My take from the book. It is easier to become rich from being a high salary earner with disciplined savings habit than undertaking risky activities like becoming an entrepreneur or trader/investor. My own personal opinion is if one wants to take risky activities to become rich, being an entrepreneur is much more socially useful than being a trader/investor because entrepreneurs create jobs and wealth. Sometimes, I feel ashamed of myself when comparing my social contributions as a financial market participant to entrepreneurs. Nevertheless, as self-consolation, I feel traders/investors have some value in providing liquidity to markets but their social value is much lower than entrepreneurs. Traders/investors are still way more useful than overpaid financial middlemen, particularly those who collect fees from selling financial products/services.
Which interestingly is exactly in line with Taleb's philosophy; the median high salaried employee will have much higher wealth and lower wealth dispersion than the median of someone who undertakes risky activities, even if the top end of the latter group will end up with far more money than the top end of the high salaried employee. Of course to become a high salaried earner already requires a certain amount of luck and in a country like the US with minimal economic mobility the first piece of good luck is to be born to the right parents. GAT
For most people the winning formula is to save a decent portion of your income as in at least 20% of your gross income and invest/trade wisely as possible. With a bit of luck a person following this could have enough cash inside of about 10 years to fly solo and not ever have to work for anyone if they didn't want to. It always sounds hard to save 20% or more of your gross income, once you start nearly everyone says it was a lot easier than they ever thought. Pay yourself first and pay yourself a lot was always my motto. I lived in high cost areas (San Francisco & Hawaii), had a job that paid about the average salary, yet could live well never feeling deprived of anything while saving 30-40% of my gross income. It does help if your frugal minded - which is really just cutting out the stupidity in purchasing decisions.
Great advice. I'll throw out a bit of unpopular advice I heard from a famous Google programmer (she founded Occupy Wall Street, can't recall her name). Live at home. I know, it sounds distasteful to a lot of Americans but it is a huge cost savings. Imagine being able to save 70 to 80 percent of one's income. Even a middle income earner can achieve remarkable things if they work a little overtime and cut expenses to the bone. In this economy, this should be an option.
"saving slow and steady through the years"... he he... "live cheaply".... its a description of a miser, no? Besides, making money is not just about money, its about how one makes them ! It's about whether one kisses the bosses's asses all his life and trembles every time when the new round of workforce cuts coming up... Or one is "dying" with the whole family in the small miserable business from 5 am to 10 pm "hustling the jalapeno chips" just to say one day: "I lost my heart here, but here is my check book..." not an easy choice, for those who recognize that it is a choice
Sergeant O'Leary is walkin' the beat At night he becomes a bartender He works at Mister Cacciatore's down on Sullivan Street Across from the medical center And he's tradin' in his Chevy for a Cadillac You oughta know by now And if he can't drive With a broken back At least he can polish the fenders
It seems such a waste of time If that's what it's all about PS. Now that I have slept on it, I truly believe that the book is total shit (just like 99% of other self-help and self-finance books).
Just like in trading, starting point (entering a trade) matters a lot. But trade management (how you manage your life) can affect the outcome perhaps more than entry (starting out). Actually the book makes a lot of sense to me personally: 1. The only sure way for us mom and pop plebs to be well off is live below your means and let the power of compounding propel you to your goal. 2. You can be poor, live below your means but also live well.
This is true. A great site for the frugal early retiree is Mr. Money Moustache. The theory is that if one accumulates 25x annual expenses and works a part time job, things should be ok. It's all pop culture junk in a sense but thrift and hard work can help many plebs overcome humble beginnings. It may not be pretty but it works for many people, especially immigrants.
As both an entrepreneur and a trader I wouldn't lump those together. If you're not looking for outside capital there are thousands of niches where you can start a million dollar a year company, which is decent money. The vast majority of the actual "millionaires next door" got that way by starting condiment factories and water meter manufacturers and activity based costing consulting practices and any of thousands of other not terribly exciting niches that will allow one to pretty reliably get rich slow. As for people who started out without much and became and remain millionaires from trading, well they're about as easy to find as unicorns in a leprechaun forest.