to. He made a logical comment which I think most folks would support, yet you chose to assume it as a criticism vs. an opinion, and worse, suggest he is probably nowhere near their level of financial success. Well I have $2M in invested money and another $1M in assets, and I would never keep my money in cash. I got where I am by doing all of the obvious things you outline, but also, quite a bit by learning the stock market well enough to get above average returns. Even just following a simple ETF rotation to the higher RSI funds can get you there without a lot of effort. I really don’t understand your response to that individual’s comments at all.
M16 says
Fill out the questionnaire and send it in to ESI, then! Would love to read your story. Do you ever get the skeptic, or the unwanted advice, or questions based on a false premise? If you have $3mm, of course you do! Tell your story and share it with us, these interviews don’t just fall out of the sky! Contribute, instead of criticize!
Mr Defined Sight says
There is one in every crowd isn’t there? I thought you handled the response quite well. I’m anxious for that day when it is my turn to be criticized for having that million 🙂
John says
I struggle with the shutdown method of ‘well my pile of money is bigger so why should I listen to you’ only in the sense that there is financial advice I would give my father in law whose pile of money is bigger.
But his pile of money is bigger because they were dual income for almost fifty years, instead of single income family of six. They are 30 years ahead in their life stage and have earned and saved incredibly well. When he told me his investment accounts were returning under 4% this year I almost said something. But why would he listen to me? I’m only worth half a million.
John says
This is, of course, a different situation than a critic.
Paper Tiger says
John, if you are 49 and your parents are ~30 years older, then that puts them around 80. At that age, they should have de-risked their portfolio to a point where getting around 4% or a little less is not all that unusual for folks their age. Most people in that age bracket will be heavy into bonds and CDs as they probably should be.
I’m not sure why you “almost said something” when it seems to me they are doing the right things for their particular life stage. Many of that era were typically much more conservative with their investing most of their lives, born just after the great depression, (my parents in the same age bracket as an example).
John says
They are both 66 with potentially many years ahead of them. And while they are comfortably settled, the extra cash would be put to good use in their charitable endeavors. That said, with a diversified nest egg large enough to ride it most market storms, I see no reason to get 2-4% returns. That is how their generation was instructed to invest but I don’t feel that currently a bond heavy investing strategy is the best stewardship. Especially when a simple four find vanguard style portfolio is reasonable low risk with much better returns.
That said, it’s their money they can do as they please.
Paper Tiger says
OK, 66 is much different than 80. You are blessed to have such young parents! Keeping 40-50% in index funds and the rest in fairly conservative income bearing instruments would not be a bad mix at all. My parents were very conservative and kept virtually all of their money in CDs. They were good with the earning and savings side but just not saavy or comfortable with the investment side. A few years ago they did go through a Dave Ramsey course and I think my Dad had some regrets about not paying a little more attention to the options that were out there as he realized how much more money they could have had. However, he gave my Mom and me a great life and after he passed in 2014 he left a nice nest egg for Mom to live the rest of her days very comfortably. I keep an eye on it for her but she won’t dare let me talk her into anything but her beloved CDs. She’s 82 and has earned the right to her opinions so, like you, I don’t push it.
Jeff B. says
America still has the richest poor people in the world.
Mr. Tako says
Over the years I’ve had my share of money critics. They’ve all told me how I’m “doing it all wrong”.
Maybe they’re right. Maybe I am doing it all wrong…
I’ll guess I’ll have to think about that on Monday morning, when they’re busy commuting to work and I’m sleeping in.
ESI says
Haha! LOVE this!!!!!!!
Kirk says
I’m glad you addressed the issue of critics. When you finally get to interviewing me (I’m in the M-Club) it’ll be interesting. I’m holding lots of cash myself, having recently sold off most of my equity holdings, peeling off profits and taking long term capital gains. The market is due for a 20%+ pullback and I wasn’t about to sit and watch my profits erode. There’s 20% Dow side and only 5-8% upside in the indices.
I’ve recently steered a great deal ($400k) of stock/equity investments over to real estate crowd funding investments and now I’m cash-flowing an 8% preferred rate that steady.
I’m very pleased with that!
Paper Tiger says
Kirk, any insights on which crowdfunding real estate programs you are utilizing, RealtyShares, Fundrise, etc.? I’ve been looking at these as well but have yet to pull the trigger.
