Path to UHNW

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jack.bauer
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Re: Path to UHNW

Post by jack.bauer »

30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
ClassII
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Re: Path to UHNW

Post by ClassII »

Once again, the dark side of Bogleheads rears its ugly head. Where a professional making well over 6 figures can feel like a total failure for not having $10M in liquid assets by 30.
nigel_ht
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Re: Path to UHNW

Post by nigel_ht »

jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
nigel_ht
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Re: Path to UHNW

Post by nigel_ht »

ClassII wrote: Thu Jan 13, 2022 1:23 am Once again, the dark side of Bogleheads rears its ugly head. Where a professional making well over 6 figures can feel like a total failure for not having $10M in liquid assets by 30.
For certain there's a bit of over expectation here...they aren't a total failure unless they can't hit $10M by 40...
Livehard1234
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Re: Path to UHNW

Post by Livehard1234 »

Vice Presidents at FAANG make $3M to $5M per year. $30M net worth very doable.
z3r0c00l
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Re: Path to UHNW

Post by z3r0c00l »

adamthesmythe wrote: Mon Nov 16, 2020 3:24 pm 1. Luck.

2. Fraud.
Don't forget hoarding vast amounts of money that you never use against a backdrop of widespread scarcity and homelessness. Maybe put a million of Tesla stock in a DAF and tell your friends about it to absolve yourself.
70% Global Stocks / 30% Bonds
gougou
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Re: Path to UHNW

Post by gougou »

Livehard1234 wrote: Fri Jan 14, 2022 9:12 pm Vice Presidents at FAANG make $3M to $5M per year. $30M net worth very doable.
You mean VPs at one of the few trillion dollar companies in the whole world? Also $3M/yr nets you $1.5M after tax. They need to be VP for 10+ years to reach $30M unless they get very high investment returns.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Livehard1234
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Re: Path to UHNW

Post by Livehard1234 »

gougou wrote: Fri Jan 14, 2022 9:42 pm
You mean VPs at one of the few trillion dollar companies in the whole world? Also $3M/yr nets you $1.5M after tax. They need to be VP for 10+ years to reach $30M unless they get very high investment returns.
Currently at ~$5M net worth. Comp is $4.2M. Estimate I’ll hit it in 7 years by age 50 if I keep working that long. I work in a no income tax state though.
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AerialWombat
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Re: Path to UHNW

Post by AerialWombat »

Let’s see… Subtract out my other net worth sources… Divide by my remaining ownership percentage… OK, the tech startup that I co-founded would need to reach a valuation of $165 million in order for me to become UHNW.

Nope, never gonna happen.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
SwampDonkey
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Re: Path to UHNW

Post by SwampDonkey »

Become a lifelong politician at the federal level. Only slightly joking.
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AerialWombat
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Re: Path to UHNW

Post by AerialWombat »

Livehard1234 wrote: Fri Jan 14, 2022 9:48 pm
gougou wrote: Fri Jan 14, 2022 9:42 pm
You mean VPs at one of the few trillion dollar companies in the whole world? Also $3M/yr nets you $1.5M after tax. They need to be VP for 10+ years to reach $30M unless they get very high investment returns.
Currently at ~$5M net worth. Comp is $4.2M. Estimate I’ll hit it in 7 years by age 50 if I keep working that long. I work in a no income tax state though.
Your annual spending for your lifestyle is more than my liquid net worth. I’ll see myself out the door of this thread now.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
checkcheck
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Re: Path to UHNW

Post by checkcheck »

mak1277 wrote: Mon Nov 16, 2020 10:23 am
oldfort wrote: Sun Nov 15, 2020 9:28 pm
edge wrote: Sun Nov 15, 2020 9:13 pm Not too sure re: the management consulting one.
oldfort wrote: Sun Nov 15, 2020 4:15 pm At that level of wealth, you're talking a lot of entrepreneurs, management consulting, venture capitalists, top finance people, investment banking, private equity, high level entertainer, moviet/tv stars, top level musicians, athletes, top of their profession lawyers, and "C' suite level jobs. I don't expect to ever hit that level of wealth.
I thought senior partners/managing directors at Mckinsey, BCG, or Bain could pull in 7 figures in total comp, but I might be wrong.
For sure. I worked with Big 4 audit partners who were making 7 figures annually.
+1 senior MBB could easily be $2M+; tier 2 shops @$1M+; Big 4 avg in the neighborhood of $1M

