Buying rental homes and having someone manage then should yield higher then anything. I don't think 6-7% would be that hard to obtain.

this is simply known as utility curve arbitrage

it is possible due to real utility curve being very concave function for above average returns. Loss on real life utility is minimal usually even as you put it "modest" living.

See Early Retirement Extreme for a more extreme version where several arb strategies first lower the average "inflection point". Tho loss on utility is more severe, to begin with in social status.*

*then again social status is only really useful in marketing and finding chicks...

I'm pretty sure most of BFI smart people do this to an extent...

"Feeling rich" is relative. Whether or not you feel rich will depend on whom you are comparing yourself to. What is a "nice house" or "nice neighborhood" is also relative. The easiest way to feel rich is to start hanging out with poorer people. If that is not an option, try to adjust your mental worldview in such a way that you are not constantly comparing your financial situation to others. "Comparison is the thief of joy."

With 1 mil or more I would take a serious look at high yield corporate bonds. You could hookup with some research firms and make an informed decision using their research and analysis to make a purchase. High yield bonds should pay at least 5% annually (all depends on how risky). Anything under 1 mil I don't think it's worth it. But 1 mil + put into the right companies debt should yield at least 50K passive income/yr

Which is why a lot of guys struggle to get (relatively) high status/paying jobs early in life, pretend to be highly ambitious, get a woman who has what they want - and shortly after tone down the spending and take on less demanding roles.

Once you pass that point, how many are actually irrationally frugal? Usually if people make that mistake it's because they undervalue their time. But in general people are far more likely to overvalue the things that have an immediate payoff than to undervalue them.

Which is why I think most people, especially people who expend a lot of mental effort towards their career and have not as much time to sit back and reflect on life, would benefit from taking a closer look at their spending habits and what that money can buy outside the big city.

I have lived in a dirt cheap housing market, and I've lived in a moderate housing market. Never the super expensive places you've mentioned.

This is definitely worth thinking about. Probably true for me too.

I wonder if there is any value in paying some kind of financial adviser for some advice or planning. I'm pretty smart, and a good saver, and my wife does not have fancy tastes, so I've never really worried about long term planning specifically; I've just saved all the time as a matter of habit. For example, as I mentioned, maxing out 401k matching and ESPP (and always selling when it matures, just to collect the free money from buying at a 15% discount). But also, I automatically send $400/month to an online savings account. Granted, it is only getting about 1% right now, but still, piling up. And every 3 to 6 months, when my checking account gets overly full, I'll transfer a 5 figure amount to my brokerage account and put it into a low cost index fund. And occasionally I'll do something else, like recently TurboTax suggested I might want $5000 in bonds with my tax refund, and I agreed, so I got them (~1.65% variable rate). What I'm getting at is, maybe I'm mindlessly squirreling away money -- which is generally good -- but maybe I really truly can afford to save less and spend x% more, including on things like a higher mortgage payment to get me that house I thought I should have had by now?? The inner cheapskate in my tells me a financial planner is a waste of money, but I'm really thinking about it now...

It's only a waste of money if you get a crappy one. Or a shady one. And for people who aren't confident in their ability to recognize those two qualities it's probably best to just go with a big name bank, but if you consider yourself to be even a little bit business savvy what's the worst that could happen from getting a few professional opinions? You don't need "the best". Their time has value like anyone elses, and if they're good at what they do they'll be able to explain how the business model works, and then you can spend as much time as you want mulling over the decision or going to other institutions to get to try and get a better offer.

sounds like you're doing great to me

fix this thinking and all your problems are over, it seems like. probably a better way (more happinessEV) to spend those thinking hours than debating whether to get a financial planner or not

You're going to get a ton of contradictory advice, and that's ok. I think the main idea is that if you set a target to be "rich" by examining what a "rich" person looks like in society, then you will never feel rich. There is always someone who has a bigger portfolio, a bigger house, a fancier car, etc, etc. I think for the vast majority of people the only way to really attain a feeling of being rich is to do the hard work of figuring out what really makes you happy and figuring out how to get to a point where you can have that and be financially secure. I often spend time relaxing with a coffee and just zoning out and thinking something like "what were the five times I was happiest in the past year?". Sounds silly, I know, but I find it makes me feel more grounded in my plans and it feels like my savings are taking toward a real goal of doing more of those things and not an abstract goal of attaining some amount of wealth where I'll suddenly feel happy and rich.

This is good advice. Society is extremely good at creating endless, mostly artificial degrees of consumption. You can spend $100 on a watch, or you could spend a million on a watch. They both keep time and look good. You can spend $40 on a bottle of wine or $40,000. They both taste good and go well with a meal. Everything is like this: cars, vacations, houses, TVs. If you take your cues about whether or not you're rich from society, you are always going to feel like you are "upper middle class," because there are all these degrees of consumption that you can't attain. Even if you decided to splurge on first class, you'd start feeling sad about not flying private. If you buy a BMW, you'll feel sad next time you see a Maserati on the street.

tnx, you're spot on

majority of people don't value their time, they value whatever makes higher utility for procreation. And in that market perceived more resource is better....