Kirk says
I have some with Realty shares but the one I like the best is CrowdStreet.
http://www.crowdstreet.com
You have to be accredited, but if you are thy have some amazing deals!
getagrip says
Consider, if you told someone who earns just $40-50K a year that you had been earning $150-200K a year for the last 20 years and mentioned you had $1M in assets. Do you think that person would honestly be impressed? It’s hardly a “WOW!” revelation. It seems more like a “well…duh!” kind of outcome. You make a lot of money, so you should have a lot of money. To many folks it might be like someone, who you know runs miles every day and has been for years, telling you they ran a marathon. Good for them, but hardly a major surprise or shocking accomplishment to most non-runners. The thought process can easily be: they run, they ran a marathon, lots of people run marathons, good job but not an unexpected connection or outcome. Yet the non-runner would have no idea of the preparation involved, the months of training runs and regime used to prepare for it, the actual difficulty in being able to run a full marathon and finish, and how it was likely a major accomplishment for the person who ran it. So sadly many who don’t, and likely will never, have a lot of money keep thinking that it’s not an accomplishment to get to a million or to become financially independent when you have high earnings, especially three to four times higher earnings than they do (which is another accomplishment all together). They see the end results and forget all that went into achieving those results, particularly if the methods are technically simple but practically hard.
So sometimes you take the comments with a grain of salt because you don’t know the person’s background. The comment was that if the person invested their money in the market instead of holding it in cash they would have even more money. I saw no real spite in the comment, just a “why buy a Corvette and never drive it over 30 mph” type attitude. I feel it’s a valid point to consider and relate it to your own journey regardless of who has more money. One example here is someone who is comfortable sitting on a large cash cushion, someone else says they could have much more. How does that apply to you? Isn’t that the point of these interviews and reading the comments? To provide different perspectives on how to get to a similar goal and expand your ideas on what might get you there or decide when enough is enough? Advice is what it is, advice, from a critic (not just a naysayer) or from an article. You get to decide what is relevant to you.
Kirk says
GetaGrip,
I certainly hope you didn’t detect any trace of arrogance in my comments. That was. It my intention. I am extremely risk averse, skeptical about the economic growth, very concerned about stock market valuations, etc. I’m sitting heavily in cash due to these concerns. I do feel that real estate crowndfunding is a viable alternative for the equity markets, in my own case. It’s not for everyone and there are those who believe on being fully invested or at least holding 70%+ in equities. Not me.
Kirk
getagrip says
Just to clarify I was responding to the article in general and the initial “critic” comment ESI put in bold in his article, not anything you stated in the comment section.
Money Beagle says
Kinda curious, if he had left out the “Honestly, not very impressed” line, would you have had the same reaction? Because reading through it, that does set a bad tone, but if you took that away, he *kinda* has a point. I mean the market has been on a one way tear, and I don’t think that pointing that out and that there was potentially a missed opportunity necessarily makes him a critic.
So, while I see your point, I kind of think you brushed off the fact that he had a legit point as well. I can sort of see why he stopped writing back.
ESI says
Maybe…
ESI says
Now that I’ve thought about this a bit longer, I think you have a point.
It’s both what is said as well as the way it’s said that can be critical — at least to me. And this one started off on the wrong foot.
Said with more of an “I want to help” feeling versus a “I’m better than the poster is” would go a long way in this case.
Financial Samurai says
Nice TR quote at the end.
I take the same approach as you. If someone is extremely critical, I ask them to share their success story and write a post that they think is the best. My hit rate is about 1%.
Easy to criticize, not easy to actually DO. But it is fun to play with critics.
Holding cash for the past 3 years was a bad move. But hey, if you’re happy with your financial situation, all for it!
I was overly conservative these past 3 years as well investing in the stock market. But, at least I bought another house in 2014 in SF. That’s done OK.
Sam
NR Properties says
uh-huh
Saint1800 says
To be critical of the interviews in general; most have a massive and unaddressed luck factor to their financial net worth. I should also note, the path of ESI has a much lower luck factor than most of the interviews. (As the age of the subject increases the significance of the luck factor often decreases.)
The problem with the luck factor is that unlike a skill factor, it is random and cannot be replicated by everyone. I think some of the ‘criticism’ of the interviews stems from this frustration. The difference in net worth between the critic and the one being interviewed is often this luck factor. (Keep in mind, the critic is still reading a financial blog so your critic is from a certain population.)
Wanna be interviewed by ESI because you have a million dollars? Here is my quick equation from the interviews:
{College (S1)+get a corporate job(S2)+live below your means(S3)+{Invested excess(s4)^Luck factor]
For most of the subjects, especially those younger that 50, remove the luck factor and give them market returns and their net worth is half or less.
ESI says
How do you define “luck factor”?
Paper Tiger says
My definition, although it has been quoted many times by others, “the harder I work, the luckier I get” 😉
Saint1800 says
Do you actually understand that statement or was it just fun to type?
If you combine luck and skill, and your distribution of outcomes is positively skewed, then yes it holds true. The more your sample size, ie working, the luckier you would get. (negative skill and luck would negatively skew the results with a larger n)
If luck is random, independent, and evenly distributed, then no amount of work will change your luck.