That being said, consulting partnership = equity ownership which is consistent with all of the other comments in this thread.
playtothebeat
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Re: Path to UHNW

Post by playtothebeat »

I work with many clients who have net worth in excess of $100M. All are commercial real estate developers and investors and have been for a long time, starting out with a small apartment building or a duplex, or a small industrial building, to now own 3000+’multi family units, or several Million SF of industrial product, etc.
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BenfromToronto
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Re: Path to UHNW

Post by BenfromToronto »

Wricha wrote: Mon Nov 16, 2020 9:28 pm I will take a stab at this. First eliminate 99.99% of all W-2 workers (including professional docs, lawyer etc) they are never ever going to get there. Then eliminate 99.98% of all small business folks. Eliminate 99.99% of all entrepreneurs. Note I am being extremely liberal with those percentages given there are only 70k UHNW people in the US out of work force 162M. Eliminate entertainers (including politicians), sports figures, salary, lottery winners, inherited wealth, marriage. And there is the path to UHNW by dancing through those rain drops. Remember Jack Bogle did get there by being a boglehead.
I know a few personally (around 20) including business partners great stories but I am old so going to bed maybe another time for that.
Yes, you can be a professional, having invested in a Bogle-congruent way (i.e., diversified low-cost funds) for your whole life, and end up as a UHNW individual.

I live among professionals (physicians, lawyers, architects, accountants...) who are in their 60's.
They have worked all their life and are still working.
Their current annual income is in the $200-400K range.
If they are married, their spouse typically works and contribute another $100-200K per year.

A substantial minority of them (5-10% rather than your 0.01%) have lived the life of a "millionaire next door": 1/3 of their income for the government; 1/3 for spending (supporting a nice enough lifestyle); 1/3 invested (in both taxable accounts and maxed-out tax-advantaged accounts).

By their early 60's, their invested assets are above $10M and their net worth (including paid home, second home, collectibles...) is around $20M.
When they will stop working (in their early 70s), their invested assets should have doubled and be around $20M (with still another $10 in non-productive assets).
In retirement, they will be able to live off SS plus less than half the dividends generated by their invested net worth (maintaining their nice lifestyle).
When they die in their 80s, their estate should be in the $40-50M range, qualifying for the current definition of UHNW.

All this has been accomplished by buying (via DCA) and holding a small number of low-cost funds (e.g. Vanguard mutual funds in the 1990s and ETFs now) but not necessarily the rigid 3-fund asset allocations (e.g., they may have tilted towards small caps; they typically did not have any bonds while they were paying mortgages...).
No individual stocks, no commercial real estate, no hedge-funds, no cryptocurrencies.

These people are the living demonstration of the Bogle's philosophy (which they may have discovered through books published in the 80s like the "Wealthy Barber" or the "Millionaire Next Door").

You are correct that most of their peers with similar income and lifestyle who have let Financial Advisors and Private Bankers "manage their money" will end up with about a quarter of their wealth (e.g., $10M vs. $40M).
In other words, they will have given 3/4 of their wealth to their advisors.
This is simple math: an IRR of 7% (10% minus 2-3% in management and trading costs) vs. an IRR of 10% over 50 years.
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.
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Wricha
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Re: Path to UHNW

Post by Wricha »

BenfromToronto wrote: Fri Jan 14, 2022 10:46 pm
Wricha wrote: Mon Nov 16, 2020 9:28 pm I will take a stab at this. First eliminate 99.99% of all W-2 workers (including professional docs, lawyer etc) they are never ever going to get there. Then eliminate 99.98% of all small business folks. Eliminate 99.99% of all entrepreneurs. Note I am being extremely liberal with those percentages given there are only 70k UHNW people in the US out of work force 162M. Eliminate entertainers (including politicians), sports figures, salary, lottery winners, inherited wealth, marriage. And there is the path to UHNW by dancing through those rain drops. Remember Jack Bogle did get there by being a boglehead.
I know a few personally (around 20) including business partners great stories but I am old so going to bed maybe another time for that.
Yes, you can be a professional, having invested in a Bogle-congruent way (i.e., diversified low-cost funds) for your whole life, and end up as a UHNW individual.

