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I just ran the numbers for the first time ever, and it adds up to 34 months - which I realize is a pretty privileged place to be. However, I’m by no means rich; I just live well below my means and invest all my savings.
Dude, you are rich.
Depends on who I compare myself to and how one defines “rich.” To me, it means someone whose passive income exceeds their spending - and I’m nowhere even close to that… yet.
Yeah I think that's where the distinction between rich and wealthy comes in. You still have to work for a living and are closer to homelessness than renting out Venice for a wedding (for instance).
This exact question from this thread is how rich are you and 34 months is quite wealthy.
It’s an important distinction where I’m a potential counter example. I admit it. I earn what ought to be a comfortable living but poor choices in the past (and probably still) mean that I’m only a couple months from financial disaster. And since it would affect my kids education and my old age, the affects would be major. I am clearly not wealthy, mostly due to my own choices
Surely it depends how you live though. A guy spending just £15 a week on food and living in a tent is not wealthy just because they have £2k in the bank which will cover them for a few years.
That’s a bit of an edge case but why not? If they earn enough to live the way they want, are secure from immediate financial catastrophe, and can afford some luxuries, then maybe they are wealthy, despite being subsistence
Meanwhile someone can earn a nice fat six figure salary but be over mortgaged for house and car, not living comfortably, and paycheck to paycheck on the edge of financial disaster. They’re poor, despite it being by their poor choices
Wealth is freedom from want and financial anxiety
I used to rent a single bedroom in an overcrowded house share, didn't learn to drive because I couldn't afford it.
Had over a year of expenses saved, hardly makes you rich.
Nearly everybody who speaks English is rich. We just have no clue who poor other parts of the world are and so think of ourselves as poor.
I'm in my mid 40's.
It's not particularly uncommon for people in regional Australia to own their own house with no mortgage by my age.
It's pretty tough to find a family home that costs less than 10x average wage.
So, as a kind of line in the sand I'd say maybe a third of 45 year olds living in regional Australia could "survive" for 10 years with no income.
How do you know how to invest? Asking for a friend.
I don’t. I do it the boring way - buying cheap, highly diversified ETF index funds.
That's way more than most people know... Also, wtf is an ETF?
Mutual funds and ETFs are both types of investments that represent a group of individual stocks and are generally managed in some way, either by a person or by a fixed algorithm. Mutual funds have some tax implications that can by annoying for people so ETFs tend to be preferred for taxable accounts (in the US at least).
Thanks! Yes, I was wondering where would be a good place to start for absolute noobs, thanks for the tip. Investing is a mystery in my life I've been conditioned not to try to understand, perhaps it's time to do something about it.
Its pretty easy if you go with something like wealthfront, betterment, etc...
But using something like fidelity is also good too.
It's not too bad. The key thing if your in the UK is to open a stocks and shares ISA (similar to a cash ISA, but for stocks) that means you don't have to worry about taxes.
Other than that... Be aware that things are very volatile due to trump. He can say something and stocks drop 10% then recover by the end of the month.... Or not.
If you are in for the long term, the worst thing you can do is panic and sell when that happens.
Buy into a broad market tracking ETF (something that tracks s&P 500 or 1000 or similar). That way you're not betting on individual companies, your betting on the collective largest companies in the world doing well. Over a long period of time, which for over a century has averaged ~7% inflation adjusted return yearly.