Saint1800 says
I think my first post references a basic and major component of ‘luck’ – randomness. It is both positive and negative. It is completely reasonable for other results to have occurred. Skill is easier to define.
I would urge anyone who studies wealth to gain a strong understanding of skill vs luck and related statistical analysis with a focus on probabilistic analysis.
On a separate note, it is weak minded to equate validity of opinion with net worth.
ESI says
I think you’re proving my point — that there are always critics who love to tell others where they are wrong, how bad they are in one way or another, and offer nothing constructive to the conversation.
Saint1800 says
Are you saying my post offers nothing constructive?
ESI says
Do you see anything constructive?
I see snarky comments and criticism.
Saint1800 says
Yes I do find the analysis of value- I would not have posted if I thought otherwise.
If you found zero value, then I offer my apology for wasting your time. Posting was clearly a waste of mine.
Paper Tiger says
Hi ESI, I’m laughing to myself because it is now a month and a half later since my post and these responses, and I am just now seeing them for the first time.
I appreciate your comments and they were illustrative of exactly the point you were trying to make. Somehow I don’t think “Saint” 1800 is really much of a “Saint” after all 😉
ESI says
Ha! 🙂
Jimcalf says
Well, I don’t have a college degree, but I did get a corporate jobs, I did live way below my means, and I did invest mechanically every month for the last 18 years as much as I could (just index funds). No luck for me. Just the mechanics of saving like my life depended on it and watching it add up and compound. Took a long time to get the first 1M, surprisingly less time for the 2nd (thank you bull market). Maybe that was the lucky part, but I also traversed the “Great Recession”, got laid off, picked up the pieces and never sold anything. Just had to save less while pushing my earnings back up by working hard. I really don’t think luck has much to do with this at all. I track my investment earnings year over year, and some years are great, some suck. I’m like a horse with blinders though, I ignore the market and just keep investing. It works. No luck required.
Kirk says
That’s a great comment Jimcalf. I applaud your determination and your discipline which has rewarded you. I agree, it’s not luck, it’s the aforementioned attributes that you possess. That’s the key to being in the “M-Club.”
ESI says
Love this comment too!!!!
Saint1800 says
If you simply invested and received near average market returns then you are correct there is little luck factor. It is repeatable by anyone. My simplistic statements fully agree with you.
I won’t expand on this any further because ESI, and others, believe it is too critical and offers little value to discuss the role of randomness in resulting returns with small sample sizes.
Ten Factorial Rocks says
Good post, ESI. $1 million in NW is a real achievement – I tell hardworking people that, don’t let anyone tell you otherwise! I know I had to work my butt off to get there, driving around old clunkers despite the snarky comments of co-workers. Unless you have a sudden inheritance or stock-option riches that materialized quickly, this is not an easy milestone. The naysayers and pointless critics are the main reason I don’t discuss finances even with family or friends – that world is kept separate outside of the online PF world. People who speak about PF and understand basic concepts to reach FI are so rare even among the educated crowd. Websites like mine and yours are oases for the deserving amidst the massive desert of confusion, frustration and negativity. Let the people who appreciate participate and learn, forget the critics!
Kirk says
Amen! There’s very few educated PF authors/writers that really “get it.”
I’m also in agreement that it’s best NOT to discuss finances with anyone outside of your spouse. No family not friends. If you have money you also have a target on your back. You’re always having to look over your shoulder for the next loan request or next friend wanting you to invest in their venture. One of the key lessons I’ve learned (the hard way after losing $53k as a silent partner in a private burger chain!) is to just say “No!”
Richard says
I don’t know, seems like there’s a bit more flesh to this parable that’s gone missing, wrapped up in a sort of rhetorical lamentation. Not sure what I’ve been seeking here beyond some new angle, variations, the occasionally altered perspective; instead I’ve found a different sort of white noise, some degree of vanity (unsurprising–it equally haunts the arrogant poor), then fear triumphant, or at least a component at every level, no matter how low, high, or far. And yes, I’ve certainly noticed the conflation of virtue and wealth. Sounds a bit Victorian to me, like equating ethics to good looks, or ugliness to criminality. A fair number used to burn for that back in the good old days, but what’s really changed? Well, the law, incarceration rates, the expansion of literacy worldwide. So it’s a bit more subtle now between our various peoples (at least outside of the most notorious sh*tholes) but here it is, right here and now, and perhaps forevermore. I think the ‘lessons’ of Rashomon are a bit more applicable; it’s all a matter of perspective, with few absolutes beyond death, taxes, and the human condition. We all pass through the veil into nothingness. Or heaven, according to some.