I live among professionals (physicians, lawyers, architects, accountants...) who are in their 60's.
They have worked all their life and are still working.
Their current annual income is in the $200-400K range.
If they are married, their spouse typically works and contribute another $100-200K per year.

A substantial minority of them (5-10% rather than your 0.01%) have lived the life of a "millionaire next door": 1/3 of their income for the government; 1/3 for spending (supporting a nice enough lifestyle); 1/3 invested (in both taxable accounts and maxed-out tax-advantaged accounts).

By their early 60's, their invested assets are above $10M and their net worth (including paid home, second home, collectibles...) is around $20M.
When they will stop working (in their early 70s), their invested assets should have doubled and be around $20M (with still another $10 in non-productive assets).
In retirement, they will be able to live off SS plus less than half the dividends generated by their invested net worth (maintaining their nice lifestyle).
When they die in their 80s, their estate should be in the $40-50M range, qualifying for the current definition of UHNW.

All this has been accomplished by buying (via DCA) and holding a small number of low-cost funds (e.g. Vanguard mutual funds in the 1990s and ETFs now) but not necessarily the rigid 3-fund asset allocations (e.g., they may have tilted towards small caps; they typically did not have any bonds while they were paying mortgages...).
No individual stocks, no commercial real estate, no hedge-funds, no cryptocurrencies.

These people are the living demonstration of the Bogle's philosophy (which they may have discovered through books published in the 80s like the "Wealthy Barber" or the "Millionaire Next Door").

You are correct that most of their peers with similar income and lifestyle who have let Financial Advisors and Private Bankers "manage their money" will end up with about a quarter of their wealth (e.g., $10M vs. $40M).
In other words, they will have given 3/4 of their wealth to their advisors.
This is simple math: an IRR of 7% (10% minus 2-3% in management and trading costs) vs. an IRR of 10% over 50 years.
I believe I left room for your possibility. It just, extremely few people work till 70 in a w-2 world after they have made/saved $10M by 60. I think if you dig deeper into those folks investments you will find an extraordinary event occurred (partnership buyout, real estate, a single (lucky) stock hit, inheritance something).Generally, someone outside the family will not know this information. Even Jack Bogle did not become wealthy form being a boglehead. I am not sure, but following the boglehead philosophy or the millionaire next story was never intended to make average folks UHNW people.
Folks striving to be UHNW people should look outside the 3 fund portfolio and traditional w-2 world to improve their odds of being successful more than likely they may not “win”. If you look at the percent of people in UHNW category the majority will be self employed vs w-2.
DarkMatter731
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Re: Path to UHNW

Post by DarkMatter731 »

leehamster wrote: Mon Nov 16, 2020 2:44 pm
LFS1234 wrote: Sun Nov 15, 2020 7:57 pm A key reason why many business owners reach VHNW and UNHW categories is that their businesses generally are highly illiquid for long periods of time, often many decades. By having 99% of their net worth locked up in illiquid stock, they don't have the ability to spend much, and their effective savings rates can be extraordinary.

The same phenomenon exists with people who have option grants in high-flying companies. They often can't know what their options are worth until fairly late in the game, and even if they do, they may not have access to liquidity. So they live on their normal salaries until they all of a sudden figure out that they're worth $15 million more than they thought they were. At that point, they sometimes post on Bogleheads asking what to do.

As someone pointed out upthread, you can turn $2m into $30m by letting it compound for 30-40 years. The problem is, almost nobody is willing to leave that $2m alone for that period of time. So something has to force you not to spend any of it. It's not a natural thing for most people to do.
This is very wise insight, which ambitious youngsters should pay attention to.

“The first rule of compounding: Never interrupt it unnecessarily.” Charlie Munger
I think the more difficult thing is getting ahold of $2 million at a young age.