Sexual market is the one market to rule them all.

theres a couple quotes

being rich is having everything you want or having more than you need

It is not the man who has too little, but the man who craves more, that is poor

i would suggest in your case you take the time to plan out how much money you actually need. not knowing or understanding your long term financial situation with your mental state will probably lead to perpetual uncertainty

to me being rich is freedom and security. i think the easiest way to achieve that is to not over value extravagant things and take on debt. most people have the what monthly payments can you afford mentality when shopping for cars or a home. then they decide they deserve/need the most expensive thing "affordable" and bury themeslves in a mountain of debt

long story short, in your situation i would just figure out how much money i actually need, keep my debt low, and put my savings to work. with a plan in place you will know exactly how "rich" you are at every step along the way. maybe you will feel rich when you crunch the numbers or maybe it will take you ten years. good luck

For some, I think you'll know you're rich when (1) you make enough to put you in the top 10% for your zip code, and (2) when you actually don't care about looking rich. It's dated, but I still think The Millionaire Next Door has a very good take on this. To most people who are actually rich, the feeling comes from, or at least is underscored by, a desired to NOT project oneself as rich.

Rizzeedizzee's post reminded me of this.

http://adage.com/article/adagestat/d...retail/233399/

2.1% of Wal-Mart customers earn 150k or more. 150k is about 98th percentile.

And data like this one is everywhere.

http://www.forbes.com/sites/joannmul.../#54b89e711728

Relevant quote: "61 percent of people who earn $250,000 or more aren’t buying luxury brands at all."

Rikers, I think you are my favorite BFI poster.

I'm overwhelmed by the constructive criticism and suggestions! Thanks BFI.

To continue with my personal details, I have never bought expensive things. I am just as happy with a $8 watch from the second hand store as with a new one from the department store (a luxury watch is out of the question).

It really is just house, property, and neighborhood, where I'm feeling it...

So before this devolves into a group therapy session, I'll just say thanks for giving me a lot to think about and leave it at that. Maybe I'll follow up if I decide to go to a financial planner, or if I come up with something else to change my outlook... Or if I decide to spend more on a nicer house in a classier neighborhood!

I would take a serious look at what condos have to offer. Costs more per square foot but there're a lot of benefits to condo living that're hard to put a dollar value on.

Unless you're suggesting renting, I couldn't disagree more vehemently here for the RE market OP has indicated they may live in. Condos frequently lose value over the midterm in most markets, so unless you are coming in behind a condo crash you will likely underperform SFD significantly. You will also have much higher monthly HOA fees that can escalate wildly and lead to annual assessments above the already high HOA fees. For what? Shared pool and workout facilities and built in lawn maintenance? If you don't have a house with pool/gym then join your local YMCA or Lifetime Fitness and hire a lawn guy. Also, neighbors a ceiling, floor, or wall away can cause tremendous life dissatisfaction and HOA is usually powerless to arbitrate serious disputes. I learned so many of these things the hard way with a condo in Atlanta and I would hate to see others in the same position.

Also SFD is usually much better for your middle age family with 3 kids than a condo which is a better fit if you are pre or post kids.

I meant for where to live more generally. I wouldn't necessarily recommend buying a condo, but I don't think it's as bad as you make it sound.

Do you know of any studies that've conclusively shown how much they underperform by? I was under the impression that the gap between house/condo appreciation rates was quite small. And I think houses SHOULD make more since they require a lot more in terms of management and hassle.

Condos by comparison are pretty much effortless, both from a tenancy perspective and from an ownership perspective. After you automate the billing the only thing that's likely to require input is kitchen appliance repair.

3 kids is what makes it tough. Not many 4 bedroom condos are made. They do exist though. And they're often a very short walk from schools in the suburbs. I don't think there's anything about having a family that requires a plot of land, and I think condos are going to become a lot more mainstream for family life as the internet generation moves forward in life.

Yes, please do. If you go to a financial planner make sure you ask in your first meeting for the planner to explain to you exactly how they are compensated and how that is impacted by the decisions you make while working with them. The last thing you need is a financial planner telling you that you'll feel rich the moment after you purchase high cost mutual funds or other expensive financial products for which the planner receives a healthy kickback, er, I mean "commission". If you end up with a bad financial planner then you'll certainly end up making them feel richer but you'll bump yourself off a nice trajectory that you've put yourself on.

free hugs for everyone...

tnx

I've been down to nothing many times in my life and I get a sense of calmness. I've had money too and it feels good but not fulfilling. The rush for me is in the journey. I once had a job making good money but I was miserable.

Try being grateful for all the intangibles you have. Your family, friends, ability to relax after work. Many people don't have these things. Meditate, listen to John prine, do whatever gives you a sense of deep fulfillment. I don't believe that comes from external things.

ehhh, blowjobs are external

True but sadly a good bj is a rare. And p*ussy don't have a face