We could all use a little more understanding, compassion, thoughtful reconsideration. Eh, but the beast; don’t hold your sweet breath. All I ever found out is that I care about money. Learning to manage it well, balanced percentages and strategies are like bread and water. I’ve had to survive a weekend on 37 cents and whatever was left in the pantry; I’ve also made 600.00 an hour. Neither situation lasted. I had 190k dropped into my lap in the midst of recessionary hell, coupled with profound heartbreak, also grinded away hopelessly through many sunny days, more to my detriment than ennoblement, that despite earning love and respect while making reasonable bucks and perks.
That’s my dust, my blood Teddy, you bloated punk (lol). I can swing with the best of them, but to me it’s more about rational management, not your net worth; managing risk, finding that healthy balance, cultivating better options. I thought it would be interesting to see how those running on millions lived, their strategies, the balancing act. It’s certainly been provocative, occasionally eye-opening. At the end of the day, I still think we are what we always were: naked apes with too much brainpower, caught up in a situation, cognizant of one too many hazards between natal bliss, the great struggle and death. I wouldn’t recommend life to anyone, but it’s still the only game in town. I still play.
Richard says
My father played a good game, despite significant setbacks. Used the GI bill for his B.S, on to a M.S. in Electrical Engineering, still a top choice for the E crowd and STEM bots in 2019. He retired early at 55 with a nice pension and Aetna medical. Loved his job early on, but he had drifted into management and hated it. The margins were right, he paid cash for cars and houses anyways, so an easy choice. His older sons began having trouble, though, mother freaked out, couldn’t handle it, so divorce. Having children was her big idea, so that really hurt him, being directed that way, then abandoned when it counts. Yes, absolutely try to choose the best partner, except what a gamble, right. Thing was, he bought an old homestead (160) acres back in the 60’s; we grew up in the old house, he built an addition, got into gardening low-level mild ranching, though I couldn’t be less interested. There’s a regret; I’ve always more of an idea guy on the sidelines than a grinder, occasionally foraying into the mix. All the usual sh*t growing up, and the divorce had terrible consequences in later years, but the money was solid. They more or less amicably split the financial resources; she left the house to him for the cash difference, then they each took 80 acres. Kind of a tax headache; he couldn’t sell his portion fast enough, mostly five-acre tracts. When his sons left the house for college, he sold it, then paid cash for new digs in Eastern WA, then a couple more girlfriends till the eventual bitter end. His older sons, well aware of his fortune eventually tried to prey upon him, but he was pretty tough and never touched principal. His lot sales and the old home sale were parlayed into mutual funds. Unfortunately they were loaded, actively-managed hot stuff, so the volatility bit him later during the Great Recession, but he was still sitting on a mountain at 82 when he passed. Lived off his pension and SS, occasionally drawing interest off his funds to pay for a truck or car, but that was pretty much it. In an unguarded moment he told me it basically wasn’t worth it, the career hustling, and that if he could do it over it would all just be real estate. Took it with a grain of salt; I noticed he was actually excellent at managing his career, kind of shaky on the real estate, so I believe that was the money creating a distortion or illusion, but the discontent was more real than it should have been. The divorce and kid trouble bothered him, and he once famously quipped, ‘is this all there is?!’ The answer is yes. I don’t know about you people, but I think the secret ingredients are better-than-average options, rational management, and excellent healthcare. I’ve got one going, working on the first; the job pays my medical in full, but from what I’ve heard, Medicare kind of sucks, so I’m not really enthused. Crunching numbers, there’s some advantage to having a lower nest egg i.e. you can bounce into Medicaid if things really go south without losing the principal home or that modest nest egg. Hardly ideal–I’d rather sit on millions and pay for Cadillac service, but I don’t really see that happening. The middle ground seems to be the most dangerous place, between the high hundred thousands and the low millions. Very high or moderately low are the sweet spots, assuming everything else is well-regulated. That’s my take, based upon the information.
Richard says
Things change so rapidly, like 0 to 50 every other month. Revisiting earlier comments, already a different person it seems, to a limited extent. More better and worse at the same time, also more uncompromising and with major attitude (enough to make a teenager blush), but what do I care of the world and its ways? Nothing, really. Still more interested in lunch, comfortable with my love for money, securing a stronghold and pleasant future for the gf, then all the usual creature comforts. Things I truly value never really change, once established. Intrinsic self-discipline controls the temptation to ‘overflow’ i.e. work too hard or play too much. The change is also those heart-racing gains as the savings and investments increase. Yeah, that’s new . . . currently 52%, but still haven’t found the cap yet, creeping up 1% per month. A protracted growth period, obviously, but I’m working less (4 days on, 3 off), making even more, equally unafraid of downturns . . . licking my lips for more fire sales, though I’d rather see steady growth for all. Everything falls apart. Not worried, though; already been through hell. So I’m 100% positive, negative as ever. I like this site less, but also know more. Kind of funny.