Also, there's no point having $30 million when you're 78 and have health problems (grandparents are in this situation right now). People spend it now because they'd rather enjoy life in their healthy years.
j.click
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Re: Path to UHNW

Post by j.click »

More of a sidebar than a contribution, but this thread reminds me of the adage: "Comparison is the thief of joy." One of Jack Bogle's great contributions to the financial field was his concept of 'enough'.....
michaelsieg
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Re: Path to UHNW

Post by michaelsieg »

As they say in Star Wars: "There is always a bigger fish"
THY4373
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Re: Path to UHNW

Post by THY4373 »

DarkMatter731 wrote: Sat Jan 15, 2022 7:41 am Also, there's no point having $30 million when you're 78 and have health problems (grandparents are in this situation right now). People spend it now because they'd rather enjoy life in their healthy years.
Agreed as my grandmother told me years ago "a shroud has no pockets" (i.e., you cannot take it with you). I am 52 and while I have done well for myself I will never be UHNW. But I realized in my mid-40s that my time to do certain things was running out. Thus while I save about 40% of my gross income I have, except in 2020, devoted about 10% of my gross income to travelling the world. This summer for example I went to several small less touristed Greek islands and spent two weeks hiking all around the islands (memories I'll have in the old folks home one day). Something I am more than capable of doing now but in 15 years who knows (heck I might not even be here). I am rapidly approaching the point where the marginal value of more dollars is going to be less than the marginal value of my remaining healthy years. I very much expect to pull the plug on my career at 55 worth "only" a few million and a modest pension. For me that is enough.
bismarck23
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Re: Path to UHNW

Post by bismarck23 »

This is depressing.
DarkMatter731
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Re: Path to UHNW

Post by DarkMatter731 »

THY4373 wrote: Sat Jan 15, 2022 9:32 am
DarkMatter731 wrote: Sat Jan 15, 2022 7:41 am Also, there's no point having $30 million when you're 78 and have health problems (grandparents are in this situation right now). People spend it now because they'd rather enjoy life in their healthy years.
Agreed as my grandmother told me years ago "a shroud has no pockets" (i.e., you cannot take it with you). I am 52 and while I have done well for myself I will never be UHNW. But I realized in my mid-40s that my time to do certain things was running out. Thus while I save about 40% of my gross income I have, except in 2020, devoted about 10% of my gross income to travelling the world. This summer for example I went to several small less touristed Greek islands and spent two weeks hiking all around the islands (memories I'll have in the old folks home one day). Something I am more than capable of doing now but in 15 years who knows (heck I might not even be here). I am rapidly approaching the point where the marginal value of more dollars is going to be less than the marginal value of my remaining healthy years. I very much expect to pull the plug on my career at 55 worth "only" a few million and a modest pension. For me that is enough.
Yep, I've got a plan to enjoy my youth doing physical things like skiing and mountain climbing.

My late 60s and 70s are for going on cruises I hope. Still 50 years away but time goes by quickly.
financeguy88
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Re: Path to UHNW

Post by financeguy88 »

I happen know a fair number of people in this category and its worth noting that with the huge increase in asset prices that number has certainly grown a lot in the last few years, so I would guess any published statistics materially understate the number of UHNW folks.

If we exclude those who inherited it or have trust funds (which is a pretty big number) and only go with self made, it is a mix of high earning employees with long careers (30+ yr careers) that received stock grants and were fortunate to have that stock perform well and make good financial choices, relatively early employees at massively successful tech companies (ie. sr engineer at AMZN who has been there for 10 years and been getting stock grants the whole time), successful private equity executives (think 10 to 15+ years working through the ranks), hedge fund portfolio managers or owners, founders of fairly successful tech companies ($200M+ exit price) entrepreneurial types with high incomes who got lucky and speculated on the right stocks, crypto, etc. The first two categories are by far the most common. There are of course your athletes and entertainers at this level as well but those are much more rare.

I don't think it is a attainable by most people (almost by definition) but it isn't an unreasonable goal for someone with extreme motivation / ambition as well as above average intelligence and some luck with health and career choices.
CletusCaddy
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Re: Path to UHNW

Post by CletusCaddy »

AerialWombat wrote: Fri Jan 14, 2022 9:51 pm Let’s see… Subtract out my other net worth sources… Divide by my remaining ownership percentage… OK, the tech startup that I co-founded would need to reach a valuation of $165 million in order for me to become UHNW.

Nope, never gonna happen.
Why not? What is your annual revenue growth and net retention rate? Software easily scales into billion dollar companies. Lots of GTM execs who could help you kick your business into the stratosphere
Californiastate
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Re: Path to UHNW

Post by Californiastate »

AAA wrote: Mon Nov 16, 2020 10:17 am
Mofire wrote: Sun Nov 15, 2020 3:43 pm Outside of an inheritance, what was your path to UHNW ($30M)?
I wish people wouldn't use acronyms without translation thus requiring others to look it up. Or maybe you figured that anyone who had to look it up would have nothing to contribute to the discussion.
Good point AAA.
Californiastate
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Re: Path to UHNW

Post by Californiastate »

TheLaughingCow wrote: Tue Nov 17, 2020 2:24 pm
btenny wrote: Mon Nov 16, 2020 2:17 pm Then buy residential real estate at a young age and purchase your first rental house at 21.

Buy good properties in nice neighborhoods in growing towns.

Buy another rental house every year.

Keep buying a house or two per year.
Just when I think bogleheads can’t get any more out of touch...
I beg to differ. I know more than a few people who did just in Bay Area real estate over the last 50 years. A common southbay home cost around $60k in the mid 70s. Those same homes are now worth $1.5m whether they painted them or not. That same scenario wouldn't work in Cleveland but here it's been the game for quite a while.
Hannibal Barca
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Re: Path to UHNW

Post by Hannibal Barca »

Most of the big law, investment banking, private equity, and big consulting partners I've met have something like $10M, not $30M. They make $1M+ a year but spend a lot of it on fancy homes, private school for their kids, expensive vacations, etc.; the lifestyle creep is real. Plus most of them didn't get to that income level until their mid-30s or later, and most are burned out or pushed out well before they hit their 60's. The ability to make good money isn't necessarily correlated with the discipline to save large amounts of it.

For what it's worth, almost everyone I've met with $30M+ was a business owner. There are some industries where you can build a business generating a few million in EBITDA and sell it at a 20x multiple. Assuming you keep a good portion of the equity, that will get you in the UHNW club.
gtrplayer
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Re: Path to UHNW

Post by gtrplayer »

Mofire wrote: Sun Nov 15, 2020 3:43 pm Outside of an inheritance, what was your path to UHNW ($30M)?
Based on some people’s definition, Jack Bogle himself was not UHNW… he definitely could have been had he structured the business for his own personal gain rather than the investors, or not given money to charity. Probably a lesson there…
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AerialWombat
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Re: Path to UHNW

Post by AerialWombat »

CletusCaddy wrote: Sat Jan 15, 2022 10:53 am
AerialWombat wrote: Fri Jan 14, 2022 9:51 pm Let’s see… Subtract out my other net worth sources… Divide by my remaining ownership percentage… OK, the tech startup that I co-founded would need to reach a valuation of $165 million in order for me to become UHNW.

Nope, never gonna happen.
Why not? What is your annual revenue growth and net retention rate? Software easily scales into billion dollar companies. Lots of GTM execs who could help you kick your business into the stratosphere
We are in a tiny market, with a product that does a very specific thing, and that doesn’t command a very high price. We already have about 25% market share. Capturing 100% of the available market would value the company at around $40 million, based on a reasonable multiple. We will be an attractive acquisition target long before then, and have every intention of selling out the first second we can.

Not every software company is on the unicorn track. There are thousands of tiny software companies you’ve never heard of that are financially healthy and serve a need, but are not mass-market.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Firemenot
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Re: Path to UHNW

Post by Firemenot »

In my opinion having ultra-high net worth as a primary goal is sad. BUT if someone gets there pursuing a job/career they enjoy, more power to them!
lasp506
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Re: Path to UHNW

Post by lasp506 »

Be employed in a high paying profession for a very very long time, and save more than half of your income in VTI.
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TomatoTomahto
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Re: Path to UHNW

Post by TomatoTomahto »

Firemenot wrote: Sat Jan 15, 2022 12:12 pm In my opinion having ultra-high net worth as a primary goal is sad. BUT if someone gets there pursuing a job/career they enjoy, more power to them!
+1 :beer
I get the FI part but not the RE part of FIRE.
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galving
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Re: Path to UHNW

Post by galving »

goodenyou wrote: Mon Nov 16, 2020 9:47 pm I watched my close friend from high school amass wealth beyond imagination as a hedge fund manager. Having an IQ over 170 and an undergraduate and masters degree in EE in 4 years from MIT with straight A’s was also a big help. His yearly comp was well beyond $30M.
That sounds like an amazing story!
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TomatoTomahto
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Re: Path to UHNW

Post by TomatoTomahto »

https://en.wikipedia.org/wiki/Sam_Bankman-Fried


Samuel Bankman-Fried[1] (born March 6, 1992[2]), also known by his initials SBF,[3] is an American businessman and effective altruist. He is the founder and CEO of FTX, a cryptocurrency exchange.[4][5] He also manages assets through Alameda Research, a quantitative cryptocurrency trading firm he founded in October 2017.[6] He is ranked 32nd on the 2021 Forbes 400 list with a net worth of US$22.5 billion.[7] In addition, Bankman-Fried is a supporter of effective altruism and pursues earning to give as an altruistic career.
I get the FI part but not the RE part of FIRE.
H-Town
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Re: Path to UHNW

Post by H-Town »

Play QB for an NFL team.
Time is the ultimate currency.
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goodenyou
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Re: Path to UHNW

Post by goodenyou »

galving wrote: Sat Jan 15, 2022 12:38 pm
goodenyou wrote: Mon Nov 16, 2020 9:47 pm I watched my close friend from high school amass wealth beyond imagination as a hedge fund manager. Having an IQ over 170 and an undergraduate and masters degree in EE in 4 years from MIT with straight A’s was also a big help. His yearly comp was well beyond $30M.
That sounds like an amazing story!
It is amazing. We reconnected years later when he was referenced in Roger Lowenstein’s book “When Genius Failed”. He wasn’t the cause, but part of the cleanup crew. The fascinating part of brilliant engineering types is that he was self-taught in finance and became a huge star. Never took a course in finance in school.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
gtrplayer
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Re: Path to UHNW

Post by gtrplayer »

galving wrote: Sat Jan 15, 2022 12:38 pm
goodenyou wrote: Mon Nov 16, 2020 9:47 pm I watched my close friend from high school amass wealth beyond imagination as a hedge fund manager. Having an IQ over 170 and an undergraduate and masters degree in EE in 4 years from MIT with straight A’s was also a big help. His yearly comp was well beyond $30M.
That sounds like an amazing story!
Is it though? Makes me think of how we as a society don’t allot money according to its value to society. Feels like someone like that could contribute to the world better than moving money around in a hedge fund. We lose a lot of doctors and scientists to finance careers that are of little value to the world in the long term.
EddyB
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Re: Path to UHNW

Post by EddyB »

mak1277 wrote: Tue Nov 17, 2020 7:58 am
Riprap wrote: Tue Nov 17, 2020 6:45 am
2tall4economy wrote: Tue Nov 17, 2020 12:16 am
Riprap wrote: Mon Nov 16, 2020 1:32 pm
2tall4economy wrote: Sun Nov 15, 2020 9:56 pmif someone can articulate that I’d love to hear about it
Marginal Utility of Wealth.

Here's a good starting place. Let Google be your friend.

https://www.investopedia.com/terms/m/ma ... tility.asp

I think a lot of people at that wealth level come to the same conclusion.
I’m saying the same thing; you don’t see a lot of uhnw folks because many who can achieve that tap out first because there is no margin utility; it’s the liquidity events or the folks that really love their job. I really like what I do. But there are plenty of days I’d prefer to sleep in or play with my kids instead.
You asked if someone could "articulate" the concept. The concept, I believe, is marginal utility of wealth.
I think he was asking for someone to explain the "concept" of why you'd need/want $30 million vs. $10 million. I gave two examples of why I think $30 million would be better for me personally.
I probably wouldn't buy "just fun" cars (e.g., two seater convertibles) on $10 million, but almost surely would at $30 million. I probably wouldn't buy a ~50 foot sailboat on $10 million, but almost certainly would on $30 million. My housing choices would be moderately different, but probably not much.
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goodenyou
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Re: Path to UHNW

Post by goodenyou »

galving wrote: Sat Jan 15, 2022 12:38 pm
goodenyou wrote: Mon Nov 16, 2020 9:47 pm I watched my close friend from high school amass wealth beyond imagination as a hedge fund manager. Having an IQ over 170 and an undergraduate and masters degree in EE in 4 years from MIT with straight A’s was also a big help. His yearly comp was well beyond $30M.
That sounds like an amazing story!
It is amazing. We reconnected years later when he was referenced in Roger Lowenstein’s book “When Genius Failed”. He wasn’t the cause, but part of the cleanup crew. The fascinating part of brilliant engineering types is that he was self-taught in finance and became a huge star. Never took a course in finance in school.
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FoolMeOnce
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Re: Path to UHNW

Post by FoolMeOnce »

Californiastate wrote: Sat Jan 15, 2022 11:12 am
TheLaughingCow wrote: Tue Nov 17, 2020 2:24 pm
btenny wrote: Mon Nov 16, 2020 2:17 pm Then buy residential real estate at a young age and purchase your first rental house at 21.

Buy good properties in nice neighborhoods in growing towns.

Buy another rental house every year.

Keep buying a house or two per year.
Just when I think bogleheads can’t get any more out of touch...
I beg to differ. I know more than a few people who did just in Bay Area real estate over the last 50 years. A common southbay home cost around $60k in the mid 70s. Those same homes are now worth $1.5m whether they painted them or not. That same scenario wouldn't work in Cleveland but here it's been the game for quite a while.
That's actually a pretty terrible return. Go put $60k into a S&P500 calculator with dividends reinvested starting in the mid 1970's.
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Re: Path to UHNW

Post by MrJedi »

I imagine many people who could gradually work a job up to 30M through a long career just end up retiring early instead.
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ClevrChico
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Re: Path to UHNW

Post by ClevrChico »

I worked for a few in this category, and I would say multi-generational family business.

One of them was retail, extremely high stress, with kids and grandkids putting in a ton of effort. The owner worked seven days week other than taking the month after Christmas off.

The other was leveraged real estate expanded over decades plus a savvy/lucky major tech investment. They could be hitting billionaire levels or close to it now.

Being a W2 HNW person may be the way to go.
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Re: Path to UHNW

Post by Californiastate »

FoolMeOnce wrote: Sat Jan 15, 2022 2:20 pm
Californiastate wrote: Sat Jan 15, 2022 11:12 am
TheLaughingCow wrote: Tue Nov 17, 2020 2:24 pm
btenny wrote: Mon Nov 16, 2020 2:17 pm Then buy residential real estate at a young age and purchase your first rental house at 21.

Buy good properties in nice neighborhoods in growing towns.

Buy another rental house every year.

Keep buying a house or two per year.
Just when I think bogleheads can’t get any more out of touch...
I beg to differ. I know more than a few people who did just in Bay Area real estate over the last 50 years. A common southbay home cost around $60k in the mid 70s. Those same homes are now worth $1.5m whether they painted them or not. That same scenario wouldn't work in Cleveland but here it's been the game for quite a while.


That's actually a pretty terrible return. Go put $60k into a S&P500 calculator with dividends reinvested starting in the mid 1970's.
A couple can exclude $500k of capital gains every few years. Try that with an index fund.
I just also plugged it into a S&P calculator. The 10% downpayment of $6k invested in the S&P on Jan 1, 1975 grows to $1,442,613.70. That's roughly equivalent minus tax implications.
GP813
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Re: Path to UHNW

Post by GP813 »

nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
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Re: Path to UHNW

Post by Firemenot »

GP813 wrote: Sat Jan 15, 2022 4:17 pm
nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
No one can reasonably execute a plan with a reasonable probability to become a billionaire from ground zero. A tiny few are just in the right place at the right time and have the drive, intellect, aggressive risk taking, and luck to get there. We attribute far too much to them having been geniuses.

For example, there’s no doubt something very much like Facebook would exist today had Mark Zuckerberg never tried.
Livehard1234
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Re: Path to UHNW

Post by Livehard1234 »

Firemenot wrote: Sat Jan 15, 2022 5:24 pm
GP813 wrote: Sat Jan 15, 2022 4:17 pm
nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
No one can reasonably execute a plan with a reasonable probability to become a billionaire from ground zero. A tiny few are just in the right place at the right time and have the drive, intellect, aggressive risk taking, and luck to get there. We attribute far too much to them having been geniuses.

For example, there’s no doubt something very much like Facebook would exist today had Mark Zuckerberg never tried.
Also the sky is blue.
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Re: Path to UHNW

Post by nigel_ht »

GP813 wrote: Sat Jan 15, 2022 4:17 pm
nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
$30M isn’t really enough to own a private jet…so that’s not really “ultra”.

It’s not just about top x% but lifestyle differences.

Going from $500K to $1M doesn't really enable a significant lifestyle change. Even $1M to $5M is more of the same…still flying commercial air, boats not yachts, larger house or better neighborhood not estates, maybe a vacation house but at a nice lake but not in Tuscany, etc.

Going from $5m to $30 is a bigger bump but it’s not top tier…and since there isn’t a rank above “ultra” it’s really not even entry level to the top tier wealth but more like the top end of normal wealth.
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Re: Path to UHNW

Post by GP813 »

nigel_ht wrote: Sat Jan 15, 2022 5:57 pm
GP813 wrote: Sat Jan 15, 2022 4:17 pm
nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
$30M isn’t really enough to own a private jet…so that’s not really “ultra”.

It’s not just about top x% but lifestyle differences.

Going from $500K to $1M doesn't really enable a significant lifestyle change. Even $1M to $5M is more of the same…still flying commercial air, boats not yachts, larger house or better neighborhood not estates, maybe a vacation house but at a nice lake but not in Tuscany, etc.

Going from $5m to $30 is a bigger bump but it’s not top tier…and since there isn’t a rank above “ultra” it’s really not even entry level to the top tier wealth but more like the top end of normal wealth.
When did the standard for being ultra wealthy become owning a private jet, lol? Something for which the mathematical logistics are really indefensible. This has nothing to do with data and like I already stated has more to do with billionaire propaganda and these pop culture references/flaunting that are out of whack with reality. $30 million dollars is UHNW according to the data.
Firemenot
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Re: Path to UHNW

Post by Firemenot »

Livehard1234 wrote: Sat Jan 15, 2022 5:40 pm
Firemenot wrote: Sat Jan 15, 2022 5:24 pm
GP813 wrote: Sat Jan 15, 2022 4:17 pm
nigel_ht wrote: Thu Jan 13, 2022 7:42 am
jack.bauer wrote: Thu Jan 13, 2022 1:01 am 30m is uhnw now? Some liberal use of the word ultra here. There are tons of people with 30m. Probably in the order of 1 in every 10k Americans. Ultra needs to be more rare. I propose we bump uhnw to at least 1b in assets.
295,450 out of 329.5M. Rare enough.

https://www.barrons.com/articles/the-wo ... 1625078725

At $30M you have enough to make a multi-family office worthwhile. You need at least $100M for a family office to make sense since they are very pricey to run.

So if you wanted to set new thresholds then HNW at $5M (up from $1M), VHNW at $30M (Up from $5M) and UHNW at $100M (up from $30M).

That should keep the 401K $1-2M riff-raff (that would be many BHs) out. You should email the head of Capgemini and tell him or her.
$30 million is solidly ultra wealthy. It's in the top 1% of every age group in America by networth with room to spare. I think since the late 1990's the American public has been brainwashed by the billionaire charm offensive/propaganda and so the practicalities of what is actually very wealthy has been skewed to be unrealistic and astronomical.
No one can reasonably execute a plan with a reasonable probability to become a billionaire from ground zero. A tiny few are just in the right place at the right time and have the drive, intellect, aggressive risk taking, and luck to get there. We attribute far too much to them having been geniuses.

For example, there’s no doubt something very much like Facebook would exist today had Mark Zuckerberg never tried.
Also the sky is blue.

Indeed.
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22twain
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Re: Path to UHNW

Post by 22twain »

Firemenot wrote: Sat Jan 15, 2022 5:24 pm For example, there’s no doubt something very much like Facebook would exist today had Mark Zuckerberg never tried.
Myspace? :twisted:
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Firemenot
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Re: Path to UHNW

Post by Firemenot »

22twain wrote: Sat Jan 15, 2022 7:28 pm
Firemenot wrote: Sat Jan 15, 2022 5:24 pm For example, there’s no doubt something very much like Facebook would exist today had Mark Zuckerberg never tried.
Myspace? :twisted:
Or the like.
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